Legislature(2025 - 2026)BELTZ 105 (TSBldg)
03/19/2025 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB132 | |
| SB133 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 132 | TELECONFERENCED | |
| *+ | SB 133 | TELECONFERENCED | |
SB 132-OMNIBUS INSURANCE BILL
1:32:55 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO.
132 "An Act relating to insurance; and providing for an
effective date."
1:33:13 PM
KONRAD JACKSON, Staff, Senator Jesse Bjorkman, Alaska State
Legislature, Juneau, Alaska, introduced SB 132 on behalf of
Senate Labor and Commerce Committee and stated that SB 132
updates Title 21 with technical corrections, aligns terms with
National Association of Insurance Commissioners (NAIC) model
laws, and refreshes federal statute references. The last major
update was in 2016.
1:34:36 PM
LORI WING-HEIER, Director, Division of Insurance, Anchorage,
Alaska, provided the sectional analysis for SB 132.
• Section 1 of SB 132 aims to better protect consumers,
especially elderly victims, from fraud involving life
insurance. She said because these products are renewed
yearly and crimes like theft or forgery may not be
discovered right away, SB 132 extends the time allowed for
prosecution to 20 years.
• Section 2 restores the option for employers in Alaska to
offer HMOs (Health Maintenance Organizations), a common and
often cheaper health insurance choice in other states. By
adding the provisions back into the statute, it gives
employers more flexibility and options to reduce healthcare
costs for their workers.
1:36:56 PM
CHAIR BJORKMAN asked what the provisions in Section 2
accomplish.
1:37:07 PM
MS. WING-HEIER answered that Alaska law allows HMOs but doesn't
let providers guide patients on where to get care. SB 132
updates the law so that, under an HMO plan, patients can be
directed to a primary care provider chosen by their employer and
then referred to a specialist if needed. This helps ensure
patients follow the right care path. She said SB 132 does not
mandate HMOs, it simply gives employers and providers the option
to offer them.
1:37:52 PM
SENATOR DUNBAR asked if employees maintain the choice of what
healthcare they want.
1:38:05 PM
MS. WING-HEIER answered that the employer will make the
healthcare choice. The employee would be part of the plan, first
visiting primary care before seeing a specialist.
1:38:29 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 3 adds protections for health insurance consumers
by requiring insurers to clearly explain the process for
benefit level exceptions, especially when it's different
from standard prior authorization. She said this includes
situations like getting care from an out-of-state provider
within the same insurance network. The goal is to prevent
surprise bills by making sure patients know in advance how
to ensure their care is covered as in-network.
• Sections 4 and 5 give the insurance director more
flexibility to grant delays or exemptions for financial
reporting requirements. She stated that the director can
only approve delays for audited financial reports, not
other filings. These changes allow the director to approve
more types of exemptions when appropriate, making
regulation more efficient.
• Sections 6 and 62 aim to simplify how taxes are calculated
for wet marine and transportation insurance policies. By
removing certain unique deductions, the state expects to
generate an additional $110,000 in revenue. The current tax
statute is confusing, often leading to errors and late
fees. These changes will make the system clearer and easier
for consumers, brokers, and insurance companies to follow.
• Section 7 updates state law to match a 2022 federal law
requiring insurers to respond to the Department of Health
within 60 days and not deny claims just because prior
authorization wasn't received. This ensures better
coordination with Medicaid and compliance with federal
regulations.
• Section 8 makes a minor technical change to improve legal
wording without changing the meaning of the law.
• Section 9 adds language that was accidentally left out of
Senate Bill 87 to clarify which reinsurance transactions
insurers will recognize. She said this change helps Alaska
stay in compliance with national insurance standards set by
the NAIC (National Association of Insurance Commissioners),
which ensures that Alaska based insurers like Alaska
National and Umialik are recognized and trusted in other
states and vice versa.
1:42:56 PM
SENATOR DUNBAR noted that Section 8 is a conforming change, on
page 5 line 30, the legislation changes "shall" to a "may". He
asked whether this wording has an effect in this case and if so,
why is the change being made.
