Legislature(2005 - 2006)HOUSE FINANCE 519
04/15/2005 01:30 PM House FINANCE
Audio | Topic |
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Start | |
HB71 | |
HB33 | |
HB147 | |
HB71 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 147 | TELECONFERENCED | |
+ | HB 144 | TELECONFERENCED | |
+ | HB 33 | TELECONFERENCED | |
+= | HB 71 | TELECONFERENCED | |
HOUSE BILL NO. 147 "An Act relating to the regulation of insurance, insurance licensing, surplus lines, insurer deposits, motor vehicle service contracts, guaranteed automobile protection products, health discount plans, third-party administrators, self-funded multiple employer welfare arrangements, and self-funded governmental plans; and providing for an effective date." LINDA HALL, DIVISION OF INSURANCE, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, related that HB 147 proposes statutory changes that would make the regulation of insurance more efficient for the division, more uniform for industry, and provide protection to consumers. The first area of change is statutory changes in the licensing area of individual agents and brokers. The proposed changes are to streamline the licensing process and to conform to national standards. Ms. Hall explained that the second area of change deals with surplus lines insurance, insurers who do not file to operate in Alaska. A couple sections deal with insurance company deposits: one removes the ability to use safety deposit boxes, one permits the director to transfer and insure deposit to the guarantee fund if that is assigned through insolvency procedures. Several sections deal with a commodity called Help Discount Plans, which look like insurance but are not. From 2000-2002, nationally, over 200,000 of these plans were sold, which resulted in $252 million worth of unpaid claims. The bill seeks specific authority to regulate these discount plans. Ms. Hall related that there are a number of sections that deal with third-party administrators, someone who provides administrative services for health insurance plans. There is language dealing with an owner-contractor insurance program, written for large construction projects. Some of the rules would be codified in statute in this bill. 3:10:07 PM Ms. Hall noted that in Section 26, standards for ratemaking in health insurance lines have been added. She spoke to discrimination and financial statements. She offered to answer questions from the committee. 3:10:52 PM Representative Hawker suggested that this is an "esoteric" bill. 3:11:34 PM Co-Chair Meyer MOVED to ADOPT Amendment 1: Page 15, line 25, following "whether": Delete "an" Page 15, line 26: Delete "insurer" Insert "," Co-Chair Chenault OBJECTED for discussion purposes. Ms. Hall stated that the amendment provides technical changes and would require the use of a licensed third-party administrator. Co-Chair Chenault WITHDREW his OBJECTION adopt Amendment 1. There being NO OBJECTION, Amendment 1 was adopted. 3:12:42 PM Co-Chair Meyer MOVED to ADOPT Amendment 2: Page 11, lines 28 - 29: Delete "a self-funded multiple employer welfare arrangement regulated under AS 21.85" Insert "any person issued or required to obtain a certificate of authority under this title to transact life insurance, annuities, and health insurance or to provide coverage for the cost of medical care" Page 17, line 2, following "annuities,": Delete "or" Page 17, lines 2 - 5: Delete "offered or provided by an insurer, or in connection with coverage offered or provided by a self- funded multiple employer welfare arrangement regulated under AS 21.85 or the Comprehensive Health Insurance Association created under AS 21.55" Insert ", or the provision of coverage for the cost of medical care" Co-Chair Chenault OBJECTED. Representative Weyhrauch suggested in Amendment 1, on page 15, line 25, to delete "and". Ms. Hall clarified that Representative Weyhrauch was referring to Amendment 3. Ms. Hall stated that Amendment 2 is a restatement of Section 3 in the current CS, version G, which was put in error in Chapter 12. She said it was a technical amendment because of an incorrect placement of the language. Co-Chair Meyer pointed out that Ms. Hall was referring to Amendment 3. Co-Chair Meyer clarified that the committee was talking about page 11, lines 28-29. Ms. Hall noted that language was removed on page 11 and new language was inserted. Co-Chair Chenault WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment 2 was adopted. 