Legislature(1999 - 2000)

04/09/1999 03:24 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
HB 158 - NOTICE OF INS. CANCELLATION TO ELDERLY                                                                                 
                                                                                                                                
Number 0484                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG announced the committee's next order of business                                                              
is HB 158, "An Act relating to the annual report of the director of                                                             
the division of insurance and to notice of cancellation of personal                                                             
insurance."  Chairman Rokeberg explained the legislation as the                                                                 
bill sponsor.  He indicated the first portion of the bill would                                                                 
amend AS 21.06.110 by adding a new subsection with the language,                                                                
"statistical information regarding health insurance, including the                                                              
number of individual and group policies sold in the state; and".                                                                
This information would be provided to the Division of Insurance,                                                                
Department of Commerce and Economic Development, to assist the                                                                  
division by mandating insurance companies doing business in the                                                                 
state to determine the number of people covered under individual                                                                
group policies or non-ERISA policies [ERISA, Employee Retirement                                                                
and Security Act].  The chairman noted this has been after a                                                                    
five-year quest for information from the department.                                                                            
                                                                                                                                
Number 0524                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG explained the second portion of the legislation                                                               
results from the experience of his neighbor.  The neighbor is in                                                                
his 80s, with an invalid wife.  The neighbor was involved in an                                                                 
automobile accident and afterwards discovered his insurance had                                                                 
expired about four months previously; he hadn't realized he had                                                                 
failed to pay his bill.  The chairman indicated his neighbor is                                                                 
quite lucid but might be suffering from mild forms of dementia,                                                                 
which is not unusual at that age.  As a result, the gentleman was                                                               
able to make a settlement of some $25,000 against an actual $80,000                                                             
damage amount.  [Chairman Rokeberg indicated this settlement                                                                    
information is in a letter in the bill packet from Reverend Ronald                                                              
Martinson of the Central Lutheran Church in Anchorage.  There is an                                                             
April 7, 1999, letter from Reverend Martinson on this issue in the                                                              
bill packet but it does not contain information regarding                                                                       
settlement.]                                                                                                                    
                                                                                                                                
Number 0577                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG emphasized the need to verify that senior and                                                                 
elderly Alaskans receive proper notice their insurance is going to                                                              
be canceled.  The legislation only covers personal insurance -                                                                  
property and casualty - excluding life and health.  Currently, the                                                              
insurance companies only have to register a notice of mailing                                                                   
within their own records; they do not have to have a return                                                                     
receipt.  The legislation gives Alaskans over 67 years old a longer                                                             
period of notification and a letter mailed return receipt ten days                                                              
prior to cancellation.  Commenting that this is like an unfunded                                                                
mandate to the insurance industry, the chairman noted the insurance                                                             
industry would incur some costs because the timing would begin at                                                               
60 days, rather than the current 30 days, and the return receipt                                                                
would be required.  The chairman requested that Janet Seitz, aide                                                               
to the House Labor and Commerce Standing Committee, explain the                                                                 
current statutory requirements for notification and the changes the                                                             
legislation would make for older Alaskans.                                                                                      
                                                                                                                                
Number 0665                                                                                                                     
                                                                                                                                
JANET SEITZ, Legislative Assistant to Representative Norman, Alaska                                                             
State Legislature came forward.  As aide to the House Labor and                                                                 
Commerce Standing Committee (Labor and Commerce), she explained the                                                             
changes.  Ms. Seitz indicated the current basic scheme for everyone                                                             
is shown on page 2, line 17 through 23, of the bill:  written                                                                   
notice of cancellation at least 30 days before the effective date,                                                              
a 20-day notice, and a 10-day notice.  House Bill 158 would require                                                             
a different notice schedule if a person is 67 or older:  first                                                                  
notice at least 60 days before the effective date of cancellation,                                                              
second notice at least 30 days, and a third written notice at least                                                             
10 days before sent by certified mail.                                                                                          
                                                                                                                                
CHAIRMAN ROKEBERG questioned if the committee understands what the                                                              
legislation does.  He confirmed for Representative Harris that only                                                             
the last mailing is by certified mail.                                                                                          
                                                                                                                                