1:43:21 PM
MS. WING-HEIER answered that Section 8 is talking about
reciprocity agreements with 8 offshore jurisdictions. These
agreements stem from federal insurance rules created under the
Obama administration to align accreditation standards with
foreign jurisdictions. Alaska adopted the required language but
used the wrong word, which federal auditors flagged. Correcting
this word is a change Alaska needs to make to help maintain
accreditation, which is critical for Alaska's insurance
industry.
1:44:37 PM
SENATOR DUNBAR asked if changing "shall" to "may" acknowledges
that Alaska isn't changing what is already happening.
1:44:50 PM
MS. WING-HEIER answered yes. She explained Alaska had to pass
the provision for accreditation and that part of the statute
will likely never be used since Alaska is a small state.
1:45:09 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 10 is amending, requires insurers using a
principle-based valuation method to also have corporate
governance procedures for reviewing waivers or
modifications. She said this change aligns Alaska with
national insurance model law 820 from the NAIC, which most
other states have already adopted. Insurers support the
update because it eliminates the need to keep separate
financial records just for Alaska.
• Section 11 updates the definition of "policyholder
behavior" to be more specific and align with current
industry language and practices. This change brings
Alaska's law in line with NAIC model law 820.
• Section 12 lets licensed firms appoint a compliance officer
for each specific line of insurance, health, life,
property, or casualty, instead of requiring one officer to
cover all lines. This matches industry standards and
recognizes that no single person is usually an expert in
all four areas.
• Section 13 requires licensees who list Alaska as their home
state to follow Alaska's existing continuing education
requirements. The requirements themselves are not changing.
• Section 14 strengthens disclosure loops by requiring
written documentation of criminal disclosures and any
administrative actions taken by other Alaska state
agencies.
1:47:09 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 15 updates the title "health authority" to
"accident and health or sickness coverage" to better
reflect the products offered and align with other states
and NAIC guidance.
• Section 16 adds independent adjusters to Alaska's
reciprocal licensing rules, allowing the division to
license non-resident adjusters the same way the state
licenses other out-of-state licensees.
• Section 17 removes exam and training requirements for non-
resident independent adjusters getting reciprocal Alaska
licenses, since these are already met in their home states.
• Section 18 expands the ability to designate Alaska as a
home state to include independent adjusters.
• Section 19 requires applicants designating Alaska as their
home state to meet Alaska's general licensing
qualifications
• Section 20 updates Alaska law to allow official
correspondence to be sent electronically, matching common
industry practice.
• Section 21 updates language clarifying that third-party
administrators are registrants, not licensees.
• Section 22 is a conforming change that removes outdated TPA
requirements and closes disclosure gaps by requiring formal
documentation of any criminal disclosures involving Alaska
agencies.
• Section 23 updates the definition of compliance officer.
• Section 24 updates the definition of home state for
adjusters and expands this to cover all industrial
licenses. This is limited to non-resident independent
portable electronic adjusters.
• Section 25 updates and broadens the definition of
independent adjusters to include portable electronic
adjusters.
• Section 26 removes the director's authority to create new
limited lines insurance classes by regulation.
• Section 27 lets surplus lines brokers pay the wet marine
and transportation tax on behalf of non-admitted insurers
or the insured. This practice is already common in the
industry, and SB 132 simply makes it official in state law.
Surplus lines insurers are those licensed differently from
regular insurers but are still reputable companies.
1:50:44 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 28 allows some disability insurance policies to be
sold as surplus lines, helping high-risk individuals who
can't find coverage from regular insurers.
• Section 29 updates the language about how non-admitted
insurers can qualify to offer insurance in Alaska,
reflecting industry and regulatory changes.
• Section 30 makes a technical change to align with the Non-
Admitted and Reinsurance Reform Act of 2010.
• Section 31 reduces penalties for late surplus lines
payments, slightly lowering state revenue as noted in the
fiscal report.
• Section 32 updates the definition of "home state" to
include multinational insurance placements.
• Section [33] aligns a definition to match with AS
21.12.090(b).
• Section 34 stops insurers from depreciating labor costs
when settling property claims. Consumers have complained
that being paid less for labor makes it hard to hire
contractors upfront for repairs. The insurance department
tried to address this on its own but faced legal
challenges, so now they're asking the legislature to decide
and fix the issue.
1:53:27 PM
CHAIR BJORKMAN asked Ms. Wing-Heier to explain how Section 34
would affect a homeowner who lost their garage in a fire.
