HOUSE BILL NO. 170 An Act relating to annual audit reports by insurers, to custodians of insurer assets, to writing workers' compensation insurance by surplus lines insurers, to reports by surplus lines insurers, to the definition of 'wet marine and transportation insurance,' to false or misleading financial statements concerning insurance audits, and to the membership of the Alaska Life and Health Insurance Guaranty Association; and providing for an effective date. Vice Chair Stoltze MOVED to ADOPT work draft #25-LS0609\E, Bailey, 4/17/07, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. 1:42:13 PM ELEANOR WOLFE, STAFF, REPRESENTATIVE KURT OLSON, stated the bill had been introduced at the request of the Division of Insurance, Department of Community & Economic Development. LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, stated that HB 170 relates to the accreditation of the Division of Insurance and includes other minor clarifying changes to the insurance code. The changes to the work draft address the oversight of the insurance industry by providing minor clarifications. She addressed the financial regulations, providing a base for the solvency oversight. It is the intent through statutory authority to adopt the balance of the model regulation. She mentioned the importance of accreditation, which occurs only once every five years; the Division hopes to be reaccredited. 1:45:08 PM The committee substitute reflects changes resulting from industry discussions during the House Labor and Commerce hearings. · Section 1 is the most important part of the bill, placing required language in statute. AS 21.09.195 - Registration for annual preparer of an insurer's audit financial report. This section was added requiring the director to establish a registration system for certified public accounts, conducting audits on Alaska insurance companies. 1:46:55 PM · Section 3 provides the requirements for custodians of the insurer assets, AS 21.21.410. 1:47:37 PM There are five other clarifications in the work draft. · Section 2, AS 21.09.200, the insurer annual audited financial report. This section clarifies the retaliatory tax used against other states should they use Alaska's domestic insurance companies differently. There are three places in Alaska Statutes that allow off-sets. She noted Section 2 was duplicative of three other sections. The Division would like to see that language amended. · Section 4, AS 21.34.030(a) - Workers compensation written in the surplus line market, which replaces "directives" with "order". Order is defined in statute. · Section 5, AS 21.34.170, the monthly report of surplus lines broker, removes the requirement for a monthly report to be notarized. · Section 6, AS 21.34.900(9), provides the definition of wet marine and transportation insurance. It clarifies that the clauses are necessary for defining that marine insurance operate separately. · Section 8, AS 21.79.040, Alaska Life and Health Insurance Guaranty Association, addresses high deductible health plans. She noted that employers have been encouraged to offer deductible health plans. · Sections 10 & 11, provide regulations and changes to the definition of a member as someone authorized to write a line of business. · Sections 15-17, identifies language of the effective dates. 1:52:22 PM In response to comments made by Committee members, Vice Chair Stoltze emphasized that insurance concerns affect everyone and that it is an extremely important aspect for the State. 1:53:25 PM Co-Chair Meyer MOVED Conceptual Amendment #1. Vice Chair Stoltze OBJECTED to hear a description. Ms. Hall explained that the language in Section 2 was duplicative of Sections 9, 12 & 13. The intent is to clarify the calculation of retaliatory fees to negate premium tax credit. The amendment requests that duplicative language be deleted. Additionally, Line 14 addresses high deductible health plans, making them compliant with federal statutes. Vice Chair Stoltze WITHDREW his OBJECTION. There being NO further OBJECTION, conceptual Amendment #1 was adopted. Representative Hawker applauded the effort of Ms. Hall addressing concerns of the accounting industry. 1:55:27 PM Representative Foster MOVED to REPORT CS HB 170 (FIN) out of Committee with individual recommendations and with the accompanying note. There being NO OBJECTION, it was so ordered. CS HB 170 (FIN) was reported out of Committee with a "do pass" recommendation and with zero note #1 by the Department of Community & Economic Development. 1:56:17 PM