05/07/1997 08:37 AM House JUD

 CSSB 119(L&C) - FRATERNAL BENEFIT SOCIETIES                                   
                                                                               
 Number 0066                                                                   
                                                                               
 CHAIRMAN GREEN announced the final item of business would be CS for           
 Senate Bill No. 119(L&C), "An Act relating to fraternal benefit               
 societies; and providing for an effective date."                              
                                                                               
 Number 0074                                                                   
                                                                               
 CHARLIE MILLER, National Fraternal Congress of America, came                  
 forward to testify.  His association represents fraternal benefit             
 societies that are distinct from some others in that they offer               
 life insurance and some health insurance policies to their members            
 only.  He stated, "They're currently regulated under Title 21.84;             
 the basic statute was put in in 1966.  And although there has been            
 some amendments to the statutes, they've been piecemeal.  And this            
 is a rewrite of those statutes.  We've been working with the                  
 Division of Insurance for several months and have resolved all the            
 difference of opinion on the bill; they support the bill, although            
 I can't officially speak for them.  I think there should be a                 
 letter in your packet that ... all their concerns have been                   
 satisfied."                                                                   
                                                                               
 MR. MILLER continued, "In other committee hearings, there has been            
 no real opposition to the bill that we're aware of.  The size of              
 the bill is because of the rewrite of the entire code.  As opposed            
 to `piecemealing' the amendments that addressed the immediate                 
 concerns that the fraternals have, it was recommended to go ahead             
 and proceed with a full rewrite because the statutes are then                 
 brought up to date with terminology that exists in other insurance            
 codes in the state, and also makes the statute read basically along           
 the NAIC [National Association of Insurance Commissioners] models,            
 so that the different states don't have different terminology and             
 processes - which makes it difficult for multi-state operations to            
 operate without a lot of extra administrative detail, as in                   
 separate forms and the like."                                                 
                                                                               
 Number 0220                                                                   
                                                                               
 MR. MILLER stated, "The fraternal benefit societies involved in               
 insurance in Alaska, I think there should be a list in your packet            
 also.  These are not locally domiciled insurers, but they are                 
 licensed insurers in the state, and they include the Aid                      
 Association for Lutherans, American Postal Workers, the Independent           
 Order of Foresters, Knights of Columbus, Lutheran Brotherhood, Sons           
 of Norway, and the Woodmen of the World Life Insurance Society.               
 They write about 7,600 life policy certificates currently, and I              
 think there's 280 health certificates in the state also.  They're             
 not allowed to sell their products outside of their membership. ...           
 The governing bodies of these lodges are all directly elected or              
 indirectly elected by members; so, it's ... member-controlled, and            
 all of their products and services are sold only to members.  There           
 should be another letter in your packet from the life insurance               
 association representative here, and they support passage of the              
 bill.  The agents have been contacted; they have no opposition to             
 the bill."                                                                    
                                                                               
 MR. MILLER advised members there had been one problem on the Senate           
 floor, relating to an English language requirement for filing of              
 documents.  That was cleared up, and the bill was not brought up              
 for reconsideration.  He stated his belief that the concerns of               
 members had been addressed.                                                   
                                                                               
 Number 0287                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG asked whether there had been a Senate floor           
 amendment.                                                                    
                                                                               
 MR. MILLER said no.  Three Senate members had voiced a concern                
 because of a reference in the Sectional Analysis to an Arizona law,           
 which had "created quite a ruckus down there on English language              
 requirements."  Mr. Miller said he isn't sure why that was                    
 referenced in the Sectional Analysis; it is not a similar issue.              
 He explained, "A lot of these groups are based on ethnic and/or               
 religious common causes, self-help groups formed during the                   
 immigration waves in the late 1800s and 1900s.  If you have a lot             
 of Estonian and Polish and different ethnic groups, it's just a               
 requirement that says ... their documents that are related to their           
 insurance entity, that that aspect of ... their group be filed,               
 just like any document has to be, with the agencies affected, in              
 English.  And so, ... it didn't have anything to do with the                  
 Arizona (indisc.) thing.  And so, like I say, I think those                   
 concerns have been addressed."                                                
                                                                               
