Legislature(2021 - 2022)BELTZ 105 (TSBldg)

03/08/2021 01:30 PM LABOR & COMMERCE

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Audio Topic
01:29:47 PM Start
01:31:16 PM Confirmation Hearing(s)
01:46:55 PM SB27
02:36:06 PM SB87
02:49:18 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Consideration of Governor's Appointees: Board of
Barbers & Hairdressers
- Connie Dougherty
- Tina Taylor
- Khitsana Sypakanphay
-- Invited & Public Testimony --
Heard & Held
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
Bills Previously Heard/Scheduled
**Streamed live on AKL.tv**
                  SB  87-REINSURANCE; CREDITS                                                                               
2:36:06 PM                                                                                                                    
CHAIR  COSTELLO announced  the consideration  of SENATE  BILL NO.                                                               
87, "An  Act relating  to credit  for reinsurance;  and providing                                                               
for an effective date."                                                                                                         
2:36:35 PM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce,  Community, and  Economic Development,  Juneau, Alaska,                                                               
explained that  the State of Alaska  is a member of  the National                                                               
Association  of Insurance  Commissioners (NAIC),  which puts  out                                                               
its own standards of accreditation  for insurance companies. As a                                                               
member,  the  Division  of  Insurance has  agreed  that  when  it                                                               
examines insurance  companies such as Alaska  National or Umialik                                                               
that  are  domiciled  in  Alaska,   it  will  use  the  identical                                                               
standards  that other  member states  use.  When Alaska  National                                                               
goes to do business in  another state, that director of insurance                                                               
knows that company has been  reviewed identically to the way that                                                               
they look  at the insurance  companies domiciled in  their state.                                                               
The  savings  is  that insurance  companies  that  do  multistate                                                               
business  are examined  by just  one  state and  the results  are                                                               
shared  with other  member states.  For that  accreditation, each                                                               
division of  insurance is examined and  its accreditation renewed                                                               
if  the audit  shows that  the division's  examinations meet  the                                                               
NAIC standards.                                                                                                                 
MS.   WING-HEIER  described   reinsurance.  She   explained  that                                                               
companies  that   sell  primary  insurance  are   likely  to  buy                                                               
reinsurance  behind the  primary  policy. For  example, if  State                                                               
Farm sells homeowners  insurance and an earthquake  policy, it is                                                               
likely to  reinsure the earthquake peril.  What SB 87 does  is to                                                               
look worldwide at where reinsurance is coming from.                                                                             
MS. WING-HEIER  related that  the federal  government established                                                               
the  Federal Insurance  Office after  the Dodd-Frank  Act passed.                                                               
That  office  created  the  covered  agreement,  first  with  the                                                               
European  Union  and  second  with   the  United  Kingdom.  Those                                                               
agreements establish that the  NAIC accreditation standards apply                                                               
in the  European Union and  the United  Kingdom. Thus, when  a US                                                               
company buys  reinsurance from a  company domiciled in  Europe or                                                               
the  United Kingdom,  it is  clear  that the  credit standard  of                                                               
those foreign companies is the same  as if they were domiciled in                                                               
the  US. Conversely,  when  US companies  sell  reinsurance to  a                                                               
European  risk,  European  countries  can  trust  that  those  US                                                               
companies are financially solvent and have been examined.                                                                       
She said  the foregoing summary  of credit for  reinsurance shows                                                               
how the division looks at  the financials of an insurance company                                                               
to see  what it has  ceded to a  reinsurance company and  what it                                                               
has  underwritten  and  is  on  their  books.  This  analysis  is                                                               
important  to  ensure the  right  ratio  and that  the  insurance                                                               
company  has  sufficient  capital  to   pay  the  claims  of  the                                                               
consumers in Alaska.                                                                                                            
MS. WING-HEIER reviewed the sections of SB 87.                                                                                  
Section  1: The  new paragraph  (6) on  page 10  lays out  what a                                                           
qualified  reinsurer must  do  to assume  the  liabilities of  an                                                               
insurer domiciled in Alaska. The reinsurer must:                                                                                
(A)  have  its  head  office  or be  domiciled  in  a  reciprocal                                                               
(B) have and maintain capital  and surplus, or its equivalent, in                                                               
an amount set out in regulation;                                                                                                
(C) have and maintain solvency or  capital ratio in an amount set                                                               
out in regulation;                                                                                                              
(D) agree to  provide adequate assurances (detailed  in the bill)                                                               
to the Division of Insurance;                                                                                                   
(E)  provide  documentation  the   director  of  insurance  might                                                               
(F)  maintain a  practice  of  prompt payment  of  claims to  the                                                               
