Legislature(2007 - 2008)BELTZ 211
04/05/2008 11:00 AM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB280 | |
| HB331 | |
| HB297 | |
| HJR24 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 297 | TELECONFERENCED | |
| += | HJR 24 | TELECONFERENCED | |
| += | HB 331 | TELECONFERENCED | |
| += | SB 280 | TELECONFERENCED | |
HJR 24 am - OPPOSING FEDERAL INSURANCE REGULATION
11:23:53 AM
CHAIR ELLIS announced HJR 24 am to be up for consideration.
KAREN LIDSTER, staff to Representative Coghill, sponsor of HJR
24, said HJR 24 am opposes a federal regulatory insurance
system. It opposes attempts by Congress to divide the insurance
regulation between the states and the federal government. The
"optional federal charter" has been introduced in both chambers
of the U.S. Congress. To avoid such a move by Congress to enact
federal regulation of insurance, the legislature passed HB 439
unanimously on May 2006. This bill added Alaska to the
Interstate Insurance Product Regulation Compact. This commission
comprised of 30 states, serves as a single point of filing for
specified insurance products and establishes uniform national
standards for those products. HJR 24 am affirms Alaska's
opposition to the federal government attempting to supersede
state regulation of insurance.
MS. LIDSTER said that Representative Gruenberg added a floor
amendment stating a further resolve that the Alaska State
Legislature opposes any attempt to weaken the current state
regulation of insurance.
SENATOR STEVENS asked for an explanation of the McCarran-
Ferguson Act. He didn't really know why it was in the
resolution.
MS. LIDSTER responded that she would let the director of the
Division of Insurance address that.
11:26:58 AM
CHAIR ELLIS asked if they are talking about who has the
authority to regulate, a turf issue, or was the sponsor trying
to get at national policy toward health insurance on consumer
issues.
MS. LIDSTER replied that initially the resolution was trying to
let the federal government know that opening up an optional
federal charter would split insurance regulation between state
or federal regulation and the states want to retain that
authority.
11:29:13 AM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community & Economic Development, said she supported
HJR 24 am. She stated that insurance regulation is a turf war;
national life insurance companies have questioned why they would
go through 50 different jurisdictions. So, there have been some
attempts at having a dual regulation in which companies doing
business nationally could elect to be regulated under a federal
regulator and companies that are regional or in-state would
choose to be regulated by the state. In her mind, that would
indicate an increasing encroachment by the federal regulator
into the business that has been the state's sole obligation or
authority so far.
11:30:58 AM
She explained that Congress passed the McCarran-Ferguson Act in
1945; it gave regulatory jurisdiction over the "business of
insurance" to the states and preempted the states from coming
under any federal laws including federal anti-trust laws without
specifically saying these apply to insurance. This has occurred
a couple of times post-McCarran-Ferguson. For instance, the
Employee Retirement and Income Security Act of 1974 (ERISA) is
an exception to the preemption that specifically gave that
authority back to the federal government.
MS. HALL said in addition to the bills that have been introduced
in both bodies of Congress, on Monday the Treasury Department
issued a report that is very over-reaching and changes how all
financial institutions are regulated. It is called "The
Blueprint for Modernized Financial Regulatory Structure." It
deals with changing how banks, thrifts and insurance are
regulated and proposes a federal regulator. It has drawn a lot
of comments.
She said she wanted to leave them with two things today. One
comes from the National Conference of Insurance Legislators
(NCOIL) that strongly opposes this resolution in two ways. She
read from a press release that said Representative Kennedy
indicated:
The report draws state insurance regulation which is
constantly developing and responding to its healthy
competitive markets into the fray along with less
regulated and less accountable financial services
sectors, such as banks, thrifts and securities that
are presently managed by the federal government....
She said people are concerned about oversight and she heard an
insurance company trade association speak to CNN on Monday after
this report was released about regulation at a federal level and
it would not be the same as the regulation the state has today.
The two primary areas of regulations she deals with are
financial oversight solvency regulation and consumer protection.
MS. HALL said she wanted to make consumer protection real. Her
department has a consumer services section and it gets 400-600
official consumer complaints a year plus lots of phone calls
where they provide assistance in other ways. She explained when
a complaint is closed she does a confidential survey. Someone
took the time to write a three-page letter expressing gratitude
for her quick and effective response to an issue for which they
initially received $20,000 and other regular payments. She
didn't think a federal regulator would ever provide that level
of assistance.
SENATOR STEVENS said he was concerned because it says the
legislature opposes anything that would establish a federal
insurance regulator, but it also says "or otherwise alter the
McCarran-Ferguson Act." He needed to know what was in the
McCarran-Ferguson Act.
11:37:25 AM
MS. HALL answered she was not an expert.
SENATOR STEVENS was concerned about the broadness of that
statement.
CHAIR ELLIS asked for clarification of what is encompassed in
that act saying the committee wanted assurance that HJR 24 is
just about insurance regulation.
11:38:49 AM
JOHN GRUMMETT, President, Alaska Independent Agents and Brokers,
supported HJR 24. He said he is also Vice President of Shattuck
and Grummett in Juneau. He supported Ms. Hall's statements about
this being an issue of consumer protection and a level of
responsiveness to them. He said they are against federal
regulation for a variety of reasons. State Farm Insurance
opposes it, as well, as indicated in a letter in their packets.
MR. GRUMMETT said there are things agents and brokers want to
improve, but they don't need a federal regulatory system to do
that. They have to do with surplus lines, reinsurance reform and
agent and company licensing reform.
He said from the property casualty angle introducing federal
regulation as an option would result in agents and brokers
having to become experts in two different regulatory
environments and it would be more confusing for the consumer to
try to distinguish between the two. Small insurance companies
would be at a competitive disadvantage.
11:41:34 AM
Further he said the premium tax in Alaska is third or fourth in
the country, and the general fund contribution last year was $46
million; that would go away. The feds say it would be optional
and they wouldn't want a premium tax, but the national companies
wouldn't want to be regulated by the feds and still keep paying
taxes to the state.
CHAIR ELLIS thanked everyone for the remarks and said he would
hold the bill for further work. There being no further business
to come before the committee, he adjourned the meeting at
11:43:38 AM.
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