Legislature(2001 - 2002)
05/05/2001 08:49 PM Senate JUD
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* first hearing in first committee of referral
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SB 191-JOINT AVIATION INSURANCE ARRANGEMENTS
CHAIRMAN TAYLOR informed participants that the committee has
already held several hearings on this legislation. He proposed
Amendment 1, and explained that it provides further clarification
from the Division of Insurance.
SENATOR DONLEY moved to adopt Amendment 1, which reads as follows.
AMENDMENT 1
TO: SB 191
Page 2, line 9
Insert a new subsection (b) and re-letter accordingly:
21.77.020 (b) Before the air carrier signs the cooperative
agreement, the Joint Aviation Insurance Arrangement shall
notify the air carrier in writing that the Joint Aviation
Insurance Arrangement is not licensed in this state, is not
subject to this state's supervision, and in the event of the
insolvency of the Joint Aviation Insurance Arrangement, losses
will not be covered under AS 21.80 (Alaska Insurance Guaranty
Association Act).
CHAIRMAN TAYLOR announced that with no objection, the motion
carried.
SENATOR ELLIS asked for clarification.
CHAIRMAN TAYLOR said Amendment 1 provides additional sidebars
because, "Everybody's worried about these guys running off and
being too thinly financed."
SENATOR ELLIS proposed Amendment 2, which reads as follows.
AMENDMENT 2
TO: SB 191
Page 2, lines 5-9:
Delete all material and insert:
"Sec. 21.77.020. Annual report. By October 1 of each
year, the administrator of a joint insurance"
SENATOR ELLIS said his intent is to require an annual report and
that requiring annual reports seem to be the prevailing attitude on
the floor today. He noted Amendment 2 would require this structure
to be under the review of the Division of Insurance.
CHAIRMAN TAYLOR said he has no problem requiring an annual report
but he has a problem with the first part. He therefore objected to
Amendment 2 and explained:
... what it does is today it's a joint insurance
arrangement, which is not under the regulation of the
Division of Insurance, like the pools are with the
schools, and the amendment would put them back under the
division and require an annual report. And I'll have to
object to that one.
SENATOR ELLIS noted the committee heard testimony from the director
of the Division of Insurance that it would be a good idea because
of the risk involved. He said he supports what Chairman Taylor is
trying to do but he would feel more comfortable if the Division of
Insurance had oversight.
CHAIRMAN TAYLOR stated:
I appreciated that. My frustration is if that were the
case, they could just form a reciprocal at this time and
there's been no movement towards that and part of the
difficulty is the extensive reporting requirements and
auditing requirements, much of which we've not put back
into the bill or a good portion of it we have, which
further will impinge on them a bit. Actually, the JIAs
that are working on the municipalities in the school
districts have basically a one paragraph authorization
and they have done the things they are doing because it's
good business to do it and not because they were required
to.
A roll call vote was taken. The motion to adopt Amendment 2 failed
with Senators Cowdery, Therriault, Donley and Taylor voting
against, and Senator Ellis voting in favor.
SENATOR ELLIS moved to adopt Amendment 3, which reads as follows:
AMENDMENT 3
TO: SB 191
Page 3, line 3l:
Delete "$250,000"
Insert "$500,000"
He said the doubled amount would provide a more adequate level of
capitalization. The director of the Division of Insurance testified
that $250,000 was inadequate.
CHAIRMAN TAYLOR said he believes Amendment 3 is fair and he has no
objection to it. With no other objection to Amendment 3, it was
adopted.
SENATOR DONLEY moved CSSB 191(JUD) from committee with individual
recommendations. There being no objection, the motion carried.
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