1:53:54 PM
MS. WING-HEIER replied that the homeowner would have to upfront
the cost then be reimbursed from the insurer which is typical
for a cash value settlement. She said with labor consumers it's
hard to find a contractor to do a job without a huge deposit
upfront even though the insurer will pay in full once the job is
complete.
1:54:51 PM
SENATOR DUNBAR asked if insurance companies are opposed to
Section 34 of SB 132.
1:55:10 PM
MS. WING-HEIER responded that the Division of Insurance expects
to hear opposition from some insurers, but Alaska based
companies like Alaska National and Umialik are aware of the
change. Other states have already adopted similar statute,
either by law or bulletin. The division was surprised that
Alaska was chosen as a test case for a lawsuit.
1:55:37 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 35 requires health insurers to give at least 45
days' notice before canceling any major medical policy.
Previously, this notice period applied to other health
insurance types, but not major medical.
• Section 36 extends the notice period to 45 days for
consumers when their premiums increase by more than ten
percent, up from the current 20 days, giving them more time
to explore options or adjust to the change.
1:56:28 PM
SENATOR DUNBAR asked if a consumer was told their policy premium
is increasing by a certain amount, does the consumer always have
the option to cancel the policy or do the rates have to stay
fixed until the contract ends, or can the insurer raise rates in
the middle of the contract.
1:56:53 PM
MS. WING-HEIER answered that insurers cannot raise rates in the
middle of a policy term. The insurers can only increase premiums
at renewal, and if the increase is ten percent or more, they
must give advance notice. She said many consumers, such as those
working remotely or on the slope, miss short notice periods. SB
132 proposes extending the notice from 20 days to 45 days to
give people more time to respond.
1:57:20 PM
SENATOR GRAY-JACKSON asked whether it's legal for insurance
companies to change coverage or increase the premium based on a
claimless inquiry.
MS. WING-HEIER asked for clarification.
SENATOR GRAY-JACKSON provided an example.
1:58:04 PM
MS. WING-HEIER answered no, that should not happen as there are
only about five or six instances in statute when insurance
companies can raise rates. She recalled that some Juneau
residents without flood coverage experienced insurance
cancellation after requesting two formal denial letters to meet
Federal Emergency Management Agency (FEMA) aid requirements
following repeated glacial dam flooding. She explained that
although the residents lacked coverage, the act of requesting
denial letters triggered policy cancellations. She stated that
state officials are working to close this loophole. She added
that the proposal aims to stop insurers from canceling coverage
when individuals request denial letters solely to qualify for
FEMA disaster assistance. She said this example is more than an
inquiry.
1:59:32 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 37 extends the notice period for non-renewing a
homeowner or vehicle policy to 45 days.
• Section 38 clarifies that moving a policy within affiliated
companies is not considered a non-renewal.
• Section 39 further limits cancellations or non-renewals
when a denial is requested only to meet requirements for
programs like FEMA.
• Section 40 updates the law to allow owner-controlled or
contractor-controlled insurance policies. This proposal had
broad support in a previous session but didn't reach a
final vote, so it's now included in the omnibus bill.
• Section 41 says for the state to keep a better track of
health discount plans, these plans must sign up with the
state, follow renewal rules, and have direct contracts for
the services or supplies they cover.
• Section 42 has been part of legislation before as House
Bill 29, insurance discrimination.
• Section 43 updates insurance rules so companies must
include restitution when they wrongly pay claims, giving
the director more power to protect consumers.
• Section 44 changes workers' compensation rules by raising
the premium threshold for assigned risk policies from
$3,000 to $6,000 before a 25 percent surcharge applies,
helping small employers and sole proprietors.
• Section 45 allows official notices by email.
• Section 46 lowers the colorectal cancer screening age from
50 to 45 years.
• Section 47 updates minimum interest rates for certain
annuities to match national standards.
• Section 48 exempts certain group life insurance entities
from filing requirements.
• Section 49 requires 45 days' notice before non-renewing a
health policy.
• Section 50 is a technical change that changes the word
agriculture to agricultural.
• Section 51 requires vehicle service contractors to file
with the division like other insurers.
2:04:36 PM
SENATOR DUNBAR referred to Section 51 and asked what a motor
vehicle service contract is in this context, whether it's
intended for everyday consumers or businesses, and requested
clarification on what it covers, and the changes being proposed.
