Legislature(2003 - 2004)
04/21/2004 01:15 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
SB 276 - ALASKA INSURANCE GUARANTY ASSOCIATION Number 0308 CHAIR McGUIRE announced that the next order of business would be CS FOR SENATE BILL NO. 276(FIN), "An Act relating to the Alaska Insurance Guaranty Association; relating to the powers of the Alaska Industrial Development and Export Authority concerning the association; and providing for an effective date." Number 0359 REPRESENTATIVE SAMUELS moved to adopt the proposed House committee substitute (HCS) for SB 276, Version 23-GS2105\S, Bullock, 4/20/04, as the work draft. Number 0362 REPRESENTATIVE HOLM objected [for the purpose of discussion]. CHAIR McGUIRE indicated that Version S will enable the legislature to revisit this issue in six years. Number 0488 VANESSA TONDINI, Staff to Representative Lesil McGuire, House Judiciary Standing Committee, Alaska State Legislature, explained that Section 1 of Version S will grant the Alaska Insurance Guaranty Association the authority to raise the percentage of assessments as requested by the administration, and that Section 2 will repeal that authority in 2010 and have the assessment level revert back to what it currently is. CHAIR McGUIRE opined that six years will be sufficient to determine the effect of the proposed increases and whether they should be maintained. REPRESENTATIVE GARA said he did not want the language in Version S to be seen as authorization for keeping the proposed assessment increases at their maximum level until 2010. Number 0634 LINDA HALL, Director, Division of Insurance, Department of Community & Economic Development (DCED), relayed that the assessments are analyzed each year by the actuary for the Alaska Insurance Guaranty Association, who assesses the anticipated cash needs for the upcoming year. She assured Representative Gara that per statute, the actuary will not assess beyond what is needed. In response to a question from Representative Holm about why there is a specific percentage referenced in statute, she noted that current statute has a 2 percent cap that cannot be exceeded without additional statutory authority, and that the current statutory language comes from "the model guaranty language" that has been adopted in most other states. CHAIR McGUIRE asked Representative Holm if he would be offering an amendment to eliminate all statutory reference to specific percentages. REPRESENTATIVE HOLM remarked that he was merely raising the issue. REPRESENTATIVE SAMUELS posited that the repealer is a moot point as long as nothing untoward occurs in the governing of the Alaska Insurance Guaranty Association. MS. HALL concurred, adding, "They do not accumulate cash; it's on a post-loss assessment basis, so the way it works at this time ... [is that] they can only assess money when there is a need for the money ...." CHAIR McGUIRE opined that the statutory caps were put in place for good reasons, and suggested that for those same reasons, the proposed increase should have a repealer. In this manner, should the current crisis continue or new crises arise in other lines of insurance, the legislature will be made aware of such and can then take an active role in developing solutions. She posited that some business are becoming frustrated with the current system, particularly when they go five or six years without a single claim but are faced with increased assessments. Her goal with Version S, she relayed, is to say to those businesses: "We don't intend for these high percentages to persist, and ... [here is] assurance that some future legislature will take a look at it." REPRESENTATIVE HOLM predicted that the business community will make legislators very aware should the assessments become too high. Number 0993 REPRESENTATIVE SAMUELS again moved to adopt the proposed HCS for SB 276, Version 23-GS2105\S, Bullock, 4/20/04, as the work draft. There being no objection, Version S was before the committee. Number 1000 REPRESENTATIVE ANDERSON moved to report the proposed HCS for SB 276, Version 23-GS2105\S, Bullock, 4/20/04, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HCS CSSB 276(JUD) was reported from the House Judiciary Standing Committee.
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