04/03/2024 03:15 PM House LABOR & COMMERCE

        HB 324-INS. DATA SECURITY; INFO. SECURITY PRGRMS                                                                    
                                                                                                                                
3:20:24 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that the  first order of business would be                                                               
HOUSE BILL NO. 324, "An  Act relating to insurance data security;                                                               
amending Rule 26, Alaska Rules  of Civil Procedure, and Rules 402                                                               
and  501,  Alaska  Rules  of   Evidence;  and  providing  for  an                                                               
effective date."   [Before the committee, adopted  as the working                                                               
document on  3/25/24, was the proposed  committee substitute (CS)                                                               
for  HB  324,  Version 33-LS1348\B,  Wallace,  3/21/24  ("Version                                                               
B").]                                                                                                                           
                                                                                                                                
3:20:53 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:20 p.m. to 3:22 p.m.                                                                       
                                                                                                                                
3:22:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WRIGHT  moved to adopt  Amendment 1 to  Version B,                                                               
labeled 33-LS1348\B.1, Wallace, 3/27/24, which read:                                                                            
                                                                                                                                
     Page 12, line 28, following "information;":                                                                                
          Insert "and"                                                                                                          
                                                                                                                                
     Page 12, line 31:                                                                                                          
          Delete "; and"                                                                                                        
          Insert "."                                                                                                            
                                                                                                                                
     Page 13, lines 1 - 3:                                                                                                      
          Delete all material.                                                                                                  
                                                                                                                                
     Page 14, line 28:                                                                                                          
          Delete "electronic"                                                                                                   
                                                                                                                                
     Page 14, line 30:                                                                                                          
          Delete "electronic"                                                                                                   
                                                                                                                                
     Page 15, line 9:                                                                                                           
          Delete "electronic"                                                                                                   
                                                                                                                                
REPRESENTATIVE CARRICK objected.                                                                                                
                                                                                                                                
REPRESENTATIVE  WRIGHT  asked  the   bill  sponsor  to  speak  to                                                               
Amendment 1.                                                                                                                    
                                                                                                                                
3:22:30 PM                                                                                                                    
                                                                                                                                
CLIFTON COGHILL,  Staff, Representative Will Stapp,  Alaska State                                                               
Legislature, on  behalf of  Representative Stapp,  prime sponsor,                                                               
deferred to Ms. Wing-Heier.                                                                                                     
                                                                                                                                
3:22:51 PM                                                                                                                    
                                                                                                                                
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community  & Economic  Development, explained  that the                                                               
amendments before  the committee today would  fix drafting errors                                                               
in  Version  B   at  the  request  of   the  insurance  industry.                                                               
Amendment 1  would clarify  that if  a consumer  were to  sue the                                                               
insurance company for breach of  private information, data can be                                                               
obtained,  but   not  from  the   Division  of   Insurance  ("the                                                               
division")  or  the  division  director.    She  added  that  the                                                               
division   holds   the   data   confidential   to   conduct   the                                                               
investigation and then  levies whatever penalty or  fine that may                                                               
be assessed against the insurance company.                                                                                      
                                                                                                                                
3:24:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK questioned the  removal of "electronic" in                                                               
Amendment 1.                                                                                                                    
                                                                                                                                
MS.   WING-HEIER  said   although   most   information  is   kept                                                               
electronically,  there   are  still   some  paper   files  within                                                               
insurance  companies   and  brokerage  firms  that   may  contain                                                               
personal information  that could be  breached.  For  that reason,                                                               
"electronic"  is  removed  to  ensure  that  all  information  is                                                               
subject to the bill.                                                                                                            
                                                                                                                                
REPRESENTATIVE  CARRICK removed  her objection.   There  being no                                                               
further objection, Amendment 1 was adopted.                                                                                     
                                                                                                                                
REPRESENTATIVE WRIGHT  moved to adopt  Amendment 2 to  Version B,                                                               
labeled 33-LS1348\B.2, Wallace, 4/1/24, which read:                                                                             
                                                                                                                                
     Page 13, line 9:                                                                                                           
          Delete "10"                                                                                                           
          Insert "15"                                                                                                           
                                                                                                                                
REPRESENTATIVE CARRICK  objected.   She questioned  the rationale                                                               
for  changing   the  number  of  employees   exempted  from  risk                                                               
assessment from "10" to "15" or fewer.                                                                                          
                                                                                                                                
3:26:21 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER said  she would not object to  Amendment 2 because                                                               
it still captures  the majority of insurance  agencies within the                                                               
state.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  CARRICK  asked  whether  Version  B  would  be  a                                                               
valuable tool for insurance agencies with 10 to 14 employees.                                                                   
                                                                                                                                
MR. COGHILL did not know the answer.                                                                                            
                                                                                                                                
3:27:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER asked which firms  would be included in 15                                                               
[employees] that would be otherwise limited by 10.                                                                              
                                                                                                                                
MS.  WING-HEIER  explained that  in  the  state of  Alaska,  most                                                               
insurance agencies  are either the  larger firms or those  with 5                                                               
employees; consequently, not many would fall between 10 and 14.                                                                 
                                                                                                                                
3:29:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX guessed that  the captive agencies would have                                                               
support from  the "mother company"  but the  independent agencies                                                               
would have to dig into their own pockets.                                                                                       
                                                                                                                                
MS.  WING-HEIER  stated  that many  smaller  agencies  have  been                                                               
acquired by  a larger  firm, which would  require them  to comply                                                               
with this  bill.   She agreed  that the  firm of  captive offices                                                               
would be subject to the provisions in Version B.                                                                                
                                                                                                                                
REPRESENTATIVE  PRAX how  much the  bill  would cost  independent                                                               
agencies.                                                                                                                       
                                                                                                                                
MS. WING  HEIER said there aren't  many firms that have  data and                                                               
lack corporate  governance with  respect to  data security.   She                                                               
further noted  that agencies would  be given 18 months  to comply                                                               
with the bill.                                                                                                                  
                                                                                                                                
REPRESENTATIVE CARRICK maintained her objection.                                                                                
                                                                                                                                
3:31:38 PM                                                                                                                    
                                                                                                                                
A roll  call vote  was taken.   Representatives  Saddler, Wright,                                                               
Prax,  Ruffridge,  and Sumner  voted  in  favor of  Amendment  2.                                                               
Representatives Carrick and Fields  voted against it.  Therefore,                                                               
Amendment 2 was adopted by a vote of 5-2.                                                                                       
                                                                                                                                
3:32:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  noted that the bill  sponsor is currently                                                               
in the House Finance Committee addressing the operating budget.                                                                 
                                                                                                                                
3:32:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  moved to  report CSHB 324,  Version 33-                                                               
LS1348\B,  Wallace, 3/21/24,  as amended,  out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
No  objection.   There  being  no  objection, CSHB  324(L&C)  was                                                               
reported from the House Labor and Commerce Standing Committee.