03/01/2000 11:30 AM Senate RLS

                                                                                                                                
SENATOR LEMAN moved to calendar, at the Chairman's discretion, all                                                              
versions of SB 177-INSURANCE TRADE PRACTICES & ACTS with individual                                                             
recommendations and accompanying fiscal notes.                                                                                  
                                                                                                                                
SENATOR LEMAN objected to his motion to explain why he will                                                                     
recommend that the bill be amended on the Senate floor. He                                                                      
expressed concern that Section 6 could have the effect of limiting                                                              
the options available to Alaskans who seek different types of                                                                   
insurance, such as earthquake insurance.  He wants to take a closer                                                             
look at that question and whether the removal of Section 6 will                                                                 
alleviate the problem.                                                                                                          
                                                                                                                                
SENATOR KELLY asked for a brief explanation of what the bill                                                                    
accomplishes in its current form.                                                                                               
                                                                                                                                
SENATOR LEMAN indicated SB 177 was heard by the Senate Labor and                                                                
Commerce Committee yesterday.  The focus of the bill is whether one                                                             
act can be considered an insurance trade practice.  Currently, the                                                              
Division of Insurance director does not believe he has the                                                                      
authority under statute to step in and take action when one act                                                                 
occurs versus when a series of actions occurs.  Others disagree                                                                 
with his interpretation and believe he has the authority but is                                                                 
choosing not to exercise it.  CSSB 177(L&C) clarifies in statute                                                                
that one act or one practice, in certain cases, could cause the                                                                 
director to take action.                                                                                                        
                                                                                                                                
SENATOR ELLIS asked if a single act will constitute a practice                                                                  
under Alaska statute if this bill becomes law.                                                                                  
                                                                                                                                
SENATOR LEMAN said yes, that is essentially what it will do but                                                                 
that Section 6 does something else.  Section 6 pertains to                                                                      
contributory causes.  For example, if an earthquake occurred and a                                                              
person's home burned down because hot wires touched during the                                                                  
earthquake, the issue was whether the person's homeowner insurance                                                              
would kick in to cover the fire damage if the person did not have                                                               
earthquake insurance.  The Division of Insurance proposed the                                                                   
language in Section 6 but it was not made fully clear during the                                                                
meeting why that section was included.                                                                                          
                                                                                                                                
CHAIRMAN KELLY noted that Senator Donley and the Division of                                                                    
Insurance support the bill while State Farm Insurance does not.                                                                 
                                                                                                                                
SENATOR LEMAN removed his objection.                                                                                            
                                                                                                                                
CHAIRMAN KELLY announced that with no objections, SB 177 would be                                                               
calendared.  There being no further business to come before the                                                                 
committee, he adjourned the meeting at 11:35 a.m.