Legislature(2013 - 2014)BARNES 124
02/07/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Overview: Department of Commerce, Community & Economic Development by Commissioner Susan Bell | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 7, 2014
3:19 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mike Chenault
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Lora Reinbold, Vice Chair
Representative Bob Herron
Representative Charisse Millett
COMMITTEE CALENDAR
OVERVIEW: DEPARTMENT OF COMMERCE~ COMMUNITY & ECONOMIC
DEVELOPMENT BY COMMISSIONER SUSAN BELL
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SUSAN BELL, Commissioner
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Presented opening remarks during the
overview of the Department of Commerce, Community & Economic
Development (DCCED).
KEVIN ANSELM, Director
Division of Banking and Securities (DBS)
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Presented an update on the Division of
Banking and Securities.
DON HABEGER, Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Presented an updates on the Division of
Corporations, Business, and Professional Licensing (DCBPL).
MARTY HESTER, Acting Director
Division of Insurance, Juneau Office
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Presented an update on the Division of
Insurance (DOI).
ACTION NARRATIVE
3:19:53 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:19 p.m. Representatives
Chenault, Saddler, Josephson, and Olson were present at the call
to order.
^Overview: Department of Commerce, Community & Economic
Development by Commissioner Susan Bell
Overview: Department of Commerce, Community & Economic
Development by Commissioner Susan Bell
3:20:16 PM
CHAIR OLSON announced that the only order of business would be
an Overview: Department of Commerce, Community & Economic
Development by Commissioner Susan Bell.
3:20:27 PM
SUSAN BELL, Commissioner, Department of Commerce, Community &
Economic Development (DCCED), introduced her staff present
today, including Jo Ellen Hanrahan, Deputy Commissioner, and
Micaela Fowler, Legislative Liaison. She indicated that three
divisions will present overview updates. She identified the
divisions and the directors: Kevin Anselm, Director, Division
of Banking and Securities; Don Habeger, Director, Division of
Corporations, Business & Professional Licensing; and Marty
Hester, Acting Director, Division of Insurance.
3:21:40 PM
COMMISSIONER BELL stated the DCCED mission is to promote a
healthy economy, strong communities, and protect Alaskan
consumers. She noted that Alaskans face a number of challenges
and possesses unique assets and strengths. The department has
been very active in working to address the high cost of energy
and building infrastructure to develop resources and to get them
to market. The DCCED works to market Alaska's goods and
services and has been very focused on Alaska's business climate.
The department also focuses on agency responsiveness, making
communities functional and stable, and providing assurance of
low taxes and fees to promote investment in Alaska. She has
served as commissioner since 2010 and commended her team of
dedicated people. She said DCCED continually works across
departmental boundaries through its regulatory and consumer best
practices, marketing programs, and energy and infrastructure
development programs to achieve overall efficiency.
3:23:17 PM
COMMISSIONER BELL provided a "snapshot" of DCCED's activities to
illustrate the volume of interactions it has with the business
community. The Division of Banking and Securities is
responsible for examining state charter banks and examined 40
depository and non-depository institutions in fiscal year 2013
(FY 13), issued more than 150 mortgage broker and lender
licenses, and registered more than 1,200 security broker/dealer
licenses. The Division of Corporations, Business and
Professional Licensing (BCBPL) oversees over 130,000 businesses
that have one or more professional license, business license, or
corporate license. Additionally, the DCBPL currently licenses
more than 50 registered corporations. The Division of Insurance
(DOI) oversees more than 45,000 licensees. She emphasized the
importance in recognizing that the department is engaged with
businesses, individuals, and communities.
3:24:54 PM
KEVIN ANSELM, Director, Division of Banking and Securities
(DBS), DCCED, stated the division's mission is to protect
consumers of financial services and promote safe and sound
financial systems. The division accomplishes its mission
through three sections that cover most of the financial services
in the state. She highlighted the division's 24 positions in
the organization chart, noting the DBS is divided among three
sections: banking, securities, and consumer finance [slide 1].
MS. ANSELM stated that division-wide the DBS protects consumers
by fielding questions, enforcing laws, and, if necessary,
penalizing those who harm citizens' financial well-being or
those who take unfair advantage of Alaska's business community.
Every Alaskan is touched by the 12 programs the division
administers, including banks, credit unions, payday lenders,
securities registered for sale in Alaska, investment advisors
and brokers who sell those securities, and Alaskans who obtain a
mortgage or use a money service business to wire funds, purchase
money orders or exchange currency. Additionally, the DBS is the
sole registry for Alaska Native Claims Settlement Act's (ANSCA)
corporation proxy filings [slides 2-3].