Number 0720                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO confirmed from the chairman that the incident                                                             
mentioned in the sponsor statement and in the letter on the Central                                                             
Lutheran Church letterhead concern the same individual.                                                                         
Representative Halcro commented the letter says the couple had a                                                                
caregiver who confessed to taking advantage of the couple's                                                                     
finances for over $40,000.                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG said that is a different incident not spoken to                                                               
in the bill; he indicated it simply makes this couple's situation                                                               
that much worse.                                                                                                                
                                                                                                                                
REPRESENTATIVE HALCRO questioned whether the caregiver could have                                                               
thrown away the notice of cancellation.                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG agreed it was possible.                                                                                       
                                                                                                                                
REPRESENTATIVE HALCRO questioned how this legislation would prevent                                                             
this situation if someone keeps throwing the notice away or if                                                                  
someone moves.                                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG answered he thinks it protects the insurance                                                                  
company because it would have the return receipt, being able to                                                                 
prove the notice was sent.  He thinks it helps both the recipient                                                               
and the insurer.                                                                                                                
                                                                                                                                
REPRESENTATIVE HALCRO asked if any other cases like this have                                                                   
occurred, indicating he is trying to understand the reason for                                                                  
changing the notice structure.                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG commented the witness testimony might be helpful.                                                             
                                                                                                                                
Number 0804                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI questioned why the legislation is                                                                      
requesting statistical information on health insurance but no other                                                             
types of insurance.                                                                                                             
                                                                                                                                
CHAIRMAN ROKEBERG replied that is the figure they have been seeking                                                             
for five years.  The department does an excellent job obtaining all                                                             
kinds of other statistics but that one has been elusive.  This                                                                  
legislation is something of a statutory mandate to obtain that                                                                  
statistical information.  It gives the Division of Insurance                                                                    
justification if there is a cost involved in obtaining the                                                                      
information and provides justification to the insurance companies                                                               
for the division's request.                                                                                                     
                                                                                                                                
Number 0856                                                                                                                     
                                                                                                                                
ROSEMARY HAGEVIG, Executive Director, Catholic Community Services,                                                              
came forward to testify in support of HB 158.  Ms. Hagevig noted                                                                
Catholic Community Services is the parent organization to Southeast                                                             
Senior Services; they serve 2,200 seniors in 15 Southeast Alaska                                                                
communities.  They support the legislation, particularly the                                                                    
section dealing with insurance notification for Alaska's elderly                                                                
citizens.  The efforts to provide an extra safety net for probably                                                              
some of the most vulnerable members of the state's population are                                                               
appreciated.  Ms. Hagevig shared that she speaks from personal                                                                  
experience as a distant caregiver for an aging parent.  Her sibling                                                             
living close to the parent tries to intercept the mail every day to                                                             
make sure something important does not go astray.  Ms. Hagevig                                                                  
indicated this legislation would be of great assistance to those                                                                
seniors, many of whom might be afflicted with dementia or                                                                       
Alzheimer's disease, who are trying very hard to maintain                                                                       
independent living for as long as possible outside of institutional                                                             
situations.  She understands there would be some complications with                                                             
the insurance industry but is confident they could be resolved.                                                                 
                                                                                                                                
REPRESENTATIVE MURKOWSKI noted this applied to personal insurance                                                               
and questioned whether Ms. Hagevig thought it should be broadened.                                                              
                                                                                                                                
MS. HAGEVIG thinks it is a step in the right direction, and she is                                                              
sure there was a good reason for beginning this process with                                                                    
personal insurance.  She related a recent situation she had heard                                                               
firsthand from a woman in Ketchikan.  The woman's husband had died,                                                             
had apparently forgotten to pay his life insurance premiums, and                                                                
the wife was unable to collect anything.   Ms. Hagevig noted these                                                              
are very serious situations in people's lives as they become older,                                                             
and she commented on the growth of this segment of the population.                                                              
                                                                                                                                
Number 0993                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG pointed out to the committee there is a statutory                                                             
grace period for life insurance, mentioning 30 days, but no                                                                     
mandated grace period for personal insurance.  The chairman                                                                     
indicated he has had some discussion with members of the industry                                                               
regarding notifications to relatives or other caregivers; he thinks                                                             
it is difficult to do that statutorily.                                                                                         
                                                                                                                                