2:05:00 PM
MS. WING-HEIER replied that when a person buys a new vehicle and
gets an extended warranty or maintenance plan included in the
loan, that's considered insurance called a vehicle service
contract (VSC). She said the insurance division has received
complaints that many of these contracts weren't filed with the
division for approval. The division will now require these
contracts to be filed and approved to ensure consumer protection
and address any issues.
2:05:54 PM
MS. WING-HEIER continued with the sectional analysis.
• Section 52 closes disclosure gaps by requiring written
documentation of criminal and administrative actions by
other state agencies.
• Section 54 updates terminology from "unauthorized" to "not
admitted" to match current insurance industry language.
• Section 55 amends federal code citations for the Alaska
Life and Health Insurance Guarantee Association, clarifying
it is not responsible for Medicaid or Medicare insolvencies
since those aren't insurance products.
MS. WING-HEIER stated that Sections 56, 57, and 58 are
amendments to restore effectiveness back into the HMO statutes
in Section 2.
• Section 59 requires risk retention groups to file annual
premium tax reports and pay taxes like other insurers.
• Section 60 asks for the division to be given authority to
apply for waivers, like section 1332 federal reinsurance
program waiver, without needing legislative approval each
time.
• Section 61 adds a consistent definition of motor vehicle
from Title 28 to apply across all of Title 21.
• Section 62 gets into the repeals.
• Section 63 provides applicability for the owner-controlled
piece of the legislation.
• Section 64 sets SB 132's effective date.
2:08:14 PM
SENATOR DUNBAR asked for an explanation of the practical change
in Section 61.
2:08:26 PM
MS. WING-HEIER responded that there are concerns insurance
companies are rating mobile equipment, like those used on the
slope, as regular autos instead of construction equipment, even
though these vehicles are never driven on roads.
2:08:41 PM
SENATOR DUNBAR asked whether the insurance companies have raised
their premiums based on that categorization.
2:08:49 PM
MS. WING-HEIER answered yes, the division plans to use the
existing statutory definition of motor vehicles and prevent it
from being applied to equipment that is not legally classified
as a motor vehicle under DMV rules.
2:09:10 PM
CHAIR BJORKMAN asked Ms. Wing-Heier to explain the repealers in
Section 62.
2:09:17 PM
MS. WING-HEIER replied that Section 62 says:
• AS 21.09.210(d) aligns wet marine and transportation tax
calculations with property and casualty tax rules, expected
to raise about $100,000 in revenue.
• AS 21.27. 020(g) repealing an inactive continuing education
(CE) advisory committee, with the Division of Insurance
seeking guidance instead from other state regulators and
the NAIC.
• AS 21.27.330(a) protecting producers' home addresses from
public disclosure, reflecting the shift to telework and
removing the requirement for a physical business location.
• AS 21.34.030(d) updating surplus line requirements to
maintain access to insurance products.
• AS 21.39.020(b)(4) starting to review aircraft insurance
rates and forms due to rising costs
• AS 21.59.290(2) replacing the motor vehicle definition.
• AS 21.86.078 Section 51 addresses out of network access for
the health maintenance organizations from Section 2.
• AS 21.34.030(d) refers to the minimums in AS 21.34.040 and
should apply if the nonadmitted insurer is a form other
than a foreign non-alien stock insurer. The intent is to
clarify the language, which has already been addressed
earlier in the bill. The current language is being
repealed.
2:12:28 PM
CHAIR BJORKMAN held SB 132 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB132 ver G.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 132 |
| SB132 Sponsor Statement ver G.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 132 |
| SB132 Sectional Summary ver G.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 132 |
| SB132 Fiscal Note-DCCED-DOI 03.16.25.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 132 |
| SB133 ver N.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 133 |
| SB133 Sponsor Statement ver. N.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 133 |
| SB133 Sectional Summary ver. N.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 133 |
| SB133 Public Testimony-Letter-AHHA 03.18.25.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 133 |
| SB133 Public Testimony-Letter-CPH 03.17.25.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 133 |
| SB133 Sectional Summary -corrected- ver. N.pdf |
SL&C 3/19/2025 1:30:00 PM |
SB 133 |