primary insurer; and                                                                                                            
(G) confirm to  the director on an annual basis  that they are in                                                               
compliance with Alaska Statutes                                                                                                 
Section  2: clarifies  compliance  set out  in  paragraph (6)  in                                                           
Section 1.                                                                                                                      
Section 3:  defines a  reciprocal jurisdiction  for a  US company                                                           
and a non-US  company, and that they must  meet certain standards                                                               
to be a reciprocal jurisdiction.                                                                                                
Section 4: adds  a new subsection (i) that  requires the director                                                           
to  consider the  list of  reciprocal jurisdictions  published by                                                               
the  NAIC.  Currently  those are  Bermuda,  the  United  Kingdom,                                                               
France, and Germany.                                                                                                            
Section  5:   allows  the  director   of  insurance   to  develop                                                           
regulations if needed.                                                                                                          
2:42:31 PM                                                                                                                    
SENATOR STEVENS commented on the  importance of understanding the                                                               
bill  because  labor  and  commerce  is  the  only  committee  of                                                               
referral in the Senate.                                                                                                         
MS. WING-HEIER  confirmed that  labor and  commerce was  the only                                                               
referral in the Senate.                                                                                                         
CHAIR  COSTELLO related  her comfort  based on  this being  model                                                               
legislation   from   the   National  Association   of   Insurance                                                               
Commissioners (NAIC). She asked Ms.  Wing-Heier to list the other                                                               
state legislatures  that have passed similar  legislation and the                                                               
effect if a state decides to amend the model law.                                                                               
MS.  WING-HEIER described  the process  for the  NAIC to  vet and                                                               
adopt  model  legislation  as  similar to  the  process  a  state                                                               
legislative  body   follows.  She   said  the  NAIC   passed  the                                                               
reinsurance  model  law  unanimously   in  2017  and  to  prevent                                                               
preemption by  the federal  insurance office,  state legislatures                                                               
must pass their own reinsurance  legislation, based on the model,                                                               
by  September  2022.  She recalled  that  Vermont,  Pennsylvania,                                                               
Virginia, Mississippi, and California  have adopted the model and                                                               
Idaho, Kansas, Iowa,  New York, Rhode Island,  West Virginia, and                                                               
Florida  were  considering it  in  2020  when the  pandemic  shut                                                               
things down.                                                                                                                    
2:46:46 PM                                                                                                                    
CHAIR  COSTELLO asked  Ms. Wing-Heier  to make  appointments with                                                               
each member  of the committee  to answer any  lingering questions                                                               
and send her  office the written responses to  the questions. She                                                               
said her staff would visit each  office after that to ensure each                                                               
member  is  comfortable with  the  bill.  After that,  she  would                                                               
schedule a second hearing and take public testimony.                                                                            
CHAIR COSTELLO  asked Ms.  Wing-Heier to share  how long  she has                                                               
been  the director  of insurance  and her  work history  prior to                                                               
MS.  WING-HEIER  related  that  she  has  been  the  director  of                                                               
insurance  since she  was hired  under then  Governor Parnell  in                                                               
2014. Before that,  she was with the Marsh &  McLennan Agency for                                                               
16 years  and the corporate risk  manager at Arctic Slope  for 10                                                               
CHAIR COSTELLO  asked if the  legislature has passed  other bills                                                               
from the NAIC.                                                                                                                  
MS. WING-HEIER answered that most of  the bills she brings to the                                                               
legislature are NAIC vetted.                                                                                                    
2:48:43 PM                                                                                                                    
CHAIR   COSTELLO   held   SB  87   in   committee   for   further                                                               

Document Name Date/Time Subjects
SLAC GOV Appointee Connie Dougherty Board Application_Redacted.pdf SL&C 3/8/2021 1:30:00 PM
SLAC GOV Appointee Tina Taylor Board Application_Redacted.pdf SL&C 3/8/2021 1:30:00 PM
SLAC GOV Appointee Khitsana Sypakanphay Board Application_Redacted.pdf SL&C 3/8/2021 1:30:00 PM
SB 27 v. A.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Sponsor Statement.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 v. A Sectional Analysis.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Written Testimony Denali Hemp Company.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Written Testimony Hemp for Healthcare in AK.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Fiscal Note DNR.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 27 Amendment No. 1.pdf SL&C 3/8/2021 1:30:00 PM
SB 27
SB 87 v. A.PDF HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 Transmittal Letter.pdf SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 v. A Sectional Analysis.pdf HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 NAIC Credit for Reinsurance Model Law Briefing.pdf HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87
SB 87 Fiscal Note 1.pdf HL&C 4/12/2021 3:15:00 PM
SL&C 3/8/2021 1:30:00 PM
SB 87