Legislature(2001 - 2002)
04/05/2002 03:25 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HJR 38-TERRORISM RISK PROTECTION ACT CHAIR MURKOWSKI announced that the next order of business would be House Joint Resolution No. 38, Relating to urging the united states congress to pass the terrorism risk protection act. Number 0553 CODY RICE, Intern for Representative Joe Hayes, Alaska State Legislature, explained that HJR 38 urges Congress to pass H.R. 3210, the Terrorism Risk Protection Act, which will create a backstop for potential losses in the event of a future national disaster, terrorist attack, or other large scale financial calamity. The [Act] will ensure that the losses sustained in the aforementioned events wouldn't be transferred to primary insurers and thus down to the policyholders. In response to Chair Murkowski, Mr. Rice informed the committee that H.R. 3210 is in the U.S. Senate Financial Services Committee where deliberations are revolving around [including] tort reform. Number 0716 BOB LOHR, Director, Division of Insurance, Department of Community & Economic Development (DCED), testified via teleconference. He announced the division's support of HJR 38. Mr. Lohr noted appreciation for the committee's interest and concern in regard to the effects of the events of September 11th on Alaska's insurance market. Furthermore, Mr. Lohr noted appreciation for the committee's support in urging Congress to consider how it might help stabilize the insurance market. This resolution, HJR 38, is timely since President George W. Bush is scheduled to address the U.S. Senate in regard to the need for terrorism insurance on Monday. MR. LOHR informed the committee that February 27th the Subcommittee on Oversight and Investigations of the Committee on Financial Services, held a hearing to access how the market is reacting to issues related to terrorism insurance coverage. At this hearing, the General Accounting Office (GAO) prepared a report describing how, in the absence of federal legislation, insurance companies and the market place have reacted to the events of September 11th. This report points out that insurers and reinsurers are withdrawing from the market. Since this has been occurring gradually, the economic consequences are unclear. The report summarizes the situation as follows: The ultimate scope of these effects is uncertain at this time, but they could become potentially significant in an economy recovering from a recession. Deciding whether Congress should act to help businesses obtain insurance against losses caused by terrorism is properly a matter of public policy. Consequences of continued inaction, however, may be real and are potentially large. MR. LOHR pointed out that Alan Greenspan, the National Football League, and the Risk Manager for the U.S. Olympic Committee has expressed support for the federal backstop legislation. Entities that have experienced difficulties in obtaining coverage or for an affordable price include the Mall of America, the Golden Gate Bridge, a large Manhattan real estate deal, and Alaska domesticated insurance carriers. Therefore, Mr. Lohr said that HJR 38 is a good resolution and thus he urges the committee's support. However, he noted that he would recommend a couple of amendments that speak to the congressional process. Number 0897 CHAIR MURKOWSKI noted that the committee packet includes a letter from Mr. Lohr to Senator Stevens, which essentially urges quick action on this matter. The letter points out that "reinsurance contract renewals are now being renegotiated for an effective date of January 1, 2002." The letter also expresses concern [with the impact] that the renewal of the reinsurance contracts will have in Alaska. Although this is a gradual effect, Chair Murkowski asked if Mr. Lohr has noticed anything precipitous as the reinsurance contracts are renewed. MR. LOHR said, "The sky didn't fall January 1st." Last fall, the insurance industry, many trade associations, and consumers and bankers made a concerted effort to say why this [federal] legislation was important. However, the actual effects have been subtle and thus there was concern that the [federal legislation] might languish. Mr. Lohr related his belief that with the President's renewed interest in this issue, the U.S. Senate will probably be more attentive to doing something with [H.R. 3210]. CHAIR MURKOWSKI surmised then that Alaska isn't in as serious shape as Mr. Lohr had anticipated. MR. LOHR answered, "I think that the jury is still out on that one." He pointed out that currently [the division] is considering rate increase requests from Alaska-based insurers that are almost entirely based on the dramatic increase in terrorism coverage. Therefore, he said he didn't believe that the market has yet seen the impact of that. "If approved, the rate increase request would have a significant effect on the workers' compensation market. And there is tangible indication of what's going on with respect to terrorism