Legislature(2003 - 2004)

05/09/2004 11:13 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 357(FIN)                                                                                               
                                                                                                                                
     An  Act   relating  to  the  regulation   of  insurance,                                                                   
     insurance   licenses,   qualifications    of   insurance                                                                   
     producers,   surplus   lines,    fraud   investigations,                                                                   
     electronic  transactions,  and compliance  with  federal                                                                   
     law  and  national  standards;   and  providing  for  an                                                                   
     effective date.                                                                                                            
                                                                                                                                
LINDA HALL,  DIVISION OF  INSURANCE, DEPARTMENT OF  COMMUNITY                                                                   
AND  ECONOMIC  DEVELOPMENT, explained  that  the  legislation                                                                   
would  ensure  that  Alaska  statutes   are  consistent  with                                                                   
federal  law  (provisions  mandated  under  the  Gramm-Leach-                                                                   
Bliley  Act)  and  with  model  acts  and  standards  of  the                                                                   
National Association of Insurance  Commissioners (NAIC).  The                                                                   
NAIC  accreditation  team  suggested  some  of  the  proposed                                                                   
changes   addressing   financial   oversight   of   insurance                                                                   
companies  when   Alaska  was  reviewed  for   a  renewal  of                                                                   
accredited status.   Some of  the proposed changes  relate to                                                                   
updating  procedures  in  order  to  better  reflect  current                                                                   
insurance environment and enabling  electronic communications                                                                   
between the  Division of Insurance  and the public,  industry                                                                   
and other  regulators.  Two key  elements of the  Division of                                                                   
Insurance are:                                                                                                                  
                                                                                                                                
   ·    Protecting the consumer                                                                                                 
   ·    Enhancing the insurance business environment                                                                            
                                                                                                                                
Ms. Hall provided a sectional analysis of the bill.                                                                             
                                                                                                                                
                                                                                                                                
TAPE HFC 04 - 111, Side B    (faulty tape - changed)                                                                          
TAPE HFC 04 - 112, Side A                                                                                                     
                                                                                                                                
                                                                                                                                
Ms. Hall continued with the analysis.                                                                                           
                                                                                                                                
Representative Fate  inquired if automobile  warranties would                                                                   
be considered in the same manner.                                                                                               
                                                                                                                                
Ms. Hall  responded  that it would  depend  on who wrote  the                                                                   
automobile  coverage.   If the  federal government  regulates                                                                   
the company, the State cannot  preempt that.  There is little                                                                   
local control on risk groups.                                                                                                   
                                                                                                                                
Representative  Hawker inquired if  there could be  testimony                                                                   
heard from the industry.  Co-Chair  Williams pointed out that                                                                   
there were no representatives present from that group.                                                                          
                                                                                                                                
Representative  Hawker asked  if the  industry supported  the                                                                   
bill.   Ms.  Hall replied  that to  date, there  had been  no                                                                   
testimony either  way on the  proposed changes.   The changes                                                                   
will  only  "standardize"  what  is  currently  done  by  the                                                                   
Division.  Representative  Hawker was "astounded"  that there                                                                   
had been no testimony received by the industry.                                                                                 
                                                                                                                                
Co-Chair  Williams   MOVED  to   ADOPT  Amendment   #1,  #23-                                                                   
LS1684\Q.4,  Bullock, 5/5/04.   (Copy  on File).   Vice-Chair                                                                   
Meyer OBJECTED.                                                                                                                 
                                                                                                                                
JERRY  RHINEWALD, LOBBYIST,  BLUE  CROSS AND  BLUE SHIELD  OF                                                                   
ALASKA, JUNEAU, noted  that Blue Cross was in  the process of                                                                   
moving from a non-profit company  to a per profit company and                                                                   
currently,  is   under  scrutiny  by  Alaska's   Division  of                                                                   
Insurance.   There is  concern that  Section 18 could  create                                                                   
problems  in the  transition process  that  would change  the                                                                   
"rules of the game".  He did not  believe it would affect the                                                                   
regulatory   environment.    Mr.   Rhinewald  requested   the                                                                   
Committee's consideration  of the amendment.   Ms. Hall noted                                                                   
that the Division had no objection to the amendment.                                                                            
                                                                                                                                
