Legislature(2019 - 2020)BUTROVICH 205
05/09/2019 09:00 AM Senate RULES
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| Audio | Topic |
|---|---|
| Start | |
| HB78 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 78 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RULES STANDING COMMITTEE
May 9, 2019
9:03 a.m.
MEMBERS PRESENT
Senator John Coghill, Chair
Senator Cathy Giessel, Vice Chair
Senator Mia Costello
Senator Natasha von Imhof
Senator Tom Begich
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 78
"An Act relating to insurance; relating to an insurer's
corporate annual disclosure; relating to insurance company
holding systems; and providing for an effective date."
- MOVED SCS HB 78(RLS) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 78
SHORT TITLE: INSURER & GROUP INSURANCE DISCLOSURE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/04/19 (H) READ THE FIRST TIME - REFERRALS
03/04/19 (H) L&C
04/22/19 (H) L&C AT 3:15 PM BARNES 124
04/22/19 (H) Heard & Held
04/22/19 (H) MINUTE(L&C)
04/24/19 (H) L&C AT 3:15 PM BARNES 124
04/24/19 (H) <Bill Hearing Canceled>
04/26/19 (H) L&C AT 3:15 PM BARNES 124
04/26/19 (H) Moved HB 78 Out of Committee
04/26/19 (H) MINUTE(L&C)
04/27/19 (H) L&C RPT 5DP
04/27/19 (H) DP: HANNAN, REVAK, STUTES, TALERICO,
LEDOUX
05/03/19 (H) TRANSMITTED TO (S)
05/03/19 (H) VERSION: HB 78
05/06/19 (S) READ THE FIRST TIME - REFERRALS
05/06/19 (S) RLS
05/08/19 (S) RLS AT 4:00 PM BUTROVICH 205
05/08/19 (S) -- MEETING CANCELED --
05/09/19 (S) RLS AT 9:00 AM BUTROVICH 205
WITNESS REGISTER
RYNNIEVA MOSS, Staff
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the changes between version A and
version M of HB 78.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented CSHB 78(RLS).
DAN WILKERSON, Assistant Attorney General
Civil Division
Commercial and Fair Business Division
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions related to HB 78.
MARIE MARX, Attorney
Legislative Legal Services
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Drafting attorney for HB 78
ACTION NARRATIVE
9:03:48 AM
CHAIR JOHN COGHILL called the Senate Rules Standing Committee
meeting to order at 9:03 a.m. Present at the call to order were
Senators Begich, Giessel, Costello, von Imhof, and Chair
Coghill.
HB 78-INSURER & GROUP INSURANCE DISCLOSURE
9:04:16 AM
CHAIR COGHILL announced the consideration of HOUSE BILL NO. 78,
"An Act relating to insurance; relating to an insurer's
corporate annual disclosure; relating to insurance company
holding systems; and providing for an effective date."
He noted who was available to answer questions and solicited a
motion to adopt the proposed committee substitute.
9:05:13 AM
SENATOR GIESSEL moved to adopt the proposed Senate committee
substitute (SCS) for HB 78(RLS), [work order 31-GH1953\M], as
the working document.
CHAIR COGHILL stated that without objection, the CS was the
working document before the committee.
SENATOR GIESSEL clarified her motion to adopt work order 31-
GS1953\M.
9:06:22 AM
RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State
Legislature, Juneau, explained that most of the changes in
version M were made to conform to the Manual of Legislative
Drafting. Legislative Legal Services also added an indirect
court rule amendment in Section 7 to reflect court rule changes
in Section 3 and Section 5. The phrase "agreements or
documentation may not serve as evidence in a proceeding," on
page 11, line 27, changes a court rule and subsection (f) on
page 13, lines 16-22, also changes a court rule. Section 8 is a
new section that adds a conditional effect that Section 3 and
Section 5 will only be enacted if the court rule changes in
those sections are enacted by a two-thirds majority vote of each
house.
CHAIR COGHILL asked Ms. Wing-Heier to offer her perspective of
the committee substitute.