MS. HAGEVIG said in her personal situation her sibling has made                                                                 
every effort to change the [mailing] address when these situations                                                              
come to light; this is another solution but it is not always                                                                    
effective.  Also, not all senior citizens have family members close                                                             
enough to be able to do that for them.                                                                                          
                                                                                                                                
CHAIRMAN ROKEBERG commented that having a change of address is                                                                  
probably the best advice to anyone in the circumstance; hopefully                                                               
they will generate some publicity with this legislation and pass                                                                
that information on.                                                                                                            
                                                                                                                                
Number 1094                                                                                                                     
                                                                                                                                
JOHN FERENCE, Deputy Director, Division of Insurance, Department of                                                             
Commerce and Economic Development, came forward to answer the                                                                   
committee's questions on HB 158 from a technical standpoint.                                                                    
                                                                                                                                
REPRESENTATIVE MURKOWSKI referred to an April 7, 1999, letter in                                                                
the bill packet from the Alliance of American Insurers which states                                                             
that this is going to be very problematic because there is nothing                                                              
currently in place for them to monitor when someone turns 67.                                                                   
Representative Murkowski commented regular notices would be sent                                                                
out to 70 percent of the public but it would then be necessary to                                                               
monitor everyone's birthday.  She asked Mr. Ference how the                                                                     
division would monitor the industry's compliance with this                                                                      
legislation, if passed.                                                                                                         
                                                                                                                                
MR. FERENCE replied they monitor in two fashions: through consumer                                                              
complaints and a periodic random audit process addressed to both                                                                
insurance agents and companies.  The division looks at producer                                                                 
files to see if the notices are copied there and it examines                                                                    
insurance companies to see if the companies have issued proper                                                                  
notices.  In addition, the division responds to individual consumer                                                             
complaints.                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI questioned whether the division has                                                                    
received complaints regarding the notification situations this                                                                  
legislation would address.                                                                                                      
                                                                                                                                
Number 1198                                                                                                                     
                                                                                                                                
MR. FERENCE replied the division receives consumer complaints on a                                                              
regular basis about inadequate or missing notices.  Investigation                                                               
results show that more often than not the notices were sent and are                                                             
missing in transit or were received and ignored.  Mr. Ference                                                                   
indicated the complaints come from no particular concentration of                                                               
the population.                                                                                                                 
                                                                                                                                
CHAIRMAN ROKEBERG indicated an amendment to the effect that nothing                                                             
in this paragraph would authorize the director to require the                                                                   
insurer to release proprietary information had been suggested                                                                   
regarding the statistical information.  The chairman questioned                                                                 
whether Mr. Ference objected to an amendment of this type.                                                                      
                                                                                                                                
MR. FERENCE replied he is not really in a position to offer an                                                                  
opinion because he does not know if the carrier they would request                                                              
this information from would view it as proprietary.  However, if                                                                
the provision is not in the legislation, it is not a question.                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG asked if a distinction would be made between                                                                  
covered lives and policies, questioning if the committee needed to                                                              
be specific in law or if the division could handle that.                                                                        
                                                                                                                                
Number 1297                                                                                                                     
                                                                                                                                
MR. FERENCE confirmed the division could handle that itself.                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG emphasized the objective is the amount of                                                                     
non-ERISA-covered.                                                                                                              
                                                                                                                                
MR. FERENCE questioned that the information desired is the number                                                               
of people who are beneficiaries of health insurance.                                                                            
                                                                                                                                
CHAIRMAN ROKEBERG noted they wanted to make the distinction between                                                             
non-ERISA and ERISA-covered.                                                                                                    
                                                                                                                                
REPRESENTATIVE HALCRO questioned whether there is similar                                                                       
legislation in other states regarding the amount of notice as well                                                              
as the statistical mandate.                                                                                                     
                                                                                                                                
MR. FERENCE replied that, to the best of his knowledge, this would                                                              
be a longer notice period than is required in any other                                                                         
jurisdiction.  In response to chairman's question, Mr. Ference                                                                  
confirmed this is a new idea, to the best of his knowledge, and has                                                             
not been directly looked at in other states.                                                                                    
                                                                                                                                