MS. ANSELM stated that the banking section charters, licenses,
and examines 65 state financial institutions including state
banks, holding companies, a credit union, a business industrial
development corporation, a small loan company, two trust
companies, 28 premium finance companies, and 25 payday loan
offices. These financial institutions are examined about every
18 months. She indicated 40 examinations were conducted in FY
13, and while examination results are confidential, the
depository institutions are profitable and well capitalized.
3:27:59 PM
CHAIR OLSON asked whether the division regulates pawn shops.
MS. ANSELM answered no.
3:28:18 PM
REPRESENTATIVE SADDLER asked whether there are any limitations
on the geographical location of payday lenders in Alaska.
MS. ANSELM answered that they are not, and it is clear under the
law that Internet payday lenders are also regulated. She said
that the division takes most actions against payday lenders
since many didn't seem to recognize that Alaska law covers them,
although the division has persuaded them otherwise.
3:28:47 PM
MS. ANSELM turned to the consumer finance section, which
licenses 165 mortgage broker/lenders, 143 branch offices, and
1,226 mortgage loan originators, of which 184 are physically
located in Alaska. She noted that every site that houses a loan
originator has to be licensed in Alaska. For instance, if a
California company is registered as a mortgage broker in Alaska
and has a separate office, that office will be licensed as a
branch. This requirement allows the division to track everyone
working in the industry. The consumer finance section also
oversees 63 money service businesses although only one is
domiciled in Alaska. She reported that over 700 delegates in
the money service businesses work in Alaska, often operating in
cruise ship ports seasonally or in the tourist industry,
typically wiring money and exchanging currency.
3:30:10 PM
REPRESENTATIVE SADDLER asked for clarification on the number of
financial institutions domiciled in Alaska. He asked whether
the presumption is that businesses such as the payday lenders
operate on the Internet or on cruise ships.
MS. ANSELM answered that the lenders are in the Lower 48 but are
licensed in Alaska since they conduct business in Alaska.
3:30:42 PM
MS. ANSELM reported that the consumer finance section conducted
13 examinations on the consumer finance regulated entities in FY
13. Additionally, this section fields consumer complaints, such
as investigating money transmitters. The division has received
consumer complaints that these businesses are difficult to
reach. Also, the division has received consumer complaints on
deceptive mortgage lending advertising or in instances in which
a mortgage loan originator fails to disclose fees or relevant
information to a borrower.
3:31:29 PM
CHAIR OLSON asked how the division regulates bitcoins.
MS. ANSELM answered that the division has been considering
bitcoins, which are a virtual currency [created by a process
called mining in which participants verify and record payments
in exchange for transaction fees and newly minted bitcoins].
The division has received inquiries about money transmitters
being registered to exchange bitcoins in Alaska. The division
has also considered the securities aspects due to the way
bitcoins are structured, as well as the investment it might take
to mine bitcoins. For example, the division has found some
companies want to syndicate, in essence, the purchase of
equipment and electronic software to mine bitcoins. She
remarked that bitcoins are currently a topic of conversation at
the state and federal level throughout the country.
3:32:31 PM
MS. ANSELM referred to the securities section [slide 6]. She
stated that the section registers 1,224 broker-dealers but none
are domiciled in Alaska; however, 51 branch offices are located
in the state. This section oversees 730 investment advisers, of
which 25 are solely state-supervised and located in Alaska. Over
81,000 securities agents are registered in Alaska, of which only
780 agents are located in Alaska.
MS. ANSELM reviewed the securities registrations and filings,
including that the division has over 5,000 mutual fund filings
and 370 securities registrations each year for stocks, bonds or
other offerings. Additionally, the division has 186 exemptions
from registration filings, which are primarily from Alaska
residents. She reported that approximately $13 million is
generated annually by the securities registrations and filing
fees. In FY 13, this section conducted 12 investment advisor
examinations and one broker-dealer examination in Alaska. The
securities section accepted 229 proxy related Alaska Native
Claims Settlement Act (ANCSA) filings, which are public
documents. The division also had 115 ANCSA inquiries. Further,
the securities staff investigates investor and ANCSA related
complaints and reports of securities fraud; however, most
complaints are related to activities that originate outside
Alaska. A number of companies sell bogus investments to
Alaskans, and Alaskans are often subject to scams related to
real estate, oil and gas, and precious metal extraction.
