05/13/2025 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS

             SB 185-INSURANCE; REBATES; ADVERTISING                                                                         
                                                                                                                                
1:42:47 PM                                                                                                                    
CHAIR   MERRICK  reconvened   the  meeting   and  announced   the                                                               
consideration  of SENATE  BILL NO.  185 "An  Act relating  to the                                                               
business  of  insurance;  relating to  exceptions  to  prohibited                                                               
rebates; relating to  the powers of the director  of the division                                                               
of   insurance;  relating   to   prohibited   practices  in   the                                                               
advertisement  of  insurance;  and  providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
1:43:08 PM                                                                                                                    
SAVAYA  BIEBER,  Staff,  Senator  Jesse  Bjorkman,  Alaska  State                                                               
Legislature,  Juneau, paraphrased  the sponsor  statement for  SB
:                                                                                                                            
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
             SB 185 Insurance; Rebates; Advertising                                                                           
                       Sponsor Statement                                                                                      
                           Version N                                                                                          
                                                                                                                                
     Senate Bill 185 updates  Alaska's insurance statutes to                                                                    
     provide  clarity   and  flexibility   around  allowable                                                                    
     business  practices. This  legislation aligns  Alaska's                                                                    
     statutes  with national  best  practices  and the  NAIC                                                                    
     Model Act.                                                                                                                 
                                                                                                                                
     SB  185  modernizes   Alaska's  anti-rebating  laws  by                                                                    
     clearly defining  exceptions for  value-added services,                                                                    
     wellness incentives,  educational tools,  and low-value                                                                    
     promotional  gifts.   It  ensures  that   insurers  and                                                                    
     producers   can  offer   beneficial  programs   to  the                                                                    
     consumer, such as programs  including health apps, risk                                                                    
     reduction tools, or financial wellness services.                                                                           
                                                                                                                                
     Under this bill, insurers may  also run pilot programs,                                                                    
     provide   charitable   donations,  or   host   raffles,                                                                    
     provided they  follow strict fairness  and transparency                                                                    
     guidelines.  Additionally,   the  legislation  provides                                                                    
     consumer protection by  prohibiting deceptive marketing                                                                    
     claims  that  suggest insurance  is  free  or that  one                                                                    
     policy is  being offered solely to  induce the purchase                                                                    
     of another.                                                                                                                
                                                                                                                                
     SB   185   promotes   innovation,   supports   consumer                                                                    
     engagement, and  levels the playing field  for insurers                                                                    
     operating  in   multiple  states.  This   bill  ensures                                                                    
     Alaskans  have  access  to  modern  insurance  services                                                                    
     while maintaining strong consumer protections.                                                                             
                                                                                                                                
     I  urge support  of Senate  Bill 185  to ensure  Alaska                                                                    
     remains aligned  with national standards  while serving                                                                    
     the  best  interests  of  consumers  and  the  industry                                                                    
     alike.                                                                                                                     
                                                                                                                                
1:43:58 PM                                                                                                                    
MS. BIEBER presented the sectional analysis of SB 185:                                                                          
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
                       Sectional Analysis                                                                                     
                           Version N                                                                                          
                                                                                                                                
     Section  1: Amends  AS 21.36.010,  Trade Practices  and                                                                  
     Frauds chapter,  to add  the Gramm-Leach-Bliley  Act to                                                                    
     the list of  federal laws the chapter  is in accordance                                                                    
     with.                                                                                                                      
                                                                                                                                
     Section 2:  Amends AS 21.36.110  to add that  the offer                                                                  
     or provision by  an insurer of a product  or service at                                                                    
     a reduced  cost as  an exemption  to the  definition of                                                                    
     insurance discrimination  if the service or  product is                                                                    
     related to  the policy holder's insurance  coverage and                                                                    
     is designed to provide specific  aid to the consumer as                                                                    
     defined in statute.                                                                                                        
                                                                                                                                
     Section  3:  Amends  AS  21.36.110  adding  a  list  of                                                                  
     provisions that the insurer must  meet and defines what                                                                    
     is allowable  for insurers in  terms of  noncash gifts.                                                                    
     This section adds a provision  for an insurer who has a                                                                    
     good  faith  belief that  a  product  or service  meets                                                                    
     certain criteria defined in  (a)(6)(c), the insurer may                                                                    
     provide  this service  or product  as part  of a  pilot                                                                    
     program. This  section also allows the  Director of the                                                                    
     Division of Insurance to adopt regulations.                                                                                
                                                                                                                                