CHAIRMAN ROKEBERG expressed his approval.                                                                                       
                                                                                                                                
Number 1367                                                                                                                     
                                                                                                                                
JOHN GEORGE, Lobbyist for the National Association of Independent                                                               
Insurers (NAII), came forward.  Among the members of NAII are                                                                   
Allstate [Allstate Insurance Company], GEICO [GEICO Corporation],                                                               
USAA, Progressive [The Progressive Corporation] - major writers of                                                              
automobile insurance in the state of Alaska.  The notice required                                                               
by this legislation would be a real problem for insurers.  Mr.                                                                  
George said he had spoken this afternoon with an Allstate                                                                       
representative who had been an underwriter in the pre-computer                                                                  
days.  This representative commented the company did not have age                                                               
information for some of its clients because the original                                                                        
applications were taken manually.  Unless the client applied for a                                                              
senior citizen discount, the company might not know who its                                                                     
67-year-olds are.  The NAII believes that there are thousands or                                                                
possibly even hundreds of thousands of cancellation notices issued                                                              
every year in the state of Alaska.  Mr. George questioned how many                                                              
people even pay their insurance 60 days before it is due,                                                                       
commenting it is due just prior to cancellation.  He indicated                                                                  
there would also be problems with people who pay their insurance on                                                             
a monthly basis.  Mr. George further indicated they are working on                                                              
these logistical concerns with the chairman.                                                                                    
                                                                                                                                
Number 1453                                                                                                                     
                                                                                                                                
MR. GEORGE expressed that his foremost concern, however, is the                                                                 
approaching year 2000 (Y2K).  The NAII and other trade associations                                                             
have lobbied the National Association of Insurance Commissioners                                                                
(NAIC), the National Conference of Insurance Legislators (NCOIL),                                                               
and the National Conference of State Legislators (NCSL) who have                                                                
all passed resolutions urging state legislators not to pass                                                                     
legislation which could require insurance company programmers to                                                                
concentrate on issues other than meeting Y2K compliance.  Even if                                                               
this legislation were to progress, NAII would urge the legislature                                                              
for an effective date after Y2K so the insurance company                                                                        
programmers can continue their compliance efforts to ensure that                                                                
the entire system doesn't crash.  Mr. George indicated his clients                                                              
have some serious problems with the legislation but the intent is                                                               
appreciated.  He thinks there are some solutions and these are                                                                  
being discussed with the companies.  He noted it has occurred to                                                                
him that the more a person suffers from dementia, the less likely                                                               
the person is to need an automobile.  Mr. George added there is an                                                              
additional fail-safe with automobiles or homes that are financed:                                                               
there is a lender ensuring that that insurance stays in force as                                                                
well.  He admitted, however, the older a person is, the less likely                                                             
there is to be a lender involved.                                                                                               
                                                                                                                                
Number 1558                                                                                                                     
                                                                                                                                
REPRESENTATIVE HARRIS questioned if the insurance companies would                                                               
be a lot happier if the notification series remained as it is                                                                   
currently - 30, 20, 10 - and the last letter had to been sent by                                                                
certified mail no matter the person's age.  It seems to him the                                                                 
certified part is the point here, that someone signed for the                                                                   
letter verifying that it was actually picked up.                                                                                
                                                                                                                                
MR. GEORGE replied that would make it more palatable.  He thinks                                                                
anytime something has to be done differently, such as the certified                                                             
mail, it is less than optimal, but that is certainly one of the                                                                 
alternatives being examined.  He referred to a previous comment of                                                              
the chairman's regarding this being an unfunded mandate; Mr. George                                                             
noted that is actually not true.  Insurance premiums are largely                                                                
based on age categories.  It might be discovered that this could                                                                
result in a premium increase for whatever age group it applies to                                                               
because insurers can add the extra notice requirement into their                                                                
rate structure.  Mr. George noted this aspect is being worked on as                                                             
well.  He reminded the committee that insurers don't like canceling                                                             
insurance and would much rather keep it on the books if it is good,                                                             
solid business.                                                                                                                 
                                                                                                                                