3:34:51 PM
REPRESENTATIVE SADDLER asked whether the 115 inquiries are
solely related to ANSCA.
MS. ANSELM answered yes. She pointed out that the inquiries are
fewer than in previous years. Over the past three years, the
division has streamlined its regulations and made the ANSCA
regulations easier to understand. Further, the division has
conducted more outreach to provide education to the public.
Thus, the division's call volume has been substantially reduced,
she said.
3:35:27 PM
MS. ANSELM said that the Banking and Securities' consumer
protection section reaches consumers in a number of ways. Last
fall, in coordination with AARP and the University of Alaska
Anchorage, the division sponsored the Anchorage Fraud Summit
featuring the DCCED's commissioner, U.S. Attorney Karen
Loeffler, and representatives from the U.S. Securities and
Exchange Commission (SEC), the Federal Bureau of Investigation
(FBI), and the attorney general's office. These presentations
have been reprised on video that will be posted on the Internet
to give Alaskans more tools to protect themselves.
Additionally, the DBS has been building resources for the
business community and the public on its website, making it a
destination spot for finding financial information. The
division has expanded its outreach to entrepreneurs, working
with the Municipality of Anchorage (MOA) on the 49th State Angel
Fund. She pointed out one challenge this section faces has been
limited resources since the bulk of the licensees are outside
Alaska. The technological age and lure of the wealth of
Alaska's citizens bring the good and the bad to the physical and
virtual borders. The division continues to cultivate its
relationships with state and federal regulators and law
enforcement in order to conduct joint examinations,
investigations, and enforcement actions, including global
negotiated settlements or administrative actions to save time
and money. The division uses technology to share information
with regulators to become more efficient and to use national
databases to allow businesses and individuals the ability to
register easily. Additionally, she reported a national database
allows people to determine who is licensed in Alaska or in the
Lower 48. The division accepts ANCSA corporation and
shareholder filings electronically, but this section still
maintains paper files.
3:37:54 PM
REPRESENTATIVE SADDLER referred to slide 6, to the 1,200 broker-
dealers not located in Alaska and asked for clarification.
MS. ANSELM answered that the broker-dealers are licensed in
Alaska, but they are not domiciled in Alaska. She commented
that many branch offices and a number of firms and sales agents
are licensed in Alaska.
3:38:35 PM
REPRESENTATIVE SADDLER inquired for clarification on the 51
branch offices and the employees that are not broker-dealers.
MS. ANSELM responded that sales agents of broker dealers work in
the branch offices.
3:38:54 PM
MS. ANSELM related a scenario in which a brokerage is in Oregon,
with 20 agents in Alaska, all of whom are likely registered in
Alaska and in other states. She explained these agents work in
Alaska, but the brokerage firm is also located in Oregon, with
50 agents who make calls to Alaska, New York, California, and
Florida. She said this is the reason that so many broker sales
agents are licensed in Alaska.
REPRESENTATIVE CHENAULT remarked that is where the 81,000 figure
comes from.
MS. ANSELM answered that a number of brokerage firms license
their higher producing agents in all 50 states since it is much
less expensive to license the agents than to have them violate
the law.
3:40:04 PM
REPRESENTATIVE JOSEPHSON expressed concern about litigation and
the service of process. He said it is frightening to think of
the level of fraud. He admired what the Division of Banking and
Securities is doing.
3:40:48 PM
DON HABEGER, Director, Division of Corporations, Business, and
Professional Licensing (DCBPL), DCCED, stated the DCBPL has four
working units consisting of professional licensing, business
licensing and corporations [slide 8]. Additionally, the
division has an administrative support unit, which often is
considered the "front line" and consists of employees who
receive calls, sit at the front desk, handle licensing needs,
and collect the money. The last unit is the investigations
unit, which supports all activity, including professional
licensing and corporations; however, they predominantly focus on
professional licensing. Within these four units, the DCBPL has
two primary functions, business licensing and corporations
[slide 9]. The business licensing section issued 67,074
business licenses. While some people may have multiple
licenses, each company is required to have a business license.
Additionally, this section handles over 54,000 corporate
licenses. He said this team of eight serves 120,000 Alaskan
customers and customers outside Alaska.