9:08:40 AM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Juneau,
described HB 78 as an accreditation bill. She explained that the
division receives an accreditation from the National Association
of Insurance Commissioners, which means that Alaska and other
jurisdictions have adopted substantially similar laws regarding
the financial solvency of an insurance company. For example,
when an insurance company from Pennsylvania comes to Alaska, the
director of insurance knows that company is being examined and
held to the same standards as Alaska National, Umialik, or
another Alaska insurance company. Conversely, when these
insurance companies are doing business in the Lower 48, the
commissioners or directors in those states know that the Alaska
companies have been examined and held to the same standards.
MS. WING-HEIER said the first part of the bill deals with
corporate governance. She explained that by statute, the
division examines the financials of an insurance company every
three years, but they do not receive the corporate governance
documentation in the off years, just during the examination. HB
78 asks insurance companies to provide the division with
corporate governance documentation every year. This will keep
the division informed about any material change in the board,
the financial solvency of the company, new acquisitions,
mergers, or divestures, and whether the board is aware of these
changes.
9:10:55 AM
MS. WING-HEIER said the second part of the bill deals with
group-wide international holding companies. She explained that
with changing economics worldwide, places like Asia and Dubai
are entering the insurance market and buying insurance companies
that transacts business in the United States. The bill says the
division can examine any holding company that is doing business
in Alaska if it is owned at the parent or holding company level.
She said international companies allow the division to conduct
financial examinations as a tradeoff for being allowed to do
business here. She said she can't imagine that an insurance
company like Alaska National or Umialik would be owned by an
international insurance company, but it could happen. On the
other hand, there are internationally owned insurance companies
not domiciled here but doing business in Alaska. The bill lays
out who would be the lead supervisor of an examination in this
circumstance. The division would always have the choice of
participating in an examination but it might not be the lead
supervisor. She said she finds that acceptable unless the
majority of the premium is Alaskan businesses. In that
circumstance, she said she would assert her right to lead.
She said other than the court rules, that sums up the bill.
9:12:56 AM
SENATOR BEGICH asked her to explain how Alaska would be
protected if an international or non-NAIC company was doing
business in Alaska.
MS. WING-HEIER explained that if an international company from
Japan, for instance, were to take the lead on an examination,
the division would find it acceptable to work with that company
if they trusted Japan to use the same standards. In the other
circumstance the division may be working with a state that has
chosen not to seek NAIC accreditation. She cited the example of
California and New York, both of which have many insurance
companies that don't necessarily seek NAIC accreditation. If the
division was working on an examination and it was determined
that the majority of the business was in California, the
division could work with that company if they were technically
using the same standards.
SENATOR BEGICH asked if HB 78 protects Alaska in that instance.
MS. WING-HEIER said yes.
9:14:38 AM
SENATOR BEGICH offered his understanding that there are a series
of disclosures so information could not be subpoenaed from the
division unless it is a federal or grand jury subpoena.
MS. WING-HEIER said that's correct. She noted that attorneys Dan
Wilkerson and Erin Egan were available to answer any questions
about that.
SENATOR BEGICH asked if the idea is that it doesn't prohibit
subpoenas being issued to other parties. It just protects the
division's control of confidential information.
MS. WING-HEIER that's correct. In the event of a lawsuit,
nothing would preclude somebody from going directly to the
insurance company to get the records. It's just that the
division would be unable to provide those records.
SENATOR BEGICH questioned the need in Section 5 for paragraph
(f)(1) on page 13, line 1, of the original bill. He commented
that it's redundant because that's what the bill does.
MS. WING-HEIER agreed that is what the bill compels her to do as
the director.
SENATOR GIESSEL advised that Sec. 21.22.117 relating to Group-
wide supervision of internationally active insurance groups is
now in Section 3 of the bill.
9:17:45 AM
SENATOR BEGICH read paragraph (f)(1) on page 12, line 6, of
version M:
(1) the director's cooperation is in compliance with
the laws of this state; and
He reiterated that it seems redundant.
MS. WING-HEIER said she didn't disagree.
CHAIR COGHILL asked Mr. Wilkerson to comment.
9:18:34 AM
DAN WILKERSON, Assistant Attorney General, Civil Division,
Commercial and Fair Business Division, Department of Law,
Anchorage, said it seems to clarify that the Alaska director of
insurance can cooperate with a regulatory official from a
nonaccredited jurisdiction as long as the Alaska director is in
compliance with Alaska laws.
SENATOR BEGICH said he understands that.
