Legislature(1999 - 2000)

03/03/2000 01:20 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HB 310 - ALASKA INSURANCE GUARANTY ASSOCIATION                                                                                
                                                                                                                                
CHAIRMAN KOTT  announced that the  final order of  business before                                                              
the  committee is  HOUSE BILL  NO. 310,  "An Act  relating to  the                                                              
Alaska  Insurance  Guaranty  Association;  and amending  Rule  24,                                                              
Alaska  Rules of  Civil  Procedure."   Chairman  Kott called  upon                                                              
Representative  Rokeberg  to present  the  bill.   [The  bill  was                                                              
sponsored  by the  House Labor  & Commerce  Committee by  request;                                                              
that committee is chaired by Representative Rokeberg.]                                                                          
                                                                                                                                
REPRESENTATIVE ROKEBERG,  Alaska State Legislature,  addressed the                                                              
committee  as the  sponsor of  HB 310.   He said  that Mr.  George                                                              
would be available to discuss the legislation.                                                                                  
                                                                                                                                
Number 1266                                                                                                                     
                                                                                                                                
MICHAEL  LESSMEIER,  Attorney at  Law,  Lessmeier  & Winters,  and                                                              
Lobbyist for State Farm Insurance  Company, informed the committee                                                              
that he was speaking on behalf of  State Farm.  He noted that CSHB
310(L&C),   Version  LS1030\H,   is  before   the  committee   for                                                              
consideration.    He said  he  believes  this legislation  is  the                                                              
product of a  joint desire to bring the Alaska  Insurance Guaranty                                                              
Association   laws  into  conformity   with  the  model   National                                                              
Association of Insurance Commissioners  (NAIC) Act.  He noted that                                                              
Tom  Andritsch,  Dane Havard  and  Don  Thomas are  available  via                                                              
teleconference.  He reported that  Mr. Thomas actually drafted the                                                              
changes,  which Mr.  Lessmeier understood  to be  approved by  the                                                              
Division   of  Insurance   and  the   Alaska  Insurance   Guaranty                                                              
Association.                                                                                                                    
                                                                                                                                
MR.  LESSMEIER  explained  that   the  Alaska  Insurance  Guaranty                                                              
Association  is a  nonprofit "creature"  of  the Alaska  statutes.                                                              
The purpose  of the  Alaska Insurance  Guaranty Association  is to                                                              
step in  when an insurance company  becomes insolvent and  pay the                                                              
claims that  are made.  He  recalled that someone had  likened the                                                              
Alaska  Insurance  Guaranty  Association to  the  Federal  Deposit                                                              
Insurance Corporation  (FDIC).  Mr.  Lessmeier requested  that Mr.                                                              
Andritsch be allowed to briefly summarize  how [this bill] came to                                                              
be.                                                                                                                             
                                                                                                                                
Number 1428                                                                                                                     
                                                                                                                                
TOM ANDRITSCH,  Chairman, Alaska  Insurance Guaranty  Association,                                                              
testified via teleconference  from Port Townsend,  Washington.  He                                                              
noted that  he had been elected  Chairman of the  Alaska Insurance                                                              
Guaranty  Association  last  June.    He also  noted  that  he  is                                                              
basically the President  of Umialik Insurance Company,  an Alaskan                                                              
domestic  property and  casualty  insurance company;  he has  held                                                              
that  position  since  1986.    Prior  to that  he  was  with  the                                                              
Providence Washington  Insurance Company  in Alaska, from  1976 to                                                              
1986.                                                                                                                           
                                                                                                                                
MR.  ANDRITSCH  explained  that  the process  which  led  to  this                                                              
legislation  began  in  1991  when  the  Chairman  of  the  Alaska                                                              
Insurance Guaranty  Association and its attorney at  the time, now                                                              
Supreme  Court Justice  Bob Eastaugh, recommended  changes  to the                                                              
Act to  conform to the  model Act of the  NAIC and the  NCIGF [The                                                            
National  Conference of  Insurance Guaranty  Funds].  The  changes                                                              
were  recommended   to  the  then-director  of   the  Division  of                                                              
Insurance,  Dave Walsh.   Nothing progressed  until 1996  when the                                                              
Guaranty Association  chairman advanced  the issue again  with the                                                              
then Director of the Division of Insurance, Marianne Burke.                                                                     
                                                                                                                                
MR. ANDRITSCH  said the  issue was then  pursued by the  following                                                              
director of  the division, and  proposed changes were  agreed upon                                                              
with Ms. Burke and the chairman of  the Guaranty Association.  Mr.                                                              
Andritsch informed  the committee  that he  has recently  met with                                                              
the  current director  of  the Division  of  Insurance, Bob  Lohr.                                                              
Both have agreed upon the language  and the changes encompassed in                                                              
the bill as it  stands now.  Basically, the intent  is to make the                                                              
statutes  conform  with other  state  statutes.   Therefore,  when                                                              
Alaska  deals with  conflicts among  other states  with regard  to                                                              
insolvency, Alaska would be dealing  with the same model Act.  Mr.                                                              
Andritsch  offered  to  answer  questions,  but  he  deferred  any                                                              
questions regarding  administration of the plan to  Mr. Havard and                                                              
Mr. Thomas.                                                                                                                     
                                                                                                                                