3:43:51 PM
MR. HABEGER pointed out that business licensing is a team of
two, who issued 16,000 new licenses and processed 35,000
renewals in FY 14. Alaska offers businesses an option to renew
annually or biennially and about half choose the single year
option and the rest the biennial option. Typically most
licenses fall under a December renewal cycle. This group
endorses business licenses for tobacco as retailers are required
to have a tobacco endorsement in their business license. In FY
13, the division issued 1,364 tobacco endorsements.
MR. HABEGER said the second part of the team registers
corporations. A number of entities can register in Alaska,
including corporations and cooperatives. Although each type has
their own section of law, the process to register is basically
the same. The parties incorporate, register, identify their
officers, provide an initial report, and receive a corporate
license. The corporation must update its reports on a biennial
basis, provide new information when officers change or certify
its existing corporate officers. In some cases some percentage
of ownership is required. The information is public, on the
division's website, and individuals can check a name and see
which corporations are connected to the individuals. Likewise,
the public can check business licenses and parties can download
a complete list of licensees from the website. In FY 13, this
section sent out six batches of courtesy notices to businesses
for a total of 28,000 courtesy notices to businesses to inform
them they need to comply with the biennial report. The
department sent the courtesy notices in an effort to increase
the number of businesses that are in good standing.
3:47:43 PM
REPRESENTATIVE SADDLER asked whether the business licenses are
fee supported.
MR. HABEGER answered yes; however, it is a little different than
professional licenses. The professional licenses have a fee
adjustment on a biennial basis, but business license fees are
set in statute, whereas corporate fees are set in regulation.
He clarified that the sections are adequately capitalized
through their fees. He said that the section brings in more
revenue than it expends.
3:48:50 PM
MR. HABEGER turned to professional licensing and investigations
[slide 10]. He explained that 80 percent of the personnel
activity is devoted to professional licensing. He said that the
professional licensing provides administrative support for 19
licensing programs. For example, geologists can obtain
licensure and the state recognizes them for life. Applicants of
other programs can apply to the state either through credentials
or examination. For example some boards, including the Board of
Public Accountancy, have an agreement with the national
professional group, and the board sends applicants to the
testing site and the state recognizes those that pass.
MR. HABEGER explained that the division also issues licenses by
reciprocity, in which applicants are licensed in another state
and the board will recognize their credentials. Thus, if they
are considered equivalent to the requirements in Alaska, the
board will issue these applicants licenses.
3:51:19 PM
MR. HABEGER reviewed statistics, such that in FY 13, the team
renewed nearly 30,000 licenses. The licensing cycle is
typically a month-long cycle and the division is required by law
to notify licensees that their license will expire. Licensees
must meet the deadline or be subject to penalties. Nearly
30,000 renewed their licenses last year, and the division issued
about 7,000 new licenses, bringing the total number of
professional licenses to nearly 67,000.
MR. HABEGER highlighted that the professional licensing team has
been working hard on responsiveness to consumers, for example,
by processing license renewals timely. At times, the division
brings in temporary personnel to ensure responsiveness. In FY
13, applications were screened within a ten-day timeframe. The
division's goal is to have 50 percent of renewals issued in the
four-week period. The division is open to public complaints in
writing and received 1,301 complaints in FY 13. He explained
the process, such that intake staff first obtains the
information in writing to be certain the issue is a valid issue.
After staff ensures the state has jurisdiction and the issue is
a violation of a licensing law, the complaint becomes an
official complaint. During this process, the board may become
involved on a limited basis to determine if it is a legitimate
issue. If a board member agrees that the matter is a violation,
the investigator gathers evidence and the matter will be further
investigated. The board limits its involvement since the whole
board may ultimately need to consider the matter. Last year,
the division conducted 385 investigations, closed 240
investigations, and took 253 actions. For example, the action
taken may be a formal board disciplinary measure, such as
suspending the license. Further, the board may issue a
conditioned license requiring continuing education, or the board
may place the licensee on probation.
3:56:12 PM
MR. HABEGER outlined other improvements the division has made.
He pointed out that the legislative audits highlighted problems
with the division's case management system. The division has
implemented a case management system to address the audit's
findings. In 2012, the division completed phase 1 of this
process and through the process identified some significant
issues. The management team identified 67 items that needed to
be addressed. In 2013, the division continued its work and the
management team completed all 67 items, on time, and on budget.
The division will finish the final testing and approval of the
case management system by the end of FY 2013.
3:57:48 PM
REPRESENTATIVE JOSEPHSON asked about the distinction between
practice and title statutes. For example, a person can
advertise himself/herself as a professional therapist and have a
degree and credentials that supports his/her professional
standing. However, the person could also act as a counselor and
not possess the appropriate degree, but still be within the law.
