05/01/2001 01:40 PM Senate L&C

          SB 191-JOINT AVIATION INSURANCE ARRANGEMENTS                                                                      
                                                                                                                                
CHAIRMAN PHILLIPS announced SB 191 to be up for consideration.                                                                  
                                                                                                                                
SENATOR TAYLOR, sponsor,  said he has a committee  substitute that                                                              
would provide  for some  of the concerns  that were raised  during                                                              
the first  hearing. "In essence,  the authority would  fall within                                                              
the regulatory  authority of the  Division of Insurance  and would                                                              
require    various    reporting    requirements    and    reserves                                                              
requirements."                                                                                                                  
                                                                                                                                
MS. SARAH  MACNEAR GROVE, Property  Casualty Actuary,  Division of                                                              
Insurance, said they worked with  Senator Taylor and prepared some                                                              
changes. She  pointed out  that safety  issues are very  important                                                              
and any entity that deals with such  a high-risk business needs to                                                              
address safety.  The other  thing was  that the  CS forms  a joint                                                              
insurance arrangement.                                                                                                          
                                                                                                                                
AS 21.77.020 talks about regulations  by the Division of Insurance                                                              
in  an  annual  report.  It  says,  "A  joint  aviation  insurance                                                              
arrangement  may not be  considered insurance  for the  purpose of                                                              
any  other law  of the  state and  is not  subject to  regulations                                                              
adopted by the Director."                                                                                                       
                                                                                                                                
She explained  that statement  takes it  outside of anything  that                                                              
would happen  in Title 21. "Because  this is a risky  business, we                                                              
would prefer to  see some of the protections in Title  21 apply to                                                              
such an entity."                                                                                                                
                                                                                                                                
CHAIRMAN  PHILLIPS asked if  she had  a problem  with the  bill as                                                              
drafted.                                                                                                                        
                                                                                                                                
MS. GROVE answered:                                                                                                             
                                                                                                                                
     It  does say  that this  is not  subject to  regulations                                                                   
     adopted by the  director and it is not to  be considered                                                                   
     insurance, which  means that it would not  be subject to                                                                   
     Title  21.  Because  of  the  nature  of  this  type  of                                                                   
     insurance, we think some of  the protections in Title 21                                                                   
     are important.                                                                                                             
                                                                                                                                
SENATOR TORGERSON asked  on page 3, line 26, "How  do you have and                                                              
maintain a surplus  no less than the amount equal  to the total of                                                              
the capital of one half of the surplus?"                                                                                        
                                                                                                                                
MS.  GROVE   answered,   "I  believe  the   capital  and   surplus                                                              
requirements  for  domestic stock  insure  they  have to  have  $1                                                              
million in capital  and $1 million in surplus. So,  this would say                                                              
you have $1 million in capital and $500,000 in surplus."                                                                        
                                                                                                                                
SENATOR TORGERSON asked if that was somewhere else in Title 21.                                                                 
                                                                                                                                
MS.  GROVE  answered, "Yes,  a  reciprocal  insurer has  the  same                                                              
requirement."                                                                                                                   
                                                                                                                                
SENATOR TAYLOR said  that was the reason he put that  in - to make                                                              
certain that  they had to  meet that  same standard. He  said, "If                                                              
you look  back to the other  provisions, we have both  agreed that                                                              
even though I don't want regulation  by the department, that there                                                              
will probably be a significant amount of regulation…"                                                                           
                                                                                                                                
CHAIRMAN PHILLIPS  asked Ms.  Grove if they  would come up  with a                                                              
position on this bill.                                                                                                          
                                                                                                                                
MS. GROVE indicated they would look at it closer.                                                                               
                                                                                                                                
Number 700                                                                                                                      
                                                                                                                                
SENATOR  TORGERSON moved  to pass  SB  191 out  of committee  with                                                              
individual recommendations.                                                                                                     
                                                                                                                                
CHAIRMAN  PHILLIPS noted  that  they had  to  adopt the  committee                                                              
substitute first.                                                                                                               
                                                                                                                                
SENATOR TORGERSON  removed his motion  to move the bill  and moved                                                              
that  the committee  adopt LS  0590F/Ford 4/28/01.  There were  no                                                              
objections and it was so ordered.                                                                                               
                                                                                                                                
SENATOR TORGERSON  moved to  pass CSSB  191(L&C) out of  committee                                                              
with individual  recommendations. There were no  objections and it                                                              
was so ordered.