CSSB 119(L&C) - FRATERNAL BENEFIT SOCIETIES Number 0066 CHAIRMAN GREEN announced the final item of business would be CS for Senate Bill No. 119(L&C), "An Act relating to fraternal benefit societies; and providing for an effective date." Number 0074 CHARLIE MILLER, National Fraternal Congress of America, came forward to testify. His association represents fraternal benefit societies that are distinct from some others in that they offer life insurance and some health insurance policies to their members only. He stated, "They're currently regulated under Title 21.84; the basic statute was put in in 1966. And although there has been some amendments to the statutes, they've been piecemeal. And this is a rewrite of those statutes. We've been working with the Division of Insurance for several months and have resolved all the difference of opinion on the bill; they support the bill, although I can't officially speak for them. I think there should be a letter in your packet that ... all their concerns have been satisfied." MR. MILLER continued, "In other committee hearings, there has been no real opposition to the bill that we're aware of. The size of the bill is because of the rewrite of the entire code. As opposed to `piecemealing' the amendments that addressed the immediate concerns that the fraternals have, it was recommended to go ahead and proceed with a full rewrite because the statutes are then brought up to date with terminology that exists in other insurance codes in the state, and also makes the statute read basically along the NAIC [National Association of Insurance Commissioners] models, so that the different states don't have different terminology and processes - which makes it difficult for multi-state operations to operate without a lot of extra administrative detail, as in separate forms and the like." Number 0220 MR. MILLER stated, "The fraternal benefit societies involved in insurance in Alaska, I think there should be a list in your packet also. These are not locally domiciled insurers, but they are licensed insurers in the state, and they include the Aid Association for Lutherans, American Postal Workers, the Independent Order of Foresters, Knights of Columbus, Lutheran Brotherhood, Sons of Norway, and the Woodmen of the World Life Insurance Society. They write about 7,600 life policy certificates currently, and I think there's 280 health certificates in the state also. They're not allowed to sell their products outside of their membership. ... The governing bodies of these lodges are all directly elected or indirectly elected by members; so, it's ... member-controlled, and all of their products and services are sold only to members. There should be another letter in your packet from the life insurance association representative here, and they support passage of the bill. The agents have been contacted; they have no opposition to the bill." MR. MILLER advised members there had been one problem on the Senate floor, relating to an English language requirement for filing of documents. That was cleared up, and the bill was not brought up for reconsideration. He stated his belief that the concerns of members had been addressed. Number 0287 REPRESENTATIVE ROKEBERG asked whether there had been a Senate floor amendment. MR. MILLER said no. Three Senate members had voiced a concern because of a reference in the Sectional Analysis to an Arizona law, which had "created quite a ruckus down there on English language requirements." Mr. Miller said he isn't sure why that was referenced in the Sectional Analysis; it is not a similar issue. He explained, "A lot of these groups are based on ethnic and/or religious common causes, self-help groups formed during the immigration waves in the late 1800s and 1900s. If you have a lot of Estonian and Polish and different ethnic groups, it's just a requirement that says ... their documents that are related to their insurance entity, that that aspect of ... their group be filed, just like any document has to be, with the agencies affected, in English. And so, ... it didn't have anything to do with the Arizona (indisc.) thing. And so, like I say, I think those concerns have been addressed." Number 0363 CHAIRMAN GREEN said the group discount certainly sounds like a way to go. He asked whether, through the Division of Insurance, there is assurance that these insurance companies are viable companies. MR. MILLER said yes. This update actually clarifies the director's authority in all insurance matters. He stated, "I mean, they are regulated under the insurance statute, as any other insurance entity is. This does clarify her control in some areas, unfair trade practices and other areas. But no, they are under the same oversight by the division as any other insurance entity, the primary difference being that they do not sell outside of their group. The reason why there's so much verbiage in the bill about ... the direct elections or indirect elections of officers and board of directors is because they can only sell to their members. You know, the membership elects these people. They not only run the fraternal benefit society but the insurance aspect of that society. They're one and the same. And so, if ... a[n] outside company wanted to be licensed here to sell, they would have to satisfy the same requirements as any other insuring entity in the state." Number 0457 REPRESENTATIVE ROKEBERG said, "Mr. Miller, these are a totally different animal; they're not a mutual company or a stock company. They are a fraternal benefit society company, and that's why there's a separate chapter under the insurance statute for the administration of it." MR. MILLER agreed it is unique. CHAIRMAN GREEN said he appreciates that; it is why he likes the concept. His only concern was that people in an elderly persons' home might be a group, or there might be a group that is an ethnic group that doesn't speak English well. He said as long as there is protection that the entity offering the policy is viable and passes muster with the Division of Insurance, that is fine. Number 0500 REPRESENTATIVE CROFT asked whether the Sons of Norway, for example, can have their minutes in Norwegian and their proceedings in Norwegian but must file in English. MR. MILLER replied, "My understanding is that any minutes pertaining to any documentation that needs to be supplied to the oversight agency has to be -- there has to be English documents, yes." REPRESENTATIVE CROFT asked whether proceedings outside of the insurance area could be in another language. MR. MILLER said he wasn't completely sure of that. He emphasized that the primary goal of these groups is self-help and charitable works. The insurance aspect is larger is some groups than in others. He stated, "But if they were to be discussing ... in the Sons of Norway some sort of a `paint so-and-so's house as a charitable act' or set up a work camp for kids in the summer ..., I don't know if they'd have to speak in English during that portion of their meeting. ... If it regards the insurance business, I am sure that they would have to have their minutes and their documents prepared in English." REPRESENTATIVE BUNDE alluded to moving the bill. Number 0580 REPRESENTATIVE ROKEBERG advised members that this bill, and its companion House bill, had a thorough hearing in the House Labor and Commerce Committee, "with full testimony from the division, which was supportive of it, as well as representatives from the fraternal organizations that went on record in support of this legislation." Number 0636 REPRESENTATIVE PORTER suggested, "Move it." CHAIRMAN GREEN asked whether there was any objection. Hearing none, he indicated that CSSB 119(JUD) was moved from the House Judiciary Standing Committee.