CS FOR SENATE BILL NO. 357(FIN) An Act relating to the regulation of insurance, insurance licenses, qualifications of insurance producers, surplus lines, fraud investigations, electronic transactions, and compliance with federal law and national standards; and providing for an effective date. LINDA HALL, DIVISION OF INSURANCE, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, explained that the legislation would ensure that Alaska statutes are consistent with federal law (provisions mandated under the Gramm-Leach- Bliley Act) and with model acts and standards of the National Association of Insurance Commissioners (NAIC). The NAIC accreditation team suggested some of the proposed changes addressing financial oversight of insurance companies when Alaska was reviewed for a renewal of accredited status. Some of the proposed changes relate to updating procedures in order to better reflect current insurance environment and enabling electronic communications between the Division of Insurance and the public, industry and other regulators. Two key elements of the Division of Insurance are: · Protecting the consumer · Enhancing the insurance business environment Ms. Hall provided a sectional analysis of the bill. TAPE HFC 04 - 111, Side B (faulty tape - changed)  TAPE HFC 04 - 112, Side A  Ms. Hall continued with the analysis. Representative Fate inquired if automobile warranties would be considered in the same manner. Ms. Hall responded that it would depend on who wrote the automobile coverage. If the federal government regulates the company, the State cannot preempt that. There is little local control on risk groups. Representative Hawker inquired if there could be testimony heard from the industry. Co-Chair Williams pointed out that there were no representatives present from that group. Representative Hawker asked if the industry supported the bill. Ms. Hall replied that to date, there had been no testimony either way on the proposed changes. The changes will only "standardize" what is currently done by the Division. Representative Hawker was "astounded" that there had been no testimony received by the industry. Co-Chair Williams MOVED to ADOPT Amendment #1, #23- LS1684\Q.4, Bullock, 5/5/04. (Copy on File). Vice-Chair Meyer OBJECTED. JERRY RHINEWALD, LOBBYIST, BLUE CROSS AND BLUE SHIELD OF ALASKA, JUNEAU, noted that Blue Cross was in the process of moving from a non-profit company to a per profit company and currently, is under scrutiny by Alaska's Division of Insurance. There is concern that Section 18 could create problems in the transition process that would change the "rules of the game". He did not believe it would affect the regulatory environment. Mr. Rhinewald requested the Committee's consideration of the amendment. Ms. Hall noted that the Division had no objection to the amendment. Vice Chair Meyer WITHDREW his OBJECTION. There being NO further OBJECTION, Amendment #1 was adopted. Co-Chair Williams pointed out a Letter of Intent. (Copy on File). Mr. Rhinewald commented that the letter would make the Alaska market more attractive to national insurance companies. The Letter of Intent would continue dialogue on ways to improve making the Alaska market more attractive without compromising the integrity of the insurance program or consumer protection. Co-Chair Williams MOVED to ADOPT the Letter of Intent. There being NO OBJECTION, it was adopted. Representative Croft MOVED to ADOPT Amendment #2, #23- LS1684\Q.7, Craver, 5/9/04. (Copy on File). Co-Chair Williams OBJECTED. Representative Croft spoke to the amendment and concerns with HB 311, replacing Administration needs and placing them into the worker's compensation. He suggested that could provide "insurance" for the Commissioner of Insurance. Co-Chair Harris stated support for Amendment #2, noting that it is important to get the parts of HB 311 that are non controversial in place. Ms. Hall noted that she had authored that language in HB 311 and that she would be "hesitant to remove portions of that bill", putting them into SB 357. Co-Chair Williams acknowledged that he also did not accept the amendment language. If the Committee wants to take-up HB 311, it should address that bill separately. Representative Croft understood that the intent to continue was to provide for a debate. Co-Chair Williams disagreed, stating that the Committee should work on HB 311 if that is the concern. Co-Chair Harris reiterated support for the "intent of the amendment", but indicated that he would vote with Co-Chair Williams. He requested that policy remain consistent with bills coming before the Committee. A roll call vote was taken on the motion. IN FAVOR: Croft OPPOSED: Meyer, Stoltze, Chenault, Fate, Foster, Hawker, Williams, Harris Representative Joule and Representative Moses were not present for the vote. The MOTION FAILED (1-8). Co-Chair Williams advised that Amendment #3, #23-LS1684\Q.6, Bullock, 5/8/04 had been WITHDRAWN. (Copy on File). Representative Foster MOVED to report HCS CS SB 357 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CS SB 357 (FIN) was reported out of Committee with a "no recommendation", a Letter of Intent and zero note #1 by the Department of Community & Economic Development.