Number 1681                                                                                                                     
                                                                                                                                
REPRESENTATIVE HARRIS commented it seems from Mr. George's                                                                      
testimony that if the certified cost is spread out over all the age                                                             
categories for health insurance, the 67-plus Alaskans would not be                                                              
hit any more than the lower age brackets.                                                                                       
                                                                                                                                
MR. GEORGE clarified that this would apply to automobile and                                                                    
homeowners' insurance, not health insurance.  Mr. George said he                                                                
did not know why it would be spread out over everyone if they were                                                              
speaking of a specific notice for a specific group, indicating he                                                               
had misunderstood Representative Harris's comment about a certified                                                             
final mailing for all policy cancellations, no matter the person's                                                              
age.  Mr. George made a few additional statements under this                                                                    
misunderstanding.                                                                                                               
                                                                                                                                
Number 1797                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI questioned which would be more expensive                                                               
for the insurance companies:  determining and monitoring the age of                                                             
all of a company's insureds to identify incoming 67-year-olds or                                                                
Representative Harris's idea that all final 10-day cancellation                                                                 
notices would be automatically sent via certified mail.                                                                         
                                                                                                                                
MR. GEORGE replied that uniformity would be nice.  He reminded the                                                              
committee that Alaska is a very small market and these are national                                                             
companies.  Almost anything the legislature does would probably be                                                              
a minor exception to these companies.  Mr. George commented that                                                                
sending out a certified notice to every Alaskan would still be                                                                  
somewhat of a thorn in the companies' side.  Even in Alaska they                                                                
are speaking of thousands and thousands of these notices.  A lot of                                                             
people pay their insurance within 10 days of the expiration date.                                                               
He indicated sending 20,000 certified letters out per month could                                                               
be a significant expense and even the physical process of                                                                       
certifying the letters would be inconvenient.  Mr. George also                                                                  
noted from his previous experience as director of the Division of                                                               
Insurance, when the division was "served" for an insurance company,                                                             
the division, in turn, had to send that summons/complaint to the                                                                
insurance company certified return request, and about a third of                                                                
the cards never came back.  Mr. George related he became so                                                                     
frustrated he called the office of Senator Ted Stevens.  He                                                                     
received a call back from the Postmaster General informing him the                                                              
postal service did not know what was happening but could not fix                                                                
it.  Mr. George said the situation was never resolved and he                                                                    
indicated certified return receipt was not a fail-safe.                                                                         
                                                                                                                                
Number 2000                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG asked how much certified mail costs.                                                                          
                                                                                                                                
KEVIN HAND, Legislative Administrative Assistant to Representative                                                              
Andrew Halcro, Alaska State Legislature, answered $2.90.                                                                        
                                                                                                                                
CHAIRMAN ROKEBERG indicated a business could also apply and fill                                                                
out their own certified mail if the mail is picked up at the place                                                              
of business.                                                                                                                    
                                                                                                                                
MR. GEORGE noted that is a manual step and indicated the companies'                                                             
current mailing processes are completely automated.  Mr. George                                                                 
reiterated the companies do think there are some solutions here and                                                             
they are continuing to work on them.  He mentioned Florida and                                                                  
Arizona both have aged populations; he commented someone has                                                                    
probably thought of this there as well.                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG questioned Mr. George's indicated testimony                                                                   
regarding concern for the upcoming year 2000 date change and the                                                                
programmers' ability to program.  The chairman noted Mr. George had                                                             
also testified that the underwriters are looking at age groups when                                                             
doing actuarial calculations to assess rates.  The chairman                                                                     
commented he was not sure if he could buy into the Y2K problem Mr.                                                              
George had mentioned; it seems to the chairman that if actuarial                                                                
calculations are going to be done for a policy rate quote to an                                                                 
individual, that person's age already has to be in the calculation.                                                             
                                                                                                                                
