Legislature(2005 - 2006)CAPITOL 17

04/01/2005 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 211 DENTISTS; HYGIENISTS; BD OF DENTAL EXAM. TELECONFERENCED
Moved Out of Committee
+= HB 216 PROPERTY/CASUALTY INSURANCE REGULATION TELECONFERENCED
Moved CSHB 216(L&C) Out of Committee
*+ HB 227 ALASKA SMALL LOANS ACT TELECONFERENCED
Bill Postponed
Bills Previously Heard/Scheduled
= HB 180 WORKERS' COMPENSATION
Heard & Held
                                                                                                                                
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.                                                                                                

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