05/03/2007 01:30 PM Senate LABOR & COMMERCE

                    CSHB 170(FIN)-INSURANCE                                                                                 
1:37:23 PM                                                                                                                    
CHAIR ELLIS announced HB 170(FIN) to be up for consideration.                                                                   
                                                                                                                                
LINDA HALL,  Director Division of  Insurance, explained  that she                                                               
requested this bill. She explained  that it has two purposes; the                                                               
basic  one  is financial  regulation  enactment  of measures  she                                                               
needs  to   maintain  the  division's  National   Association  of                                                               
Insurance  Commissioners  (NAIC)  accreditation. Alaska  and  all                                                               
other  states  are  accredited  by  the NAIC  as  part  of  their                                                               
solvency oversight.  Each state  relies on  the quality  of other                                                               
state's  financial review  and  oversight  and the  accreditation                                                               
process insures that Alaska's  financial regulation meets certain                                                               
standards. Alaska has been accredited for several years.                                                                        
                                                                                                                                
She said  the basic  model regulations are  actually part  of the                                                               
financial statement and they are  referenced in AS 21.09.200. The                                                               
financial  statement  instructions  are  going away  and  she  is                                                               
seeking  to have  them  put into  statute so  she  still has  the                                                               
authority to enforce them.                                                                                                      
                                                                                                                                
MS.  HALL  said the  director  can  require a  report  describing                                                               
internal  controls   and  request  reports  of   misstatement  of                                                               
financial conditions  from a CPA.  Basically, she is  making sure                                                               
the division is doing appropriate financial oversight.                                                                          
                                                                                                                                
1:39:04 PM                                                                                                                    
Section 3  requires that  the custodial  oversight is  in writing                                                               
and clarifies  who can have the  assets of the insurer.  The idea                                                               
is to make  sure the risk of insurers  becoming insolvent because                                                               
of dishonest or unqualified custodians  does not exist. These are                                                               
the main financial pieces, she said.                                                                                            
                                                                                                                                
MS. HALL  said another clarification includes  tax equalization -                                                               
if other  states charge our  domestic insurers their  higher rate                                                               
of premium  tax, Alaska will  charge, in return,  their companies                                                               
the higher rate of tax. "It's not meant to be punitive."                                                                        
                                                                                                                                
She said  sections 9,  12, and 13  clarify that  retaliatory fees                                                               
are  not to  negate various  premium  tax credits  this body  has                                                               
enacted in prior  pieces of legislation. Last year  a bill passed                                                               
that gave premium tax credits  for contributions to the high risk                                                               
health insurance  pool. She wants  to make sure insurers  who are                                                               
paying those  assessments are  not penalized.  The same  thing is                                                               
true for charitable contributions to  colleges or the Alaska Fire                                                               
Standards Counsel.                                                                                                              
                                                                                                                                
The  balance  of the  bill  deals  with  changing words  such  as                                                               
"directive" to "order"  because Ms. Hall said  she issues orders,                                                               
not  directives.  Changes were  made  in  high deductible  health                                                               
insurance  plans  so  that they  meet  IRS  standards.  Guarantee                                                               
Association references were changed  so that an insurance company                                                               
that is authorized  to write health insurance  policies in Alaska                                                               
can be assessed for administrative  charges. Unless they actually                                                               
write  policies they  would not  pay insolvency  assessments. The                                                               
rest of the bill gives her  authority to adopt regulations and it                                                               
has some "unusual" effective dates.                                                                                             
                                                                                                                                
1:41:08 PM                                                                                                                    
Pieces of  bill, she said,  are not effective until  2010 because                                                               
they  impact industry.  This effective  date gives  them time  to                                                               
adjust  to  changes  in  the  bill. She  has  heard  no  negative                                                               
testimony about the bill.                                                                                                       
                                                                                                                                
1:41:38 PM                                                                                                                    
SENATOR BUNDE said  considering the late date of  the session, he                                                               
would be comfortable moving it now.                                                                                             
                                                                                                                                
CHAIR ELLIS asked  if anyone would like to testify  on this bill.                                                               
He saw none. He asked Ms. Hall if she wanted to comment.                                                                        
                                                                                                                                
MS. HALL  said she has  not heard of  any opposition and  she had                                                               
taken care of the one concern that was raised.                                                                                  
                                                                                                                                
1:42:18 PM                                                                                                                    
SENATOR STEVENS moved  to pass CSHB 170(FIN)  from committee with                                                               
individual recommendations  and attached fiscal note.  There were                                                               
no objections and it was so ordered.