02/26/2013 01:30 PM Senate LABOR & COMMERCE

             SB  52-PORTABLE ELECTRONICS INSURANCE                                                                          
                                                                                                                                
1:33:53 PM                                                                                                                    
CHAIR DUNLEAVY  announced the  consideration of  SB 52  and asked                                                               
for a motion to adopt the work draft committee substitute (CS).                                                                 
                                                                                                                                
SENATOR  MICCICHE  moved to  adopt  CS  for  SB 52,  labeled  28-                                                               
LS0461\N, as the working document.                                                                                              
                                                                                                                                
CHAIR DUNLEAVY objection for discussion purposes.                                                                               
                                                                                                                                
1:34:35 PM                                                                                                                    
SENATOR JOHN COGHILL,  sponsor of SB 52, explained  that the bill                                                               
provides more  nimble insurance  for portable  electronic devices                                                               
and establishes  a best  practices rule  for Alaska.  He deferred                                                               
the detailed explanation to his intern Kari Nore.                                                                               
                                                                                                                                
1:35:49 PM                                                                                                                    
KARI  NORE, Intern  to Senator  John  Coghill, sponsor  of SB  52                                                               
stated  that this  legislation seeks  to bring  structure to  the                                                               
electronics   insurance  market   and   protect  consumers.   She                                                               
explained that  homeowner's insurance does not  necessarily cover                                                               
the  theft  of  a  portable  electronic  device,  like  a  laptop                                                               
computer,  from  the homeowner's  car  or  home. She  offered  to                                                               
provide a sectional analysis of SB 52.                                                                                          
                                                                                                                                
CHAIR  DUNLEAVY  suggested  she  hit  the  major  spots  and  the                                                               
committee would ask questions.                                                                                                  
                                                                                                                                
MS. NORE  explained that a main  point of the bill  adds portable                                                               
electronics  insurance to  the list  of insurances  that are  not                                                               
included  under   "service  contract."  Section  2   adds  a  new                                                               
subsection [AS  21.03.021(g)] to clarify  that Title 21  does not                                                               
apply  to  a  portable  electronics  manufacturer's  warranty  or                                                               
extended  warranty. Section  4 adds  a new  paragraph (8)  [to AS                                                               
21.27.150(a)]  to allow  the  director of  insurance  to issue  a                                                               
portable electronics  limited producer  license to a  vendor that                                                               
sells  or  offers  portable electronics  insurance.  The  license                                                               
covers the  vendor and employees  for all locations in  the state                                                               
where the  vendor sells the  products. The employees do  not have                                                               
to be licensed  as long as they are not  compensated based on the                                                               
sale of  insurance, the  vendor has a  training program,  and the                                                               
vendor maintains a registry.                                                                                                    
                                                                                                                                
1:38:23 PM                                                                                                                    
SENATOR MICCICHE  summarized that  a business  like ACS  or Radio                                                               
Shack has the license to sell  the insurance and employees of the                                                               
business  can   sell  under  that   license  as  long   as  their                                                               
compensation isn't based on the sale of that insurance.                                                                         
                                                                                                                                
MS. NORE agreed. She continued  to explain that Section 5 defines                                                               
portable electronics insurance, lists  the materials that must be                                                               
presented to the  consumer in writing, defines  the procedure for                                                               
modification  of   the  terms  of  the   insurance,  defines  the                                                               
procedures to  terminate the  insurance, and  lists the  types of                                                               
devices  that   will  be   covered  under   portable  electronics                                                               
insurance.                                                                                                                      
                                                                                                                                
Section 6 provides an effective date  of January 1, 2014 to allow                                                               
the Division of Insurance time  to complete installation of a new                                                               
software program for data entry.  This will prevent the bill from                                                               
having a fiscal impact.                                                                                                         
                                                                                                                                
1:39:51 PM                                                                                                                    
SENATOR MICCICHE  described the legislation as  timely, and noted                                                               
that Alaska will be the 44th state to adopt this legislation.                                                                   
                                                                                                                                
