Legislature(2005 - 2006)CAPITOL 17
04/01/2005 03:15 PM LABOR & COMMERCE
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* first hearing in first committee of referral
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HB 216-PROPERTY/CASUALTY INSURANCE REGULATION CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 216, "An Act relating to insurance rate-making and form filing." The committee took an at-ease from 4:01:24 to 4:01:54. [REPRESENTATIVE ROKEBERG moved to adopt version CS HB 216 version 24-LS0349\Y, Bullock, 3/31/05.] CHAIR ANDERSON announced that the Version Y was before the committee. 4:02:18 PM LINDA HALL, Director, Division of Insurance, stated that the CS has some changes and that she would like to talk about the process that led to the CS and the original bill. She said that the end goal was to come up with more efficient means of rate and form review to enhance market place and make it more attractive to other companies. She revealed that the changes made by the CS were met through the same process of meetings and online discussions with the industry and Division members. MS. HALL stated that the major changes are found in a chart that the committee has. Predominately things that were redundant were changed. None of these changes were substantive. Self- certification language was probably the most substantive in nature. It is now clear that we want clear complete and accurate filings. She indicated that she is fully in support of the bill and thinks that it is an improvement of the regulatory environment as it maintains consumer protections and allows for flexibility that we did not have before. She then directed the committee's attention to a letter that was filed with the committee that answered some of the questions that Representative Rokeberg has concerning the bill. There is also a chart of bills that other states have adopted file and use systems, and it also gives information concerning about filings over the years and what did and did not qualify for filing under the flex rating system. It also included information concerning the number of days that it took to post a file. 4:06:01 PM REPRESENTATIVE GUTTENBERG referring to page 4 section 8, suggested that if someone raised their rates and then repeated the process 12 months later. He asked if this were something that was approved of by the Division. 4:06:43 PM MS. HALL stipulated that she would have to look at those. She stated that this would send up flags but that this situation could be allowed given certain circumstances. She said that it would get some scrutiny. REPRESENTATIVE GUTTENBERG asked that if a company protested and said that they fulfilled the requirements of the statute, would the bill allow one to pursue this. 4:07:38 PM MS. HALL indicated that it would have to be done with jurisprudence and there has to be substantial proof that they are in violation of the statute. 4:08:01 PM REPRESENTATIVE GUTTENBERG asked how long it would take to examine the documents and mitigate the violation. 4:08:17 PM MS. HALL answered that different filings have different number of days. The thing that slows filings down is when things get bogged down due to back and forth exchanges that need to thoroughly addressed. Typically it takes three or four days depending on the complexity. 4:08:57 PM REPRESENTATIVE ROKEBERG stated that in one example, the recent 77 rate filings that were received and most of them took an average time of 40 days to be dealt with by the Division. He then stated that 24 of these 77 rate filings took from 50 days to around 100 days. This time period consisted of two months to do almost a third of the work. It is obvious that the flex rate would allow the industry market the ability to adapt and change without having to go through the approval process. He then asked if her division still controlled the oversight and if they still took corrective action on any problem that might occur in the self-governing flex rate system. 4:09:53 PM MS. HALL answered that this was indeed the case. 4:10:02 PM REPRESENTATIVE ROKEBERG indicated that one of the concerns was that with the granting of the flex rate system, the department would be diminished in their authority and oversight. He then asked if the rate examples in the letter were actual examples from the state. 4:10:27 PM MS. HALL said that they were real examples, minus their identity. She then went on to say that these are typical rate filings. 4:10:39 PM REPRESENTATIVE ROKEBERG pointed out, in reference to the examples that there were numerous times that the rates do go down. He then said that rates really do go down, as evidenced by a 20 point rate band. 4:11:04 PM MS. HALL said that part of the responsibility of the division was to look at not only inadequate rates that can lead to insolvency but to also look at excessive rates and decide if they can be lower. She believes that the intent of the bill is to speed up the process and make it more responsiveness to the market. It allows an immediate response to conditions. Insurers will know that they can now file a rate decrease and increase with ease. This bill allows the rate to go both ways. 4:12:10 PM REPRESENTATIVE ROKEBERG agreed and said this was a very positive thing for the state. He then reemphasized that the Division still maintains the rate setting requirements of new producers. 4:12:36 PM MR. HALL said that this was correct. 4:12:44 PM CHAIR ANDERSON asked how would you categorize the support for this bill by industry. 4:13:05 PM MS. HALL indicated that in her two-year experience that the agent community approached her about the idea so that it would enhance the market and make it more responsive. She stated that industry had worked hard to modernize the way that business is conducted in Alaska. One of the things I hear regularly is that at some companies, the agents have to schedule computer time, and if you miss the appointment, the agent has to wait another 6 months to input their data. There is a stability here and that if all standards of the title the division knows its rate will be effective and the division can plan for its effective use, regardless if it is up or down. 4:14:51 PM CHAIR ANDERSON stated that ENCOIL is very supportive of modernization. 4:15:07 PM MS. HALL stated that ENCOIL supports this bill and the National Agent Association encourages support for this concept. CHAIR ANDERSON asked for a motion to move the bill. 4:15:21 PM REPRESENTATIVE ROKEBERG stated that this is one of the rare moments that we can actually keep our campaign promises to deregulating government. This is really a good thing and positive. 4:16:29 PM REPRESENTATIVE ROKEBERG moved to report CSHB 216 [version 24- LS0349\Y, Bullock, 3/31/05] out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 216(L&C) was reported from the House Labor and Commerce Standing Committee.