coverage in Alaska and its increased cost," he explained. He noted that how to handle the aforementioned as a regulatory rate making matter is debated. In response to Representative Kott, Mr. Lohr didn't know the specific time the President will speak on this matter and thus he offered to find out and inform the committee. CHAIR MURKOWSKI announced that no one else had signed up to testify on HJR 38. Therefore, she turned to the technical amendments Mr. Lohr had mentioned. REPRESENTATIVE KOTT inquired as to why the resolution included in the committee packet doesn't have a number. The committee took a brief at-ease from 3:42 p.m. to 3:43 p.m. CHAIR MURKOWSKI clarified that [the numbered version of HJR 38] is the same as the unnumbered version in the committee packet. Number 1132 MR. LOHR explained that the resolution focuses on H.R. 3210 and support of H.R. 3210 could be controversial simply because of the latitude left to the other body in shaping the bill. One approach would be to amend the title to say, "Relating to urging the United States Congress to pass terrorism risk protection legislation." Furthermore, the two specific references to "H.R. 3210, the Terrorism Risk Protection Act" on page 1, lines 4-5, should be deleted and replaced with "terrorism risk protection legislation". Similarly, on page 2, line 14, the text "H.R. 3210, the Terrorism Risk Protection Act" should be replaced by "terrorism risk protection legislation". Therefore, the recommendation in HJR 38 would be generic and leave it to the [U.S. Senate] as to the particular form of the legislation. Mr. Lohr mentioned that H.R. 3210 contains some "quirks" that the U.S. Senate might or might not agree with in the course of the congressional process. REPRESENTATIVE HAYES announced that he would accept Mr. Lohr's recommendations as friendly amendments. Number 1241 REPRESENTATIVE HAYES moved that the committee adopt Mr. Lohr's aforementioned technical amendments to page 1, line 4; page 1, lines 1 and 2; page 2, line 14, to conform the language to urge passage of "terrorism risk protection legislation". REPRESENTATIVE KOTT objected. He asked whether there is any other legislation pending in Congress that addresses the subject matter [addressed in H.R. 3210]. REPRESENTATIVE HAYES answered that he didn't believe so. Representative Hayes related his belief that if H.R. 3210 reaches the conference committee stage, the U.S. House of Representatives has latitude that far exceeds "our" latitude. Therefore, changes that exceed the structure for the Alaska State Legislature could occur at that point in the process. REPRESENTATIVE KOTT remarked that he prefers to provide specific guidance to Congress. If H.R. 3210 is the only legislation that addresses the issue, then it will be the vehicle. Therefore, Representative Kott didn't see any reason to eliminate the reference to "H.R. 3210" in HJR 38. Number 1338 CHAIR MURKOWSKI suggested that the first "WHEREAS" read as follows: "WHEREAS the United States House of Representatives has passed H.R. 3210, the Terrorism Risk Protection Act; and the United States Senate is considering terrorism risk protection legislation;". She asked if the aforementioned language, with the other changes recommended by Mr. Lohr, as well as the title change would address Representative Kott's concern. REPRESENTATIVE KOTT replied that it would be acceptable. He expressed the need for the [U.S.] Senate to be able to know the vehicle for which the resolution urges support. MR. LOHR informed the committee of his belief that there has been a turf war in the [U.S.] Senate in regard to which committee has jurisdiction. Furthermore, he reiterated that the U.S. House version of [H.R. 3210] attempted to include tort reform. Mr. Lohr said that the approach by Chair Murkowski would work. REPRESENTATIVE HAYES, in response to Chair Murkowski, said that he would accept Chair Murkowski's suggestion for the first "WHEREAS" clause. REPRESENTATIVE KOTT withdrew his objection. CHAIR MURKOWSKI clarified the amendment. The first "WHEREAS" clause would read as follows: "WHEREAS the United States House of Representatives has passed H.R. 3210, the Terrorism Risk Protection Act; and WHEREAS the United States Senate is considering terrorism risk protection legislation;". The amendment would also [replace "the Terrorism Risk Protection Act" language with "terrorism risk legislation"] and incorporate the recommendations by Mr. Lohr to change the title and page 2, line 14. There being no objection, the amendment was adopted. Number 1517 REPRESENTATIVE MEYER moved to report HJR 38, as amended,HJH out of committee with individual recommendations and the accompanying zero fiscal note. REPRESENTATIVE HAYES announced a conflict of interest because he works in the insurance industry. CHAIR MURKOWSKI asked if there was any objection to moving HJR 38 as amended from committee. There being no objection, CSHJR 38(L&C) was reported from the House Labor and Commerce Standing Committee.