02/12/2020 03:15 PM House LABOR & COMMERCE

           SB 106-HOMEOWNER/RENTER INSURANCE RENEWAL                                                                        
                                                                                                                                
3:36:39 PM                                                                                                                    
                                                                                                                                
CHAIR SPOHNHOLZ announced that the  final order of business would                                                               
be CS FOR  SENATE BILL NO. 106(L&C), "An Act  relating to renewal                                                               
of insurance  coverage for homeowners and  renters; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
3:36:55 PM                                                                                                                    
                                                                                                                                
SENATOR TOM  BEGICH, Alaska State Legislature,  as prime sponsor,                                                               
introduced CSSB  106(L&C).  He  paraphrased parts of  the sponsor                                                               
statement [included in  the committee packet], which  read in its                                                               
entirety as follows [original punctuation provided]:                                                                            
                                                                                                                                
     Moving into a  new home is one of  the most significant                                                                    
     commitments  any  person   will  ever  make.  Obtaining                                                                    
     insurance  to  protect  not  only  the  value  of  that                                                                    
     commitment,  but also  the  invaluable belongings,  and                                                                    
     heirlooms  housed  within  one's   home,  is  not  only                                                                    
     prudent,  but  in  most cases,  mandated  by  insurance                                                                    
     lenders. Although not  mandatory, renter's insurance is                                                                    
     recommended  by   the  State  of  Alaska   Division  of                                                                    
     Insurance   and   offers   tenants   similar   economic                                                                    
     protection against loss of personal property.                                                                              
                                                                                                                                
     Currently,  Alaska  insurance  providers  may  fail  to                                                                    
     renew  an insurance  policy within  the  first year  of                                                                    
     coverage for  any reason, including  after a  claim has                                                                    
     been made.                                                                                                                 
                                                                                                                                
     CSSB 106 would restrict  insurance company's ability to                                                                    
     not  renew a  policy based  solely on  the first  claim                                                                    
     filed  within 3  years of  the policy  being initiated.                                                                    
     This would  ensure that one-time crime  victims are not                                                                    
     penalized  by  their  insurance company  for  filing  a                                                                    
     claim.                                                                                                                     
                                                                                                                                
SENATOR BEGICH continued  by illustrating a scenario  in which an                                                               
individual's  insurance  policy  fails   to  be  renewed  by  the                                                               
provider because  he or she filed  a claim within the  first year                                                               
after  a burglary.    He  said that's  the  power that,  although                                                               
rarely used, exists under the law.   He reported working with the                                                               
insurance  industry  to   "narrow  the  scope  to   look  at  the                                                               
revictimization of a  victim."  That, he said, is  what this bill                                                               
does,  which  is  why  it  passed  out  of  the  Senate  with  no                                                               
opposition and has 12 of 20 senators co-sponsoring it.                                                                          
                                                                                                                                
3:41:37 PM                                                                                                                    
                                                                                                                                
LKI  TOBIN, Staff, Senator Tom  Begich, Alaska State Legislature,                                                               
presented a  sectional analysis of the  committee substitute (CS)                                                               
for  SB 106  [included  in  the committee  packet]  on behalf  of                                                               
Senator  Begich, prime  sponsor, which  read in  its entirety  as                                                               
follows [original punctuation provided]:                                                                                        
                                                                                                                                
     Section  1:  Cleans  up  previous  language  and  moves                                                                  
     notice and  applicability language for nonrenewal  of a                                                                    
     personal  or   business  insurance  policy  to   a  new                                                                    
     section, described below.                                                                                                  
                                                                                                                                
     Section 2: Adds a  new section prohibiting an insurance                                                                  
     company from  considering a  first claim  filed against                                                                    
     the policy  in the  preceding three  years as  a reason                                                                    
     for  not renewing  the policy  when that  claim results                                                                    
     from a criminal act committed by a third party.                                                                            
                                                                                                                                
     The  insurance company  may still  cancel or  not renew                                                                    
     without notice if the  insurance company has manifested                                                                    
     a  good  faith  effort  to  renew  the  policy  or  the                                                                    
     premiums on a policy are not paid.                                                                                         
                                                                                                                                
     Section 3: Aligns  "personal insurance" definition with                                                                  
     AS 21.36.460(i).                                                                                                           
                                                                                                                                
     Section 4:  Amends uncodified Alaska law  so Sections 1                                                                  
     and  2 apply  to  new insurance  or insurance  policies                                                                    
     renewed after the effective dates in this Act.                                                                             
                                                                                                                                
     Section 5:  Amends uncodified Alaska  law to  allow the                                                                  
     Director of  the Division of  Insurance the  ability to                                                                    
     implement new  regulations outlined  in Sections  1 and                                                                    
     2.                                                                                                                         
                                                                                                                                
        Section 6: Gives the Director of the Division of                                                                      
         Insurance the authority outlined in Section 5                                                                          
     immediately upon passage of the legislation.                                                                               
                                                                                                                                
     Section 7: All sections, save Section 6, will go into                                                                    
     effect July 1, 2020.                                                                                                       
                                                                                                                                
3:44:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS  thanked the  bill sponsor and  the victims                                                               
for bring  this issue to  the committee's attention,  adding that                                                               
he was not aware of it before last year.                                                                                        
                                                                                                                                
3:45:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RASMUSSEN  questioned whether SB 106  might prompt                                                               
the insurance industry to cease  from insuring consumers in high-                                                               
risk crime areas.                                                                                                               
                                                                                                                                
SENATOR  BEGICH answered  no.    He offered  his  belief that  by                                                               
limiting the  number of  years within which  a first  claim would                                                               
have to  fall, SB 106  did not create  an onerous burden  for the                                                               
industry or the consumer.                                                                                                       
                                                                                                                                
REPRESENTATIVE  RASMUSSEN  said  she  appreciates  the  intention                                                               
behind this  bill, especially for  tenants who are  often signing                                                               
one-year  leases that  they may  not renew.   She  said it  seems                                                               
important  to  have protections  in  place  for people  that  are                                                               
victims of crime.                                                                                                               
                                                                                                                                
SENATOR BEGICH noted  that nothing in the bill  would prohibit an                                                               
insurance company from continuing to  raise rates because a claim                                                               
was made, which is standard insurance practice.                                                                                 
                                                                                                                                
3:47:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HANNAN  referenced   the  statutory  citation  in                                                               
Section  2  and  sought  to   clarify  if  it  includes  renter's                                                               
insurance as well as homeowner's insurance.                                                                                     
                                                                                                                                
SENATOR BEGICH said he doesn't know.                                                                                            
                                                                                                                                
REPRESENTATIVE HANNAN  asked how many states  have discovered and                                                               
attempted to remedy the loophole  that allows insurance companies                                                               
to cancel coverage if a claim is filed within the first year.                                                                   
                                                                                                                                
SENATOR BEGICH said,  "a number of states."  He  listed New York,                                                               
Oregon, Minnesota, and offered to  follow up with a document that                                                               
indicates which states' statutes allow  some form of this kind of                                                               
law.                                                                                                                            
                                                                                                                                
3:50:15 PM                                                                                                                    
                                                                                                                                
CHAIR SPOHNHOLZ announced that SB 106 was held over.