Number 2170                                                                                                                     
                                                                                                                                
MR. GEORGE responded that the major changes are for young drivers                                                               
versus anyone over 25 or so.  They are speaking about a fair number                                                             
of people who have been insured for the last 30 or 40 years who did                                                             
not get into the computer system.  Mr. George emphasized his                                                                    
concern about Y2K is that any changes which require a programmer to                                                             
change the program to give a different notice to a certain group of                                                             
people, or other action, takes a programmer's time.  Currently,                                                                 
that programmer is concentrating on generically beating the Y2K                                                                 
problem.  The companies would like to let the programmers continue                                                              
to concentrate on that.  Mr. George noted it would be a significant                                                             
problem for some companies, and would not be as big a deal for                                                                  
others.                                                                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG noted he looked forward to Mr. George's letter                                                                
endorsing HB 82 [HB 82 - IMMUNITY: CLAIMS ARISING FROM Y2K                                                                      
PROBLEMS].                                                                                                                      
                                                                                                                                
Number 2263                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA commented regarding health insurance and                                                                  
expressed that she could see a significant advantage in having an                                                               
extended time to make sure people received something.  She                                                                      
questioned if older policy holders didn't usually pay more because                                                              
of their age.                                                                                                                   
                                                                                                                                
MR. GEORGE answered there is actually a senior citizen discount on                                                              
automobile policies.                                                                                                            
                                                                                                                                
REPRESENTATIVE CISSNA questioned if this discount was often given                                                               
because the senior citizens had been policy holders for many years,                                                             
had helped support the company, and helped support other policy                                                                 
holders.                                                                                                                        
                                                                                                                                
MR. GEORGE replied he doesn't know that they are required to have                                                               
been longtime policy holders.  He believes the theory is that                                                                   
people probably drive less as they reach a more mature age and                                                                  
probably are statistically involved in fewer accidents because of                                                               
fewer miles.  He noted, though, the rate of accident per mile might                                                             
actually be higher.  Mr. George qualified that he was speaking off                                                              
the top of his head and really does not know how that comes out                                                                 
statistically.                                                                                                                  
                                                                                                                                
Number 2435                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA noted her father had had an insurance                                                                     
company; the thought had been to always try and provide service.                                                                
She commented she was sure all of the companies Mr. George                                                                      
represents do that.                                                                                                             
                                                                                                                                
MR. GEORGE reminded the committee that insurance companies make                                                                 
money by writing insurance, not by canceling it.  It is expensive                                                               
to cancel a policy then reinstate it or lose it altogether.  The                                                                
companies pay commissions to agents to make sure those things don't                                                             
happen.                                                                                                                         
                                                                                                                                
REPRESENTATIVE HALCRO said he had a couple of questions.  He                                                                    
stated, "The way the bill is written, you have to give 60 days                                                                  
first notice, then 30 and then..." [TESTIMONY INTERRUPTED BY TAPE                                                               
CHANGE]                                                                                                                         
                                                                                                                                
[From tape log notes: 'If my policy']                                                                                           
                                                                                                                                
TAPE 99-36, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO continued, "...and send out three notices                                                                 
before you can cancel me, is that the way you're reading ... the                                                                
legislation?"                                                                                                                   
                                                                                                                                
MR. GEORGE replied, "I'm not sure that carrying someone would be                                                                
the (indisc.) - you would - if the policy expired August 1, 60 days                                                             
prior to that you would send out the notice, so that on the day the                                                             
policy expired it could be canceled.  You wouldn't wait until close                                                             
to the end and then cancel it and have to extend it beyond."                                                                    
                                                                                                                                
REPRESENTATIVE HALCRO agreed, noting Mr. George had said some                                                                   
people do pay their insurance on a monthly basis.  Therefore, there                                                             
is no way this time period would fit within that 60-day window.                                                                 
                                                                                                                                
MR. GEORGE replied it would be "putting a round peg in a square                                                                 
hole," indicating it created some logistical problems.                                                                          
                                                                                                                                
Number 0089                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO questioned if the company would have to                                                                   
continue to carry the person if the certified mail was returned,                                                                
asking what the intent was.                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG noted the company could cancel the policy.                                                                    
                                                                                                                                
REPRESENTATIVE HALCRO said that is where his problem lies.  In the                                                              
case the chairman had cited, if the caregiver had thrown away the                                                               
certified letter it would not have made any difference.                                                                         
                                                                                                                                
CHAIRMAN ROKEBERG agreed that is true.                                                                                          
                                                                                                                                
