HB 324-INS. DATA SECURITY; INFO. SECURITY PRGRMS  3:20:24 PM CHAIR SUMNER announced that the first order of business would be HOUSE BILL NO. 324, "An Act relating to insurance data security; amending Rule 26, Alaska Rules of Civil Procedure, and Rules 402 and 501, Alaska Rules of Evidence; and providing for an effective date." [Before the committee, adopted as the working document on 3/25/24, was the proposed committee substitute (CS) for HB 324, Version 33-LS1348\B, Wallace, 3/21/24 ("Version B").] 3:20:53 PM The committee took an at-ease from 3:20 p.m. to 3:22 p.m. 3:22:02 PM REPRESENTATIVE WRIGHT moved to adopt Amendment 1 to Version B, labeled 33-LS1348\B.1, Wallace, 3/27/24, which read: Page 12, line 28, following "information;": Insert "and" Page 12, line 31: Delete "; and" Insert "." Page 13, lines 1 - 3: Delete all material. Page 14, line 28: Delete "electronic" Page 14, line 30: Delete "electronic" Page 15, line 9: Delete "electronic" REPRESENTATIVE CARRICK objected. REPRESENTATIVE WRIGHT asked the bill sponsor to speak to Amendment 1. 3:22:30 PM CLIFTON COGHILL, Staff, Representative Will Stapp, Alaska State Legislature, on behalf of Representative Stapp, prime sponsor, deferred to Ms. Wing-Heier. 3:22:51 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community & Economic Development, explained that the amendments before the committee today would fix drafting errors in Version B at the request of the insurance industry. Amendment 1 would clarify that if a consumer were to sue the insurance company for breach of private information, data can be obtained, but not from the Division of Insurance ("the division") or the division director. She added that the division holds the data confidential to conduct the investigation and then levies whatever penalty or fine that may be assessed against the insurance company. 3:24:36 PM REPRESENTATIVE CARRICK questioned the removal of "electronic" in Amendment 1. MS. WING-HEIER said although most information is kept electronically, there are still some paper files within insurance companies and brokerage firms that may contain personal information that could be breached. For that reason, "electronic" is removed to ensure that all information is subject to the bill. REPRESENTATIVE CARRICK removed her objection. There being no further objection, Amendment 1 was adopted. REPRESENTATIVE WRIGHT moved to adopt Amendment 2 to Version B, labeled 33-LS1348\B.2, Wallace, 4/1/24, which read: Page 13, line 9: Delete "10" Insert "15" REPRESENTATIVE CARRICK objected. She questioned the rationale for changing the number of employees exempted from risk assessment from "10" to "15" or fewer. 3:26:21 PM MS. WING-HEIER said she would not object to Amendment 2 because it still captures the majority of insurance agencies within the state. REPRESENTATIVE CARRICK asked whether Version B would be a valuable tool for insurance agencies with 10 to 14 employees. MR. COGHILL did not know the answer. 3:27:40 PM REPRESENTATIVE SADDLER asked which firms would be included in 15 [employees] that would be otherwise limited by 10. MS. WING-HEIER explained that in the state of Alaska, most insurance agencies are either the larger firms or those with 5 employees; consequently, not many would fall between 10 and 14. 3:29:11 PM REPRESENTATIVE PRAX guessed that the captive agencies would have support from the "mother company" but the independent agencies would have to dig into their own pockets. MS. WING-HEIER stated that many smaller agencies have been acquired by a larger firm, which would require them to comply with this bill. She agreed that the firm of captive offices would be subject to the provisions in Version B. REPRESENTATIVE PRAX how much the bill would cost independent agencies. MS. WING HEIER said there aren't many firms that have data and lack corporate governance with respect to data security. She further noted that agencies would be given 18 months to comply with the bill. REPRESENTATIVE CARRICK maintained her objection. 3:31:38 PM A roll call vote was taken. Representatives Saddler, Wright, Prax, Ruffridge, and Sumner voted in favor of Amendment 2. Representatives Carrick and Fields voted against it. Therefore, Amendment 2 was adopted by a vote of 5-2. 3:32:17 PM REPRESENTATIVE SADDLER noted that the bill sponsor is currently in the House Finance Committee addressing the operating budget. 3:32:39 PM REPRESENTATIVE RUFFRIDGE moved to report CSHB 324, Version 33- LS1348\B, Wallace, 3/21/24, as amended, out of committee with individual recommendations and the accompanying fiscal notes. No objection. There being no objection, CSHB 324(L&C) was reported from the House Labor and Commerce Standing Committee.