3:15:45 PM Co-Chair Meyer MOVED to ADOPT Amendment 3: Page 2, line 8, through page 3, line 21: Delete all material. Renumber the following bill sections accordingly. Page 14, following line 31: Insert a new bill section to read: "* Sec. 22. AS 21.36 is amended by adding a new section to read: Sec. 21.36.065. Limitation on owner controlled and contractor controlled insurance programs. (a) An owner controlled insurance program or a contractor controlled insurance program is subject to both AS 21.39 and AS 21.42, must be approved by the director, and shall be allowed only for a major construction project. Owner controlled and contractor controlled insurance programs are limited to property insurance as defined in AS 21.12.060 and casualty insurance as defined in AS 21.12.070. (b) In this section, an owner controlled or contractor controlled insured program does not include (1) builder's risk or course of construction insurance; (2) insurance relating to the transportation of cargo or other property; (3) insurance covering one or more affiliates, subsidiaries, partners, or joint venture partners of a person; or (4) insurance policies endorsed to name one or more persons as additional insureds. (c) In this section, (1) "contractor" means a person who meets the definition of "contractor" in AS 08.18.171 and who undertakes the performance of a construction project for a project owner, its agent, or its representative; (2) "contractor controlled insurance program" means an insurance program where one or more insurance policies are procured on behalf of a contractor, its agent, or its representative, by its insurance producer, as defined in AS 21.27.900, for the purpose of insuring the contractor and one or more of the following: (A) the project owner; (B) a subcontractor; (C) an architect; (D) an engineer; or (E) a person performing professional services; (3) "major construction project" means the process of constructing a structure, building, facility, or roadway or major renovation of more than 50 percent of an existing structure, building, facility, or roadway having a contract cost of more than $50,000,000 of a definite term at a geographically defined project site; (4) "owner controlled insurance program" means an insurance program where one or more insurance policies are procured on behalf of a project owner, its agent, or its representative, by its insurance producer, as defined in AS 21.27.900, for the purpose of insuring the project owner and one or more of the following: (A) the contractor; (B) a subcontractor; (C) an architect; (D) an engineer; or (E) a person performing professional services; (5) "project owner" means a person who, in the course of the person's business, engages the service of a contractor for the purpose of working on a construction project; (6) "subcontractor" means a person to whom a contractor sublets all or part of a contractor's initial undertaking." Renumber the following bill sections accordingly. Page 15, line 25: Delete "AS 21.12.140" Insert "AS 21.36.065" Page 15, line 29: Delete "AS 21.12.140" Insert "AS 21.36.065" Page 17, line 26: Delete "22" Insert "21" Page 17, line 28: Delete "22" Insert "21" Page 17, line 29: Delete "22" Insert "21" Co-Chair Chenault OBJECTED for discussion purposes. 3:16:33 PM TOM BRICE, COUNCIL OF LABORERS 942 & 341, LOCAL 71, reported that the unions have been tracking the legislation. He stated that there was not an objection to the (L&C) version. He indicated that there could be concerns with Amendment #2. Representative Weyhrauch asked if Mr. Brice has seen the amendments. Mr. Brice said he had. Representative Weyhrauch asked if the portion of Amendment 2, lines 5-6, regarding the cost of medical care, affects the medical trust administered by the union. Mr. Brice thought that question would be better directed to Ms. Hall. He wondered if "to provide coverage for the cost of medical care" is incorporated under individuals that are required to receive a certificate of authority to participate, or whether that is a separate section. If it is a separate section, that is redefining the public health trust. Ms. Hall agreed with Mr. Brice's statement that the pieces that are controversial regarding the health trust should be removed. She added that there is no intent to require a person to obtain a certificate of authority. It was directed to self-funded multiple employer welfare arrangements, which are currently required to have a certificate of authority. 3:19:58 PM Ms. Hall addressed Amendment 3, which limits owner controlled insurance programs. She related that these programs would not change within the current bill, but move to AS 21.36. She offered to answer questions from the committee. Representative Hawker referenced to Section 24, "except as provided in AS 21.12.140, an insurer, whether an authorized or unauthorized insurer may not underwrite an owner controlled insurance program or contractor controlled insurance program." He requested clarification. Ms. Hall responded that these programs are designed for major construction projects. It is not something that does not already occur. Currently, the rules and definitions are in the Worker's Compensation manuals. It is not a change in how these programs are used, but it is a prohibition against expanding them into things other than large construction projects. Typically, these do not happen. Co-Chair Chenault WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment 3 was adopted. Representative Foster MOVED to report CSHB 147 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 147 (FIN) was REPORTED out of Committee with a "no recommendation" recommendation and with a zero fiscal impact note by the Department of Commerce, Community and Economic Development. 3:24:28 PM
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