REPRESENTATIVE HALCRO stated, "With all due respect, I think this                                                               
is a solution looking for a problem."                                                                                           
                                                                                                                                
MR. GEORGE pointed out Ms. Hagevig had described that her sibling                                                               
tries to intercept the parent's mail:  a notice to another person                                                               
might be a simple solution.  A person could designate themselves or                                                             
someone else to receive notices of cancellation.  Mr. George                                                                    
indicated that perhaps information to this effect could be included                                                             
with the person's premium billing when he/she hits the specific                                                                 
age.  Mr. George further indicated the industry is examining all of                                                             
these things to find workable solution.                                                                                         
                                                                                                                                
Number 0218                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG reminded Representative Halcro the present                                                                    
statutory policy is that the insurance company makes and files a                                                                
note to itself that the cancellation notice has been sent.  The                                                                 
company does not have to account to anyone regarding this.  To the                                                              
chairman, requiring the return receipt ensures there was an intent                                                              
to make notice by mail to the insured.  The return receipt also                                                                 
gives the insurance company proof it did make the notice.                                                                       
                                                                                                                                
REPRESENTATIVE HALCRO noted the current statutes state that they                                                                
shall obtain a certificate of mailing from the United States Postal                                                             
Service, so that is already required under AS 21.36.260.                                                                        
                                                                                                                                
MR. GEORGE explained, as he understands it, an insurance company                                                                
will have a computer printout with the list of names and the stack                                                              
of envelopes.  This list is signed by a postal employee.  Mr.                                                                   
George indicated there is also is a certification by the insurance                                                              
company employee that he/she actually mailed those notices.  He                                                                 
expressed doubt about certified mailing.                                                                                        
                                                                                                                                
Number 0337                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG indicated the company would receive the return                                                                
receipt verifying the letter had been delivered.                                                                                
                                                                                                                                
MR. GEORGE answered, "Or not."                                                                                                  
                                                                                                                                
CHAIRMAN ROKEBERG commented that perhaps the committee should                                                                   
mandate that if the return receipt was not received, the company                                                                
should give the individual a grace period.                                                                                      
                                                                                                                                
MR. GEORGE referred to the return receipt, indicating that piece of                                                             
paper would have to be dealt with manually, rather than by                                                                      
computer, and there would be some matching problems because it is                                                               
a fixed post office form.                                                                                                       
                                                                                                                                
CHAIRMAN ROKEBERG noted he appreciates Mr. George's comments and                                                                
has indicated to the industry that he is happy to work with them on                                                             
solutions.  Chairman Rokeberg commented some of the possible                                                                    
solutions might be increasing the age and examining other forms.                                                                
He explained the intent of the 60-day period was to allow                                                                       
sufficient time if a caregiver or someone else was paying the bills                                                             
for the individual.  However, the chairman does understand that                                                                 
probably would be a programming change and probably a larger cost                                                               
than the certified return receipt.                                                                                              
                                                                                                                                
Number 0501                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked why statutory grace periods are                                                                  
allowed with a cancellation or termination of a life insurance                                                                  
policy, but not with any other form of insurance.                                                                               
                                                                                                                                
MR. GEORGE answered that life and health have very different types                                                              
of products and grace periods do exist.  He noted he had been                                                                   
surprised on examining the statute that a person has two or three                                                               
years after a life insurance policy lapses to be able to pay the                                                                
premium and have the policy reinstated.  Mr. George indicated this                                                              
might affect the Ketchikan woman whose situation Ms. Hagevig                                                                    
described.                                                                                                                      
                                                                                                                                
REPRESENTATIVE MURKOWSKI said it makes one wonder if a grace period                                                             
couldn't just be allowed for certain individuals above a certain                                                                
age.                                                                                                                            
                                                                                                                                
MR. GEORGE noted that was one of the possibilities being                                                                        
considered, even if there were a fee for that.  For example, the                                                                
person receives the notice on the day the policy actually cancels                                                               
but if he/she sends payment in within 15 days for an extra $25                                                                  
dollars, the person could possibly be reinstated.                                                                               
                                                                                                                                