9:19:53 AM
CHAIR COGHILL asked Ms. Marks to talk about why she added a
section about a court rule amendment.
9:20:08 AM
MARIE MARX, Attorney, Legislative Legal Services, Alaska State
Legislature, Juneau, said it was a close call, but provisions
[in Sections 3 and 5] change discovery and evidence rules and
create a testimonial privilege. That has the effect of changing
the practice and procedure of a court rule. If this isn't
specifically mentioned in the bill and there is a conflict, the
court rule will override anything that is contrary in the bill,
she said. The fact that the provisions are added raises a
legitimate question and it's easier to resolve the potential
conflict now.
CHAIR COGHILL expressed satisfaction with the answer. He
recognized that there was a conceptual amendment.
9:22:27 AM
SENATOR GIESSEL moved to adopt Conceptual Amendment 1 that
states:
The director of the Division of Insurance may adopt
regulations necessary to implement the most recent
version of the Financial Analysis Handbook adopted by
the National Association of Insurance Commissioners.
CHAIR COGHILL objected for an explanation.
MS. WING-HEIER explained that the Division of Insurance receives
updated manuals from the National Association of Insurance
Commissioners on an annual basis and the division was under the
impression that AS 21.06.140, which compels the division to use
the current manuals, provided that authority. However, it is the
opinion of Legislative Legal Services that the division does not
have that authority. The proposed conceptual amendment allows
the division to implement regulations to adopt the current
manual.
CHAIR COGHILL asked Ms. Marx if she agreed with the explanation
and that this would resolve the issue.
9:24:01 AM
MS. MARX agreed that the legislature needs to grant the
department explicit authority to adopt future amended versions
of the NAIC manuals. She suggested that the new statutory
provision should state that by the authority granted in AS
44.62.245(a)(2), the Department of Commerce, Community and
Economic Development (DCCED) may incorporate future amended
versions of the Financial Analysis Handbook published by the
National Association of Insurance Commissioners.
SENATOR GIESSEL clarified that the conceptual amendment
encapsulates the concept that Ms. Marx articulated. She
suggested including a statement that Legislative Legal Services
has the authority to make conforming changes. That would allow
the drafters to include the reference to the specific statute
and language.
CHAIR COGHILL asked Ms. Marx if she heard the language suggested
in the conceptual amendment.
MS. MARX answered no, but with authority from the committee she
would be happy ensure the appropriate language is included.
9:27:32 AM
SENATOR GIESSEL clarified that the authority to make conforming
changes comes from the chair of the committee.
9:27:44 AM
CHAIR COGHILL restated the language in the conceptual amendment:
The director of insurance may adopt regulations
necessary to implement the most recent versions of the
Financial Analysis Handbook adopted by the National
Association of Insurance Adjusters.
CHAIR COGHILL withdrew his objection and authorized Legislative
Legal Services to make necessary conforming changes.
Without further objection, Conceptual Amendment 1 was adopted.
9:28:33 AM
SENATOR GIESSEL moved to report SCS HB 78(RLS), work order 31-
GH1953\M as amended, from committee [with individual
recommendations] and attached fiscal note(s).
CHAIR COGHILL stated that without objection, SCS HB 78(RLS)
passed from the Senate Rules Standing Committee with authority
for Legislative Legal Services to make conforming changes.
9:29:24 AM
There being no further business to come before the committee,
Chair Coghill adjourned the Senate Rules Standing Committee
meeting at 9:29 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 78 - Legal Memo Version M CS.pdf |
SRLS 5/9/2019 9:00:00 AM |
HB 78 |
| HB 78 - Sponsor Statement 3.4.19.pdf |
SRLS 5/9/2019 9:00:00 AM |
HB 78 |
| HB 78 - Fiscal Note DCCED-DOI 03.04.19.pdf |
SRLS 5/9/2019 9:00:00 AM |
HB 78 |
| HB 78 - Supporting Document-Support Letter from State Farm 3 28 19.docx.pdf |
SRLS 5/9/2019 9:00:00 AM |
HB 78 |
| HB 78 - Version A 3.4.19.pdf |
SRLS 5/9/2019 9:00:00 AM |
HB 78 |
| HB 78 - Version M Rules CS.pdf |
SRLS 5/9/2019 9:00:00 AM |
HB 78 |