Vice  Chair Meyer  WITHDREW his  OBJECTION.   There being  NO                                                                   
further OBJECTION, Amendment #1 was adopted.                                                                                    
                                                                                                                                
Co-Chair Williams  pointed out a Letter of Intent.   (Copy on                                                                   
File).   Mr. Rhinewald commented  that the letter  would make                                                                   
the  Alaska  market more  attractive  to  national  insurance                                                                   
companies.  The  Letter of Intent would continue  dialogue on                                                                   
ways  to improve  making the  Alaska  market more  attractive                                                                   
without compromising  the integrity of the  insurance program                                                                   
or consumer protection.                                                                                                         
                                                                                                                                
Co-Chair  Williams  MOVED  to  ADOPT the  Letter  of  Intent.                                                                   
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Representative  Croft  MOVED  to  ADOPT  Amendment  #2,  #23-                                                                   
LS1684\Q.7,  Craver,  5/9/04.    (Copy on  File).    Co-Chair                                                                   
Williams OBJECTED.                                                                                                              
                                                                                                                                
Representative  Croft  spoke to  the amendment  and  concerns                                                                   
with HB 311, replacing Administration  needs and placing them                                                                   
into  the worker's  compensation.   He  suggested that  could                                                                   
provide "insurance" for the Commissioner of Insurance.                                                                          
                                                                                                                                
Co-Chair Harris stated support  for Amendment #2, noting that                                                                   
it is  important  to get  the parts  of HB 311  that are  non                                                                   
controversial in place.                                                                                                         
                                                                                                                                
Ms. Hall noted that she had authored  that language in HB 311                                                                   
and that  she would be "hesitant  to remove portions  of that                                                                   
bill", putting them into SB 357.                                                                                                
                                                                                                                                
Co-Chair Williams  acknowledged that  he also did  not accept                                                                   
the amendment  language.  If  the Committee wants  to take-up                                                                   
HB 311, it should address that bill separately.                                                                                 
                                                                                                                                
Representative Croft  understood that the intent  to continue                                                                   
was to  provide for a debate.   Co-Chair Williams  disagreed,                                                                   
stating that the  Committee should work on HB 311  if that is                                                                   
the  concern.   Co-Chair Harris  reiterated  support for  the                                                                   
"intent of the  amendment", but indicated that  he would vote                                                                   
with  Co-Chair Williams.   He  requested  that policy  remain                                                                   
consistent with bills coming before the Committee.                                                                              
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Croft                                                                                                            
OPPOSED:       Meyer, Stoltze, Chenault, Fate, Foster,                                                                          
               Hawker, Williams, Harris                                                                                         
                                                                                                                                
Representative  Joule  and  Representative   Moses  were  not                                                                   
present for the vote.                                                                                                           
                                                                                                                                
The MOTION FAILED (1-8).                                                                                                        
                                                                                                                                
Co-Chair Williams advised that  Amendment #3, #23-LS1684\Q.6,                                                                   
Bullock, 5/8/04 had been WITHDRAWN.  (Copy on File).                                                                            
                                                                                                                                
Representative  Foster MOVED to  report HCS  CS SB  357 (FIN)                                                                   
out  of Committee  with individual  recommendations and  with                                                                   
the accompanying  fiscal note.  There being  NO OBJECTION, it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
HCS CS SB 357 (FIN) was reported  out of Committee with a "no                                                                   
recommendation", a  Letter of Intent and zero note  #1 by the                                                                   
Department of Community & Economic Development.                                                                                 
                                                                                                                                

Document Name Date/Time Subjects