     Section 4: Amends AS 21.36  by adding a new section, AS                                                                  
     21.36.115 defining prohibited  advertising practices by                                                                  
     insurers.                                                                                                                  
                                                                                                                                
     Section 5:  Amends AS  21.36.120(a) making  a technical                                                                  
     change to  conform with current industry  and licensing                                                                    
     terminology.                                                                                                               
                                                                                                                                
     Section 6:  Provides transitional  regulation authority                                                                  
     to the Director of the Division of Insurance.                                                                              
                                                                                                                                
     Section  7: Provides  an immediate  effective date  for                                                                  
     Section 6.                                                                                                                 
                                                                                                                                
     Section  8: Provides  an effective  date of  January 1,                                                                  
     2026, for the remainder of the bill.                                                                                       
                                                                                                                                
1:46:10 PM                                                                                                                    
CHAIR MERRICK announced invited testimony on SB 185.                                                                            
                                                                                                                                
1:46:31 PM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community and  Economic Development, Anchorage, Alaska,                                                               
gave a  brief history of  SB 185.  She explained how  the Healthy                                                               
Alaskans   program   led   to  questions   about   public-private                                                               
partnerships and  whether insurance  companies could  provide the                                                               
insured with tools  to improve their health and  quality of life.                                                               
She explained  that this would  be considered a rebate,  which is                                                               
prohibited by law.  SB 185 is based on a  National Association of                                                               
Insurance Commissioners  (NAIC) model and would  enable insurance                                                               
companies  (and  their  brokers)  to  provide  the  insured  with                                                               
certain  gifts. She  stated that  all gifts  must align  with the                                                               
premium  and cannot  be used  as leverage  for policy  sales. She                                                               
explained that  allowable gifts would include  devices to improve                                                               
the  insurance risk  and/or improve  the life  and health  of the                                                               
consumer.  She   stated  that  the  American   Property  Casualty                                                               
Insurance Association (APCIA) requested SB 185.                                                                                 
                                                                                                                                
1:48:15 PM                                                                                                                    
SENATOR DUNBAR directed attention to SB  185, page 5, line 2, and                                                               
asked what would be considered "reasonable" for non-cash gifts.                                                                 
                                                                                                                                
MS.   WING-HEIER  said   this  would   likely  be   addressed  in                                                               
regulation. She that a reasonable  non-cash gift would need to be                                                               
in line with the product (e.g.  if the product is life insurance,                                                               
the gift must  relate to life insurance). She  hesitated to apply                                                               
a specific  dollar amount or  percentage, as this  could disallow                                                               
certain   useful  gifts   (e.g.  Fitbit).   She  suggested   that                                                               
regulations  could specify  parameters, perhaps  limiting product                                                               
type based on  the policy and setting a cap  for the total dollar                                                               
amount (again, relative  to the policy). She  indicated that this                                                               
would be a fair solution.                                                                                                       
                                                                                                                                
1:49:47 PM                                                                                                                    
SENATOR DUNBAR considered why these  prohibitions were in the law                                                               
and how  certain industries work.  He offered  the pharmaceutical                                                               
industry as an example to  illustrate how gifts could potentially                                                               
lead to  problematic practices.  He wondered  if a  similar power                                                               
imbalance exists in  the insurance industry and  whether this was                                                               
the reason  for the  existing prohibition.  He asked  whether Ms.                                                               
Wing-Heier is concerned that insurance  companies could use gifts                                                               
to   manipulate   insurance    policy   negotiations   in   large                                                               
organizations and offered examples to illustrate his question.                                                                  
                                                                                                                                
MS.  WING-HEIER  replied  that,  while  the  potential  for  such                                                               
activities exists, it is unlikely.  She said that any gift should                                                               
go  to  all  policy  holders,  not only  to  the  person  who  is                                                               
negotiating the  policy. She expressed  a willingness  to clarify                                                               
this in regulations.                                                                                                            
                                                                                                                                
1:52:04 PM                                                                                                                    
SENATOR  DUNBAR  asked  whether   this  should  be  clarified  in                                                               
statute.                                                                                                                        
                                                                                                                                
MS. WING-HEIER  said the Division  of Insurance would  not object                                                               
to this clarification.                                                                                                          
                                                                                                                                
SENATOR DUNBAR said he would like to discuss this further                                                                       
offline. He expressed concern about gift-giving in negotiations                                                                 
that should remain neutral.                                                                                                     
                                                                                                                                
MS. WING-HEIER expressed her understanding.                                                                                     
                                                                                                                                
1:53:03 PM                                                                                                                    
CHAIR MERRICK held SB 185 in committee.