Number 0599                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG commented, "Option to extend prepayment," noting                                                              
it could be inserted in the initial billing.  He indicated possibly                                                             
the person could be sold 30 or 60 days worth of grace for a prepaid                                                             
premium.  He confirmed no one else wished to testify on the                                                                     
legislation and expressed his desire to see HB 158 move out of                                                                  
committee to the next committee of referral, the House Judiciary                                                                
Standing Committee (Judiciary).  The chairman noted he has agreed                                                               
to work with industry and make some adjustments to the legislation                                                              
as it moves through the process.  He commented the chairman of                                                                  
Judiciary formerly chaired Labor and Commerce and has been an                                                                   
active legislative participant with NAIC and NCOIL.  Chairman                                                                   
Rokeberg thinks the required age needs to be raised somewhat and                                                                
the time frames need to be examined, along with any suggestions the                                                             
industry can make that might reduce the cost and serve these people                                                             
better.  Confirming no one else wished to testify, the chairman                                                                 
closed the public testimony on HB 158.  He pointed to the D.1                                                                   
amendment before the committee, explaining it was requested by some                                                             
members of the insurance industry and he thinks it is valid.  The                                                               
chairman designated this proposed amendment as Amendment 1.                                                                     
Amendment 1, labeled 1-LS0128\D.1, Ford, 4/7/99, read:                                                                          
                                                                                                                                
     Page 2, line 11                                                                                                            
          Following "sold":                                                                                                     
               Insert "or terminated"                                                                                           
          Following "state;":                                                                                                   
               Insert "this paragraph does not authorize the                                                                    
     director to require an insurer to release proprietary                                                                      
     information;"                                                                                                              
                                                                                                                                
CHAIRMAN ROKEBERG moved Amendment 1, questioning if everyone had an                                                             
understanding of it.  He asked if there were any objections to the                                                              
amendment.  There being none, Amendment 1 was adopted.  With that,                                                              
the chairman requested the committee's indulgence to move the                                                                   
legislation to Judiciary for further activity.                                                                                  
                                                                                                                                
Number 0786                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO objected to moving the legislation out of                                                                 
committee.                                                                                                                      
                                                                                                                                
CHAIRMAN ROKEBERG asked Representative Halcro to speak to his                                                                   
objection.                                                                                                                      
                                                                                                                                
REPRESENTATIVE HALCRO said he thinks the bill has a lot of                                                                      
logistical problems; since he does not sit on Judiciary, he does                                                                
not feel comfortable moving the legislation until these problems                                                                
are addressed in the current committee.                                                                                         
                                                                                                                                
REPRESENTATIVE MURKOWSKI noted she sits on Judiciary and she would                                                              
prefer that the work on this legislation be done in this committee,                                                             
rather than Judiciary.  She thinks Labor and Commerce will produce                                                              
a good product and then Judiciary can do the final review.                                                                      
                                                                                                                                
Number 0881                                                                                                                     
                                                                                                                                
REPRESENTATIVE CISSNA commented on the references to the committee                                                              
members as freshmen legislators, noting many of the new members are                                                             
younger members.  She indicated the issue the bill addresses is                                                                 
something that becomes a more significant problem as one approaches                                                             
her own age and she expressed the hope that if the legislation is                                                               
heard again in Labor and Commerce, the committee would hear from                                                                
other witnesses.                                                                                                                
                                                                                                                                
CHAIRMAN ROKEBERG indicated he is concerned about the lateness of                                                               
the session and the "bottleneck" in Judiciary.                                                                                  
                                                                                                                                
REPRESENTATIVE HARRIS suggested the committee take an at-ease.                                                                  
                                                                                                                                
REPRESENTATIVE MURKOWSKI noted, "And Mr. Chairman, if I may speak                                                               
to that bottleneck I think that we could address..."                                                                            
                                                                                                                                
Number 0945                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG called a brief at-ease at 5:19 p.m.  The                                                                      
committee came back to order at approximately 5:21 p.m.                                                                         
                                                                                                                                
Number 0947                                                                                                                     
                                                                                                                                
CHAIRMAN ROKEBERG announced that HB 158 would be held over until                                                                
Monday [April 12, 1999].                                                                                                        

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