Number 1509                                                                                                                     
                                                                                                                                
DANE  HAVARD,  President,  Northern   Adjusters,  Inc.;  and  Fund                                                              
Manager for Alaska  Insurance Guaranty Association,  testified via                                                              
teleconference  from Anchorage, offering  to answer  any questions                                                              
with regard  to the  operations of  the Alaska Insurance  Guaranty                                                              
Association.   He informed the committee,  "We have been  the fund                                                              
administrator for  the Alaska Guaranty Association  since 1984 and                                                              
we have actually handled the claims since about 1978."                                                                          
                                                                                                                                
REPRESENTATIVE KERTTULA referred  to page 8, Section 9, subsection                                                              
(b),  of the  House Labor  & Commerce  committee substitute  (CS).                                                              
She noted that the language in paragraph  (1) is being eliminated,                                                              
which is  language referring  to the  notification of  insolvency.                                                              
She asked if there is a notice requirement  in another part of the                                                              
bill.                                                                                                                           
                                                                                                                                
MR.  HAVARD  explained that  the  language  on  page 8,  lines  27                                                              
through page 9,  line 3, is being deleted because  in general [the                                                              
notice  requirement]  is  being   handled  under  the  liquidation                                                              
statutes  by  the  receiver  of  the  insolvent  carrier.    As  a                                                              
practical matter,  [the receivers  of the insolvent  carrier] have                                                              
all the addresses for the insured  and all the interested parties.                                                              
That  information is  not kept  by the  Alaska Insurance  Guaranty                                                              
Association and would have to be  obtained by [the receiver of the                                                              
insolvent carrier] anyway.                                                                                                      
                                                                                                                                
REPRESENTATIVE KERTTULA  said her understanding, then,  is that as                                                              
a practical matter the notice is  happening, and no deadlines will                                                              
pass before the notice is given.                                                                                                
                                                                                                                                
MR. HAVARD said, "As far as I know  from the liquidation statute."                                                              
                                                                                                                                
REPRESENTATIVE  KERTTULA  asked whether  there  is  a chance  that                                                              
there would not be a notice before  something happened, or whether                                                              
that is taken care of through the liquidation statute.                                                                          
                                                                                                                                
MR. HAVARD deferred to the Division of Insurance.                                                                               
                                                                                                                                
Number 1604                                                                                                                     
                                                                                                                                
BOB  LOHR,   Director,  Division   of  Insurance,  Department   of                                                              
Community  & Economic  Development,  testified via  teleconference                                                              
from Anchorage.   He   informed  the committee  that the  division                                                              
supports CSHB 310(L&C).  With regard  to Representative Kerttula's                                                              
question, Mr.  Lohr explained that  the statutory receiver  is the                                                              
director of the  Division of Insurance.  The  receivership statute                                                              
requires [the division] to give notice  to all potential claimants                                                              
in a timely  manner.  If that  does not occur, the court  can tell                                                              
the division  to do it properly.   Mr. Lohr said he  believes that                                                              
statute  is in  the receivership  area  and is  adequate to  cover                                                              
notice.                                                                                                                         
                                                                                                                                
REPRESENTATIVE MURKOWSKI  pointed out that a provision  allows the                                                              
director to  appoint two individuals  as members of the  [Board of                                                              
Governors] in order to represent  the public.  She understood that                                                              
there have not been  public members in the past.   She inquired as                                                              
to why one would want public members on a board such as this.                                                                   
                                                                                                                                
MR. LOHR said he believes having  public members [on the board] is                                                              
consistent  with the  NAIC  model.   He recognized  that  it is  a                                                              
fairly  technical  area  which represents  the  interests  of  the                                                              
companies that have a mandatory assessment  to cover the costs and                                                              
any distributions  for the  guaranty fund.   However, he  believes                                                              
the nature  of this organization  supports having  representatives                                                              
of the public.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  asked   whether  the  Alaska  Insurance                                                              
Guaranty Association is in agreement with this.                                                                                 
                                                                                                                                
MR. ANDRITSCH replied yes.                                                                                                      
                                                                                                                                
REPRESENTATIVE MURKOWSKI clarified,  in response to Chairman Kott,                                                              
that  she  was referring  to  Section  6  on  page  3.   She  then                                                              
recognized that  the language is  discretionary due to the  use of                                                              
the word "may."                                                                                                                 
                                                                                                                                
Number 1774                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG noted  that  there was  a fairly  lengthy                                                              
discussion in the  House Labor & Commerce Standing  Committee with                                                              
regard to  barring the  timeframe and actions.   He recalled  that                                                              
[the  discussion]  was  brought  by  the  Department  of  Labor  &                                                              
Workforce    Development,   who    upon   further   review    told                                                              
Representative   Rokeberg   their   objections   were   misguided.                                                              
Therefore,  he  said, the  department  agreed  that  it is  not  a                                                              
problem.                                                                                                                        
                                                                                                                                
CHAIRMAN KOTT closed the public testimony.                                                                                      
                                                                                                                                
Number 1813                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MURKOWSKI made  a motion  that the committee  move                                                              
CSHB 310(L&C) out  of the House Judiciary Standing  Committee with                                                              
individual recommendations  and a zero  fiscal note.   There being                                                              
no objection,  CSHB 310(L&C)  was moved  from the House  Judiciary                                                              
Standing Committee.                                                                                                             

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