MR. HABEGER explained that the division has 39 programs with a
variety of protections. He agreed that some licensees have a
title protection. For example, marriage and family therapists
fall under title protection. This means that the person must
have credentials in order to use the title of marriage and
family therapist, for example, on business cards or other
advertising. In other professions, such as the medical
profession, a person cannot perform a service that a medical
doctor would provide unless the person has a license to practice
medicine. The distinction is that the title is protected in
one, and the practice is protected in the other, he said.
REPRESENTATIVE JOSEPHSON answered that appraisers did not have
any license. He asked whether any other professions are
unregulated.
MR. HABEGER said some bills before the legislature discuss new
licensing professions. For example, he understood an effort was
being made to license phlebotomists.
4:00:38 PM
MARTY HESTER, Acting Director, Division of Insurance (DPI),
Department of Commerce, DCCED, reviewed the organization chart.
He said the Division of Insurance's mission is to regulate the
insurance industry to protect Alaskan consumers [slide 11]. Two
core themes offer consumers this protection. It protects
consumers through an effectively regulated insurance market and
protects Alaska's consumers by regulating the insurance
marketplace to promote a healthy competitive marketplace. The
division strives to keep a balance between the two, he said.
4:02:00 PM
MR. HESTER explained that the division must have the products
offered by insurance companies for consumers. If the division
fails to do so, the consumers are ultimately not protected. He
pointed out that DOI has 54 positions, with 21 in Anchorage and
33 in Juneau [slide 11]. The division consists of six sections.
The licensing section oversees current licensing statutory
requirements and oversees training, ethics, selling, continuing
education, and licensing renewals. The consumer services
section provides direct contact with Alaskan consumers. The
investigation section provides the first line in detecting
insurance fraud for companies and consumers. The fourth section
includes the property/casualty actuaries, and the fifth section
are the life/health actuaries who approve rates and conduct
exams on insurance entities. Sixth, the financial examinations
section conducts financial audits on the seven domesticated
insurance companies in Alaska and premium tax audits on any
company licensed to sell insurance in Alaska.
4:03:39 PM
MR. HESTER highlighted some of the achievements each section has
achieved in the last year. He began with the market conduct and
filing approval section that monitors rates and forms [slide
12]. He characterized this as covering the normal products that
consumers are familiar with, such as car policies, home
policies, and health policies, which are reviewed and approved
to ensure conformity with statutory standards. He reported that
this section reviewed 3,256 rate and form filings and
disapproved 135.
4:04:31 PM
CHAIR OLSON asked whether the non-compliance was property and
casualty or life and health insurance.
MR. HESTER answered property and casualty insurance.
MR. HESTER said that the licensing section probably handles the
most volume. Currently, over 45,316 licensees operate in
Alaska, an increase of almost 8 percent. Of that, about 1,500
resident Alaskans are agents or producers. The division
implemented new technology software developed by the National
Association of Insurance Commissioners. The system is called
state-based systems and the division is in the second phase of
the rollout. The first phase primarily allows licensees to
conduct their work with the state online. He said that 95
percent of the over 56,000 documents processed last year was
conducted online, allowing agents and producers to conduct
business from anywhere.
4:06:01 PM
MR. HESTER discussed the financial examination and compliance
process that helps ensure that businesses in Alaska are solvent
[slide 13]. He reported that in 2012, $3.3 billion of total
premiums were written in total premiums for both lines -
property and casualty, and life and health insurance. These
figures are down from $3.5 billion, which suggests that the
Alaska market is starting to enter a softer insurance market
phase and means premiums go down and products go up. The rest
of the nation is facing a harder market with higher premium
rates while Alaska's rates are going down. One reason for this
is the availability of profits. He pointed out that those in
assigned risk pools for private automobile insurance number less
than 50 and for commercial automobile insurance is zero.
4:07:21 PM
REPRESENTATIVE SADDLER asked for clarification on the comment
that "premiums go down" and "products go up."
MR. HESTER answered that in a softer market the premium rate
will go down as companies are trying to compete for the premium
dollars, for example, the dollars paid for insurance policies
for homes or cars. That the state is bringing in $3.3 versus $
3.5 billion and people are not in assigned risk pools suggests
Alaskans are getting the products they need at a better price.
In response to a question, he answered that when insurance
companies compete for premium dollars, the companies will offer
consumers additional products.
