03/29/1994 01:33 PM Senate L&C

 SENATOR KELLY asked Mr. Fink to contact the State Appraiser's                 
 Association to testify Thursday and announced  SB 362  (OMNIBUS               
 INSURANCE REFORM) to be up for consideration.  He announced a                 
 recess from 2:20 through 2:25 p.m.                                            
                                                                               
 DAVE WALSH, Director, Division of Insurance, said there was one               
 change in the bill that affected Lloyds of London and Mr. Gussi               
 would answer questions regarding that issue.  He said this bill has           
 a $0 fiscal note and gives them the authority to respond to                   
 catastrophic situations.                                                      
                                                                               
  TAPE 94-21, SIDE B                                                           
  Number 580                                                                   
                                                                               
 MR. WALSH said it provides them with the authority to suspend a               
 certificate of an insurance company if they don't renew it and                
 provides for the voluntary surrender of a certificate of authority            
 without going through a full liquidation process.  Another                    
 provision allows them to grant a refund or tax credits for                    
 overpayment of premium tax.  Industry does not object to this.                
                                                                               
 SB 362 restores their ability to promulgate regulations for                   
 continuing education for agents and brokers.  The Agents and                  
 Brokers Association is in support of this.  The bill also clarifies           
 fiduciary accounts, saying they must be in Alaska if it's an Alaska           
 broker, but that a single bond can cover multiple offices.                    
 The bill also allows incorporated insurers into the definition of             
 a group of unincorporated insurers to reflect a recent change at              
 Lloyds of London.  As they have reorganized, they have gone from              
 allowing only individual members to allowing corporate members.               
 This provision is key to continued participation of Lloyds in our             
 market.                                                                       
                                                                               
 SB 362 strengthens the consumer protection and enforcement laws               
 with regards to false statements made when filing an insurance                
 claim.  A couple of other miner provisions allows the Director to             
 specify the format and content of rate and policy form filings.  It           
 clarifies health insurance coverage for newborn and adopted kids.             
 It allows electronic transfer of funds, makes "housekeeping"                  
 corrections and conforming amendments.                                        
                                                                               
 Number 500                                                                    
                                                                               
 SENATOR KELLY asked if there were any objections to adopting the CS           
 to SB 362.  There were none and it was so ordered.                            
                                                                               
 SENATOR RIEGER asked in reference to page 8, line 24 if somewhere             
 in statute you can have filings, but not be subject to subpoena.              
 MR. WALSH explained that the depth of a filing a company must make            
 really reveals everything.  In the past, frivolous lawsuits have              
 been filed just to obtain this information.  If any of the                    
 information is ruled to be material to a lawsuit, it is                       
 discoverable, but not from the Department of Commerce.                        
                                                                               
 SENATOR RIEGER asked at the top of page 37 what it meant that an              
 insurer may not increase the premium on auto insurance, unless it             
 applies to all insurance in the same class.  MR. WALSH said that              
 means that if you as a company set up your classes by age, type of            
 vehicle, etc., you may not have a discriminatory rate.                        
                                                                               
 SENATOR RIEGER said there were several references to credit                   
 insurance which, he thought, were bad deals, anyhow.  MR. WALSH               
 agreed and said their loss ratios are so low, you can't hold them             
 to a 20% standard.  This bill gives them the power to correlate the           
 premium to the losses.                                                        
                                                                               
 SENATOR SALO asked him to explain on page 3, closing an examination           
 hearing to the public.  MR. WALSH responded that when they examine            
 a company, they hold a hearing on the examination report.  At times           
 the reports can be highly critical and sometimes there are                    
 mistakes.  This is an opportunity where those things can get                  
 straightened out.  If the hearing officer disagrees, it becomes               
 public, but it gives an individual or company the right to come in            
 and be heard in a fashion that would do them the least harm, if a             
 mistake had been made.                                                        
                                                                               
 Number 430                                                                    
                                                                               
 SENATOR LINCOLN asked what section 12 does.  MR. WALSH explained              
 that insurers pay a premium tax to the state based upon the type of           
 line they write.  SB 362 would allow them to give tax credit, if              
 the figures were found to be wrong, so that the Department would              
 not have to come up with cash it didn't have, if it was a large               
 sum.  Although it has not come up, yet, he said they would have no            
 way of dealing with a big figure.                                             
                                                                               
 SENATOR LINCOLN asked what right we had to keep someone's money, so           
 they have to wait over a period to get it back.  MR. WALSH said if            
 it took longer than 1 year to pay back, he would come to the                  
 legislature for an appropriation.  This measure would give them               
 more flexibility to deal with an accidental overpayment to the                
 state.                                                                        
                                                                               
 SENATOR LINCOLN said she would feel better if it said "to be used             
 in the next calendar year to the fullest extent possible and then             
 have a monetary refund" rather than saying "in each succeeding year           
 until no credit remains."  MR. WALSH said that would be fine with             
 him.                                                                          
                                                                               
 SENATOR KELLY told Mr. Fink to put that language in the bill and              
 asked if there were any objections to adopting CSSB 362(L&C). There           
 were none and it was so ordered.                                              
                                                                               
 Number 508                                                                    
                                                                               
 SENATOR KELLY adjourned the meeting at 2:50 p.m.