04/04/2006 01:30 PM Senate LABOR & COMMERCE

    CSHB 394(L&C)AM-INSURANCE POLICIES IN FOREIGN LANGUAGES                                                                 
                                                                                                                                
CHAIR CON BUNDE announced CSHB 394(L&C)AM to be up for                                                                          
consideration.                                                                                                                  
                                                                                                                                
MICHAEL PAWLOWSKI, staff to Representative Kevin Meyer, sponsor                                                                 
of HB 394, said that according to the last census, more than                                                                    
80,000 Alaskans speak a language other than English at home.                                                                    
                                                                                                                                
     Even  though  they  are   still  required  to  purchase                                                                    
     insurance,  there is  an  obstacle in  state  law to  a                                                                    
     company  providing them  with  associated materials  or                                                                    
     policies that are published in  a foreign language. The                                                                    
     problem  is  that since  the  law  is silent  on  which                                                                    
     version  of policy,  be it  the non-English  version or                                                                    
     the  English  version,  is the  official  version.  And                                                                    
     since insurance contracts  and policies are interpreted                                                                    
     against  the   insurance  company   with  all   of  the                                                                    
     associated   materials  brought   in,   and  since   no                                                                    
     translation is ever perfect and  there can be plenty of                                                                    
     disagreement  in court  as to  the nuances  of a  word,                                                                    
     companies are reluctant  to publish policies, pamphlets                                                                    
     and materials  in a language  other than  English. This                                                                    
     has  led to  a growing  portion of  our population  not                                                                    
     being adequately served.                                                                                                   
                                                                                                                                
     As  the  chairman  said,  insurance  polices  are  hard                                                                    
     enough to  understand in our  own language. And  to ask                                                                    
     someone  to  wade through  the  minutia  of a  contract                                                                    
     without   supporting    materials   for   informational                                                                    
     purposes  is  detrimental  to them  trying  to  conduct                                                                    
     regular  business  in  the state  of  Alaska.  So,  the                                                                    
     sponsor introduced HB 394 to  remove that obstacle from                                                                    
     statute,   put   adequate   barriers  in   to   prevent                                                                    
     misrepresentation  of information  and to  clarify that                                                                    
     these  are to  be only  for informational  purposes. He                                                                    
     believes that this  will lead to a freer  market in the                                                                    
     state  to  conduct  business and  serve  Alaskans  that                                                                    
     truly need the service.                                                                                                    
                                                                                                                                
CHAIR BUNDE asked if it requires any one to try to provide                                                                      
written information in any language.                                                                                            
                                                                                                                                
MR. PAWLOWSKI replied no, it requires nothing of anyone. It only                                                                
removes an obstacle to allow people and companies to pursue a                                                                   
business activity that they might want to.                                                                                      
                                                                                                                                
2:09:31 PM                                                                                                                    
SENATOR  SEEKINS asked  about language  on page  2, line  6, that                                                               
says  an   "insurer  may  not  misrepresent   information  in  an                                                               
insurance  policy  ....translated  into  a  language  other  than                                                               
English" and asked if he could only misrepresent in English.                                                                    
                                                                                                                                
MR.  PAWLOWSKI  replied  that  was  a  good  question,  but  that                                                               
language came  from, AS 21.36.030 on  misrepresentation and false                                                               
advertising. The  actual activity in  English is covered  under a                                                               
separate statute.                                                                                                               
                                                                                                                                
2:10:28 PM                                                                                                                    
JEFFERY TROUTT,  Deputy Director, Division of  Insurance, said he                                                               
was here primarily to answer  questions, but wanted to expound on                                                               
some  of the  issues raised.  He recalled  that the  Division had                                                               
received two  health policies in Spanish.  An English translation                                                               
was sent along with it. Under  that circumstance he said he would                                                               
consider the  Spanish version as the  operative version. However,                                                               
business phrases  might mean one  thing in Mexico and  another in                                                               
Chile or  El Salvador. He said,  "It's good to have  an anchor so                                                               
everybody knows what version you are working on."                                                                               
                                                                                                                                
MR.  TROUTT said  he viewed  this as  a consumer  protection bill                                                               
that would encourage insurance companies  to provide materials in                                                               
a form  that people could  understand and his  Division supported                                                               
the  legislation. He  strongly supported  Senator Seekins'  point                                                               
about lying stating:                                                                                                            
                                                                                                                                
     To  me, I  believe  a  lie is  a  lie  whether it's  in                                                                    
     English,  Spanish, Tagalong  or Mandarin.  And I  would                                                                    
     apply Section  21.36.120 and  .140 against  anybody, no                                                                    
     matter  what  language they  were  lying  in. But  even                                                                    
     though   I  believe   those  two   statutes  apply   to                                                                    
     misrepresentation  in a  foreign language,  as somebody                                                                    
     who works in enforcement, I  don't mind you giving me a                                                                    
     little extra rope to hang the bad guys with.                                                                               
                                                                                                                                
2:13:11 PM                                                                                                                    
SHELDON WINTERS,  State Farm Insurance,  said that State  Farm is                                                               
the largest insurer  of homes and autos in the  United States and                                                               
in Alaska.  He supported  CSHB 394(L&C) AM  saying it  would help                                                               
better serve State Farm's customers  by providing more meaningful                                                               
information to them.                                                                                                            
                                                                                                                                
This  bill is  needed, first,  because it  deals with  the actual                                                               
insurance  policy  forms  that   get  filed  with  the  Division.                                                               
Currently, if a non-English version is  filed, there is no law as                                                               
to which  version controls and  he understands that  the Division                                                               
has   unofficially   assumed   that   the   non-English   version                                                               
controlled.  He suggested  that two  requirements be  met -  one,                                                               
that  both  versions  are  filed and,  two,  that  both  versions                                                               
provide notice  to the  consumer that  this is  for informational                                                               
purposes and the English version controls.                                                                                      
                                                                                                                                
Secondly,  Mr.  Winters  said that  insurance  companies  provide                                                               
brochures describing coverage and  other information to consumers                                                               
and that  is impossible  if the  consumer doesn't  speak English.                                                               
The problem  is with court  interpretation of such  materials and                                                               
the inherent subtle differences between  an English version and a                                                               
non-English version.  Alaska's Supreme  Court has ruled  if there                                                               
is a dispute  about what a policy provides, the  court has to not                                                               
only look at  the actual policy language, but at  any other extra                                                               
evidence that  the consumer  may have looked  at or  relied upon.                                                               
That would include the advertising  or the brochures the industry                                                               
provides to them.                                                                                                               
                                                                                                                                
Other jurisdictions that allow  policies and advertising material                                                               
to be  produced in a non-English  version can produce a  lot more                                                               
information and  he used California  as an example.  Twelve other                                                               
states  have laws  that allow  what is  trying to  be done  here.                                                               
However,  most other  states don't  require an  English and  non-                                                               
English  version to  be  produced. Some  don't  even require  the                                                               
notice that  the English version  controls, but he  believed that                                                               
was good for the consumer.                                                                                                      
                                                                                                                                
CHAIR BUNDE  remarked that this  seems to be a  relatively simple                                                               
and non-controversial bill.                                                                                                     
                                                                                                                                
2:18:15 PM                                                                                                                    
SENATOR SEEKINS  moved to  pass CSHB  394(L&C) am  from committee                                                               
with individual  recommendations and  attached zero  fiscal note.                                                               
Senators  Davis,  Ellis, Ben  Stevens,  Seekins  and Chair  Bunde                                                               
voted yea; and CSHB 394(L&C) am moved from committee.