02/20/2023 01:30 PM Senate LABOR & COMMERCE

         SB  70-OWNER & CONTRACTOR CONTROLLED INSURANCE                                                                     
                                                                                                                                
1:55:17 PM                                                                                                                    
VICE-CHAIR BISHOP announced the  consideration of SENATE BILL NO.                                                               
70 "An  Act relating  to coverage  for additional  insureds under                                                               
owner   and  contractor   controlled   insurance  programs;   and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
VICE-CHAIR BISHOP  invited Ms. Wing-Heier  to put herself  on the                                                               
record and introduce SB 70.                                                                                                     
                                                                                                                                
1:55:51 PM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community and  Economic Development, Anchorage, Alaska,                                                               
introduced  SB 70  on behalf  of the  administration. She  said a                                                               
large construction project in Alaska:                                                                                           
                                                                                                                                
- is worth over $50 million;                                                                                                    
- has to be in a defined location, and                                                                                          
- has a defined period, like two or three years.                                                                                
                                                                                                                                
MS.   WING-HEIER  said   the  Trans-Alaska   Pipeline  and   some                                                               
improvement  projects  at  the  Anchorage  International  Airport                                                               
would qualify as large construction  projects. The owner buys all                                                               
the insurance for a project  instead of every contractor and sub-                                                               
contractor  buying their  own. She  said  there is  not really  a                                                               
limit   to  what   an  owner   can   purchase,  naming   workers'                                                               
compensation,  general  liability,   and  professional  liability                                                               
insurance.  The  project  owner controls  a  master  program  and                                                               
insures employees and  all the project workers under  it. In some                                                               
situations,  the owner  delegates that  authority to  the general                                                               
contractor;  that  is  called  contractor-controlled  instead  of                                                               
owner-controlled, which is basically the same thing.                                                                            
                                                                                                                                
MS.  WING-HEIER said  she  consulted  attorneys representing  the                                                               
division  to   propose  changing   one  sentence.   The  sentence                                                               
clarifies that a  contractor would be an additional  insured or a                                                               
sub-contractor would be  an additional insured and  have the full                                                               
benefits of  the insurance policy  that the owner would  buy. She                                                               
said the original  bill will be amended, but the  intent will not                                                               
change. The administration  introduced SB 70, so  the division is                                                               
ready to help if a project  exceeds $50 million; the division has                                                               
to  approve these  projects.  She believed  a  project like  this                                                               
could be on the North Slope.                                                                                                    
                                                                                                                                
1:58:10 PM                                                                                                                    
SENATOR DUNBAR  commented that  SB 70  deletes paragraph  (4). He                                                               
asked how long this language has been in statute.                                                                               
                                                                                                                                
MS. WING-HEIER replied since 2005.                                                                                              
                                                                                                                                
SENATOR  DUNBAR   asked  whether   there  have  been   any  large                                                               
construction projects since 2005 that went through this process.                                                                
                                                                                                                                
MS.  WING-HEIER  expressed  her   assurance  that  projects  have                                                               
qualified since  2005. However, she  has not approved one  in her                                                               
ten years with  the division. She said the  division reviewed the                                                               
statutory language and noticed some  ambiguity. The changes in SB
 clarify the intent.                                                                                                          
                                                                                                                                
1:59:07 PM                                                                                                                    
VICE-CHAIR BISHOP opened public testimony on SB 70.                                                                             
                                                                                                                                
1:59:43 PM                                                                                                                    
ED  MARTIN,  representing  self,   Kenai,  Alaska,  testified  in                                                               
opposition to SB 70. He is  a general contractor who is licensed,                                                               
bonded, and insured. He has  contracted in Alaska for many years.                                                               
He said his  concern is that the state  is unnecessarily creating                                                               
money for insurance companies. It  is ironic that state attorneys                                                               
want to change one word in a  statute. It is also ironic that the                                                               
state  is not  following AS  39.15.010-100. He  said that  public                                                               
official  bonds are  not provided  for any  department heads  who                                                               
should   carry  a   bond   for   malfeasance,  misfeasance,   and                                                               
nonfeasance in office. It blows  his mind that the attorneys want                                                               
to  change one  word that  would  affect the  private sector  yet                                                               
disregard  AS  39.15.010-100. He  said  he  would not  turn  down                                                               
insurance  if someone  wanted to  insure  him, but  he wants  the                                                               
state to  be accountable  for following  the statutes  that other                                                               
citizens have to  follow. He said he would like  the committee to                                                               
investigate and follow up on AS 39.15.010-100.                                                                                  
                                                                                                                                
2:03:45 PM                                                                                                                    
VICE-CHAIR BISHOP closed public testimony on SB 70.                                                                             
                                                                                                                                
VICE-CHAIR  BISHOP  invited Ms.  Wing-Heier  to  offer a  closing                                                               
statement.                                                                                                                      
                                                                                                                                
2:04:06 PM                                                                                                                    
MS. WING-HEIER  said the division  will offer an amendment  to SB
  during the  next hearing  that  is likely  to alleviate  some                                                               
concerns.                                                                                                                       
                                                                                                                                
VICE-CHAIR BISHOP held SB 70 in committee.