 Number 0363                                                                   
                                                                               
 CHAIRMAN GREEN said the group discount certainly sounds like a way            
 to go.  He asked whether, through the Division of Insurance, there            
 is assurance that these insurance companies are viable companies.             
                                                                               
                                                                               
 MR. MILLER said yes.  This update actually clarifies the director's           
 authority in all insurance matters.  He stated, "I mean, they are             
 regulated under the insurance statute, as any other insurance                 
 entity is.  This does clarify her control in some areas, unfair               
 trade practices and other areas.  But no, they are under the same             
 oversight by the division as any other insurance entity, the                  
 primary difference being that they do not sell outside of their               
 group.  The reason why there's so much verbiage in the bill about             
 ... the direct elections or indirect elections of officers and                
 board of directors is because they can only sell to their members.            
 You know, the membership elects these people.  They not only run              
 the fraternal benefit society but the insurance aspect of that                
 society.  They're one and the same.  And so, if ... a[n] outside              
 company wanted to be licensed here to sell, they would have to                
 satisfy the same requirements as any other insuring entity in the             
 state."                                                                       
                                                                               
 Number 0457                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said, "Mr. Miller, these are a totally                
 different animal; they're not a mutual company or a stock company.            
 They are a fraternal benefit society company, and that's why                  
 there's a separate chapter under the insurance statute for the                
 administration of it."                                                        
                                                                               
 MR. MILLER agreed it is unique.                                               
                                                                               
 CHAIRMAN GREEN said he appreciates that; it is why he likes the               
 concept.  His only concern was that people in an elderly persons'             
 home might be a group, or there might be a group that is an ethnic            
 group that doesn't speak English well.  He said as long as there is           
 protection that the entity offering the policy is viable and passes           
 muster with the Division of Insurance, that is fine.                          
                                                                               
 Number 0500                                                                   
                                                                               
 REPRESENTATIVE CROFT asked whether the Sons of Norway, for example,           
 can have their minutes in Norwegian and their proceedings in                  
 Norwegian but must file in English.                                           
                                                                               
 MR. MILLER replied, "My understanding is that any minutes                     
 pertaining to any documentation that needs to be supplied to the              
 oversight agency has to be -- there has to be English documents,              
 yes."                                                                         
                                                                               
 REPRESENTATIVE CROFT asked whether proceedings outside of the                 
 insurance area could be in another language.                                  
                                                                               
 MR. MILLER said he wasn't completely sure of that.  He emphasized             
 that the primary goal of these groups is self-help and charitable             
 works.  The insurance aspect is larger is some groups than in                 
 others.  He stated, "But if they were to be discussing ... in the             
 Sons of Norway some sort of a `paint so-and-so's house as a                   
 charitable act' or set up a work camp for kids in the summer ...,             
 I don't know if they'd have to speak in English during that portion           
 of their meeting. ... If it regards the insurance business, I am              
 sure that they would have to have their minutes and their documents           
 prepared in English."                                                         
                                                                               
 REPRESENTATIVE BUNDE alluded to moving the bill.                              
                                                                               
 Number 0580                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG advised members that this bill, and its               
 companion House bill, had a thorough hearing in the House Labor and           
 Commerce Committee, "with full testimony from the division, which             
 was supportive of it, as well as representatives from the fraternal           
 organizations that went on record in support of this legislation."            
                                                                               
 Number 0636                                                                   
                                                                               
 REPRESENTATIVE PORTER suggested, "Move it."                                   
                                                                               
 CHAIRMAN GREEN asked whether there was any objection.  Hearing                
 none, he indicated that CSSB 119(JUD) was moved from the House                
 Judiciary Standing Committee.