Legislature(2003 - 2004)
05/04/2004 01:55 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CSHB 540(L&C)-WORKERS' COMPENSATION INSURANCE RATES
CHAIR CON BUNDE announced HB 540 to be up for consideration.
MR. JOSH APPLEBEE, staff to Representative Tom Anderson,
sponsor, explained that the CS to HB 540 addresses a long-
standing problem with Alaska Workers' Compensation loss cost
filing. It makes the statute a more open and transparent process
that gives stakeholders in the system an opportunity for input
and understanding of the "loss cost" filings, which are a
fundamental building block of the workers' compensation rates.
Initially, the Division of Insurance voiced concerns regarding
timeline and process issues. At the request of the committee,
the company who brought the issue forward and the Division of
Insurance worked together to produce the committee substitute
before them now. It has their full support.
MR. CHARLIE MILLER, Alaska National Insurance Company (ANIC),
said that loss costs are the basic component of what becomes
workers' compensation rates. The rating agency reviews the
previous data and tries to project what the loss cost will be in
the upcoming rate year. It's an actuarial exercise and ANIC
hoped to be able to participate more in setting the rate. He
supported the committee substitute.
MS. SARAH MCNAIR GROVE, Property Casualty Actuary, Division of
Insurance, said the CS has a good process that meets the needs
of all the participants, including the insurer. Currently, the
National Council on Compensation Insurance (NCCI) sets the rate
that is then reviewed by the division. Now the insurer will have
a seat at the table.
SENATOR FRENCH commented that some people might view raising
rates as a way of making up for past losses.
MS. GROVE denied that was the intent of this bill. The intent is
to give more stakeholders the ability to raise questions and
provide information in the process.
MR. BOB LOHR testified in support of the SCS to HB 540 as the
former director for the Division of Insurance. He explained that
the filings have a detailed hearing process set out by a rating
organization like the NCCI. However he questioned whether the 20
- 25 day time-frame (on page 3) in which to have a hearing after
receipt of a filing was an adequate window to conduct a hearing.
Lines 15 - 16 on page 4 clarifies that the hearings are a public
record, which he supported.
Page 5, line 18, requires the rating organization to make the
information available as soon as possible and he asked the
committee to consider making it available immediately. The order
must include details of the director's reasoning and presumed
the order must state the director's reasoning on line 22 and he
felt that it should just be stated.
On page 6, lines 22 - 25, the final definition says a
perspective loss cost filing is a term defined, but doesn't
label it as a filing submitted by a rating organization. He
thought it should explicitly state that it is a filing submitted
by a rating organization.
CHAIR BUNDE asked Ms. Grove if she supported Mr. Lohr's
suggestions about the time-frame, the soon as possible versus
immediately issue and the definition.
MS. GROVE explained that 20 -25 days was the time-frame in which
it could be determined that a hearing needed to be held and she
was comfortable with it. She felt that as-soon-as-possible and
immediately meant the same thing and had discussed that with the
rating organization that would have a website on which to post
the information. She said the definition section mirrors
language that is already in regulation and felt that should
stay.
SENATOR RALPH SEEKINS moved to pass SCS HB 540(L&C) from
committee with individual recommendations and attached fiscal
note. Senators French, Gary Stevens, Seekins, Davis and Chair
Bunde voted yea and CSHB 540(L&C) moved from committee.
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