SENATOR  OLSON  questioned  why  the  sponsor  was  bringing  the                                                               
legislation forward if there were no complaints.                                                                                
                                                                                                                                
MS.  NORE  responded  that  the  legislation  was  proactive  and                                                               
anticipated what could be a problem in the near future.                                                                         
                                                                                                                                
SENATOR OLSON questioned the need to  pass a law that addresses a                                                               
problem that doesn't exist now  and because technology changes so                                                               
quickly, might  not address an issue  that arises in five  or ten                                                               
years.                                                                                                                          
                                                                                                                                
1:41:15 PM                                                                                                                    
RYNNIEVA MOSS,  staff for Senator  Coghill, said the  sponsor has                                                               
been convinced  that portable electronic  devices are  creating a                                                               
new industry  in the  insurance world  and regulation  is needed.                                                               
Consumers need to  know if they are receiving  coverage when they                                                               
purchase the produce or if  they're paying for separate insurance                                                               
coverage. Because of nuances in  this industry, the sponsor feels                                                               
regulation is justified.                                                                                                        
                                                                                                                                
SENATOR OLSON asked if states  that have similar legislation have                                                               
had complaints from consumers.                                                                                                  
                                                                                                                                
MS. MOSS  acknowledged that she  didn't know and  emphasized that                                                               
the intent is to protect the consumer.                                                                                          
                                                                                                                                
SENATOR MICCICHE commented that  replacing electronic devices can                                                               
be expensive and he would be interested in the product.                                                                         
                                                                                                                                
CHAIR  DUNLEAVY asked  if evidence  from  other states  indicates                                                               
that  in the  future Alaska  will need  such a  law and  that the                                                               
sponsor was being proactive.                                                                                                    
                                                                                                                                
MS. NORE confirmed that the  sponsor was preemptively introducing                                                               
the legislation to ensure consumer protection in the future.                                                                    
                                                                                                                                
1:44:54 PM                                                                                                                    
SENATOR OLSON asked  what insurance companies think  of this type                                                               
of legislation.                                                                                                                 
                                                                                                                                
MS. NORE said she was not aware of any opposition to the bill.                                                                  
                                                                                                                                
MS. MOSS highlighted  that vendors of insurance  have objected to                                                               
the  language  on  page  6,  lines  10-16,  because  it  requires                                                               
additional recordkeeping  and paperwork.  She explained  that the                                                               
sponsor  included the  language  to accommodate  the division  of                                                               
insurance, but the  current director has indicated  that he would                                                               
not  object to  removing the  language. One  company also  raised                                                               
concern  with existing  statutory  language on  page  2, line  9,                                                               
relating   to  power   surges.  She   said  she   wanted  further                                                               
clarification   before  deleting   that   language,  because   it                                                               
addresses  service  contracts  and the  bill  addresses  portable                                                               
electronics insurance.                                                                                                          
                                                                                                                                
1:46:59 PM                                                                                                                    
BRET  S. KOLB,  Director,  Division of  Insurance, Department  of                                                               
Commerce, Community  and Economic Development (DCCED)  offered to                                                               
answer questions.                                                                                                               
                                                                                                                                
SENATOR OLSON asked if the department supported the bill.                                                                       
                                                                                                                                
MR. KOLB answered that the department is supportive of SB 52.                                                                   
                                                                                                                                
CHAIR DUNLEAVY asked if he sees any issues with the bill.                                                                       
                                                                                                                                
MR.  KOLB  confirmed that  he  did  not  object to  removing  the                                                               
language  on page  6. The  division has  sufficient authority  to                                                               
provide needed protections so that language is redundant.                                                                       
                                                                                                                                
CHAIR DUNLEAVY  removed his objection,  and version N  was before                                                               
the committee.                                                                                                                  
                                                                                                                                
He  stated that  he would  hold SB  52 in  committee for  further                                                               
consideration.