Legislature(2005 - 2006)BELTZ 211
04/11/2006 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| CONFIRMATIONHEARING | |
| SB312 | |
| SB311 | |
| SB309 | |
| HB439 | |
| SB282 | |
| HB122 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 439 | TELECONFERENCED | |
| *+ | SB 282 | TELECONFERENCED | |
| += | HB 122 | TELECONFERENCED | |
| += | SB 311 | TELECONFERENCED | |
| += | SB 312 | TELECONFERENCED | |
| += | SB 309 | TELECONFERENCED | |
CSHB 439(L&C) AM-INSURANCE PRODUCT REGULATION COMPACT
CHAIR CON BUNDE announced CSHB 439(L&C) AM to be up for
consideration.
REPRESENTATIVE JOHN COGHILL, sponsor of HB 439, explained that
it would standardize products that are beneficial for the state
of Alaska. He was asked to do it, but he also supported it. It
would include the state in an interstate compact dealing with
life insurance products like life insurance annuities and long
term care products. He thought the nature of the insurance
industry demanded this because it wasn't as closely regulated on
a state-by-state basis and the federal government would probably
develop guidelines. The director of the Division of Insurance
would be a part of the commission so changes that may happen
would be well known and he thought this would be a better way to
do it.
CHAIR BUNDE asked him if he felt this bill would benefit Alaska
in terms of him being a state's rights, smaller government
person.
REPRESENTATIVE COGHILL replied yes and that Alaska could pull
out of the compact if "it starts yanking our chain" or if
consumers were not protected. However, he pointed out that the
compact has better consumer protections than some of the things
the state already is doing. He said the director could explain
those in much better detail.
2:43:10 PM
LINDA HALL, Director, Division of Insurance, said that she did
not request this bill to be introduced. She explained that the
interstate compact has been a creature of the National
Association of Insurance Commissioners and it has already been
adopted by 21 states. Twenty-six states must adopt this compact
before it can become effective. It originated with the
recognition that the insurance marketplace was changing - with a
lot of overlap in bank and insurance products. There is also
recognition of the increased mobility of the population.
One of the issues that has become a problem around the country
is uniform filing and getting new products to consumers. So,
there has been a real push to do "speed market" - a single
uniform standard single-filing system. The state participates in
"SERF," an electronic filing system that facilitates products
getting to consumers.
2:45:13 PM
MS. HALL noted her concern is that there is a growing push for
federal regulation of insurance, which would cause a loss of
consumer protection here. She explained that the "Optional
Federal Charter" was sponsored by some of the life insurance
companies who were looking for a more efficient way of being
regulated as opposed to having 50 different state regulators
with 50 different sets of rules and it was introduced last week
in Congress.
The basic structure is that each state that is a member of the
compact would send a delegate to that commission; the chief
regulator in Alaska is the director. For anything to occur in
that body would take a two-thirds majority vote. She said these
products don't include health insurance or property liability
workers' compensation type of insurances.
If a state chooses to opt out of a standard, it has 10 days to
do so and must provide some rationale for why it doesn't protect
its consumers. Legislatures can opt out at any time. The
commission is delegated the authority to adopt these standards.
It will only look at individual and group life insurance
annuities, disability income insurance and long-term care
products.
Her observation on this bill is that the insurers would still be
able to determine where they want to file their product -
through the traditional system with the state or through the
commission.
The original fear of this kind of proposal was that whatever
standards were accepted would be the lowest common denominator,
but she would not be here talking about this bill if she thought
would happen. She said there have been six meetings so far on
adopting standards and they now exceed those in Alaska statute.
For instance, the state has no standard for a "free look" which
is when a consumer has 10 days to look at a product and give it
back without any kind of penalty. She thought that kind of thing
would be good. She thought other good provisions would be for
creating binding arbitration and adopting readability standards.
MS. HALL also explained that generally the insurers who write
these products file their national products with her division
and she was already seeing a lot of filings for products that
exceed the state's statutory standards. Because it's easier and
more efficient than filing 50 separate products in 50 different
states, insurance companies were filing to the highest standard
and she was seeing the benefits from that. Standards help
insurance companies more readily get their products in the
marketplace, which is where they look for a competitive
advantage. Both the National Conference of State Legislatures
(NCSL) and the National Conference of Insurance Legislators
(NCOIL) have endorsed this compact and that this legislation has
been introduced in 16 other legislatures this year.
2:49:40 PM
CHAIR BUNDE asked if it's more likely to happen sooner than
later.
MS. HALL replied yes.
2:50:07 PM
JOHN GEORGE, American Counsel of Life Insurers, said he asked
for this legislation and Ms. Hall did a great job of explaining
it. He offered to answer questions, but there were none.
CHAIR BUNDE said he would hold HB 439 and bring it up again at
the first available opportunity.
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