CHAIR OLSON added it could mean broader coverage.
MR. HESTER agreed. He acknowledged that it is a significant
difference in one year. He siad that having lower premiums with
more products available is good for consumers. The division is
determined to ensure that consumers have the products they want
and need at a price they can afford.
4:09:34 PM
MR. HESTER reported that the division collected over $65 million
in premium taxes, fees, and penalties last year. Of that, $7.6
million is the division's request, and the remaining goes in the
general fund. The division admitted 15 new insurance companies
to do business in Alaska, of which 3 were life and health and 12
were property and casualty insurance companies.
MR. HESTER discussed market conduct examinations. He explained
that the division examines companies to ensure compliance with
the National Association of Insurance Commissioners, which
requires that states only perform full-fledged market conduct
examinations on those insurance companies that are domesticated
in their state. The division does not check each insurance
company's books each year since the insurance companies pay for
these compliance examinations. This limitation helps insurance
companies, and it streamlines the audit process. The division
completed six premium tax audits. He pointed out that 1,128
insurance companies are admitted to do business in Alaska and
the division has authority to perform a premium tax audit at any
time. The financial examination is the full-fledged market
conduct exam conducted on one of the domesticated companies;
however, two exams are pending. The 160 market regulatory
activities listed represent a "spot check" on the insurers doing
business in Alaska. If the division receives a series of
complaints, the division will target the company and investigate
the company for compliance.
4:11:50 PM
MR. HESTER discussed the investigations and consumer services
sections [slide 14]. The investigation's section collaborates
with local, state and federal entities across the state and
country to investigate alleged fraudulent activities. The
division works with Workers' Compensation and the Division of
Labor & Workforce Development. Last year, the division opened
54 criminal investigations and closed 77, of which 36 were from
prior years. The consumer services section responds to consumer
inquiries and policies and helps to assist the consumer with
complaints. This section opened and closed 238 complaints,
which indicates that this section is very efficient in
responding to consumer complaints and issues. Of the 238
complaints, the division had insurance companies refund $194,648
to Alaskan consumers in 2013.
4:13:28 PM
REPRESENTATIVE SADDLER referred to the $194,000 in refunds. He
asked whether the division receives any payment for the cost of
processing the refunds.
MR. HESTER answered that there is not any refund to the state.
He said that one of the division's missions is to protect
Alaskan consumers. He said that it is a contract between the
consumer and the insurance company, and it is the division's
duty to ensure enforcement of insurance laws. In response to a
question, he said the money is refunded directly to the consumer
from the insurance company.
4:14:38 PM
REPRESENTATIVE JOSEPHSON asked whether consumers pursue their
own appeals.
MR. HESTER answered that consumers can file a complaint at any
time during the claims process. The division will review the
claims documents to investigate the complaint. Further, the
consumer doesn't need to wait for a check or file the claim 30
days after the claim is closed. The consumer can file the
complaint while the claim is open.
4:15:29 PM
REPRESENTATIVE JOSEPHSON asked whether the division needs
general fund monies to operate.
MR. HESTER answered that the division is completely "receipts
based," so the $65 million it generates in revenue covers its
operating costs.
4:15:56 PM
REPRESENTATIVE JOSEPHSON asked for clarification on how the
revenue is generated.
MR. HESTER answered that the state assesses various premium
taxes on insurers for insurance policies written in Alaska. He
reiterated that insurers pay quarterly taxes of 2.7 percent on
any insurance premiums collected for insurance policies written
in Alaska.
4:16:23 PM
REPRESENTATIVE JOSEPHSON expressed concern about the philosophy
behind self-funding. He asked whether the division would feel
comfortable requesting general fund operating funds from the
legislature for division needs not met by incoming receipts. He
said it would be important for government to know if the DOI or
DCBPL had a dire emergency arise. He recapped his concern by
asking whether the divisions would ask for general fund monies
if the divisions assessed that user groups couldn't absorb
higher tax rates.
MR. HESTER offered his belief that the entire division has the
full support of Commissioner Bell. In the event the division
needed additional operating funds he would make the request;
however, he couldn't think of any instance that it would be
necessary to do so.
CHAIR OLSON recalled that the division generates revenue at a
ratio of 9 to 1 in terms of its operating costs.
MR. HESTER agreed.
CHAIR OLSON remarked that the division is the third or fourth
largest source of receipts deposited to the general fund after
oil taxes.
MR. HESTER said that is correct.
4:19:06 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:20 p.m.
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