HB 168-TRAVEL INSURANCE  3:20:08 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 168, "An Act amending the definition of travel insurance for the purpose of describing a person eligible for a travel insurance limited producer license; and authorizing a person selling travel services to transact the business of travel insurance on behalf of and under the direction of a person licensed as a travel insurance limited producer." 3:20:22 PM ANNA LATHAM, Staff, Representative Kurt Olson, Alaska State Legislature, on behalf of Representative Kurt Olson, sponsor, stated that HB 168 is based on National Council of Insurance Legislators (NCOIL) recommendations, who have worked with states for the goal of improving consumer protection and creating consistency in travel insurance sales. She provided a section- by-section analysis. Section 1 would redefine travel insurance, which provides insurance coverage for personal risks connected to travel including trip interruptions, cancellations, lost baggage or personal effects, damage to accommodations or rental vehicles, for sickness, accident, disability, or death occurring during travel. This insurance does not include comprehensive medical insurance that provides coverage for trips lasting six months or longer. She reiterated that this is NCOIL's attempt to standardize the definition of travel insurance in all 50 states. Alaska's version is slightly modified, she said. MS. LATHAM said Section 2 would add a new section defining travel insurance and identifying who may transact travel insurance. It would allow a person who transacts travel services the ability to sell those products under the direction of a person holding a travel insurance limited producer's license. It would also require a travel insurance limited producer to maintain a register of all persons selling insurance on their behalf, and to provide a training program. It would limit the information that a person transacting travel insurance may and may not provide to a customer. It also would make a travel insurance limited producer liable for the acts of a person selling travel insurance on the producer's behalf. 3:22:06 PM MS. LATHAM said NCOIL prepared this model sine 41 different qualifications were required for travel agents to become licensed to sell insurance across the U.S. Additionally, many states do not accept the same electronic applications, which impact the length of time it takes to become licensed in an industry with high job turnover. Further, travel agents really are not in the insurance business since insurance sales account for approximately 2 percent of the overall revenue. The travel industry has changed significantly in the past 20 years from brick and mortar to Internet transactions that cross state lines. This NCOIL model would establish a licensing framework that reflects the unique distribution system of travel insurance in the industry and will place the regulatory burden on the insurer, who develops and distributes the product. This would improve consumer protection by requiring clear accountability and notice to the consumer and regulator with respect to who is responsible for the sale. This model clearly distinguishes between licensed and non-licensed activities for limited lines of product, such as travel insurance, and would promote uniformity to help states more effectively govern these products. Thus far, a version of this model travel insurance has been enacted in eight states and awaits governor signatures in two other states, with bills pending in 16 states, including Alaska. She concluded that this bill is deregulatory in nature and would bring Alaska in line with the national model. CHAIR OLSON related this is similar with what occurs for customers of car rentals when the person at the counter offers them a limited insurance product. 3:25:30 PM REPRESENTATIVE REINBOLD moved to adopt the committee substitute (CS) for HB 168, Version O, [labeled 28-LS0562\O, Bailey, 3/22/13] as the working document [Version O was before the committee.] CHAIR OLSON objected for purpose of discussion. 3:25:59 PM MS. LATHAM explained the changes made in the proposed committee substitute (CS) for HB 168, Version O. She highlighted that the changes were technical in nature, for purposes of clarity, and none were substantive changes. She referred to page 4, line 26, which reorganizes the language that requires the travel insurance limited producer to maintain a register. Everything in the register is contained in subsection (a), (b), & (c). On page 5 line 7, the language requires a person transacting travel insurance to complete a training program. CHAIR OLSON removed his objection. 3:27:41 PM REPRESENTATIVE JOSEPHSON asked whether this bill will create difficulties when people feel they need recourse and have not received benefits of the travel insurance. He assumed the people would still go to the original broker for assistance. MS. LATHAM answered that HB 168 contains consumer protection, such that complaints or comments would be directed to the producer. She previously asked the department about complaints with the 259 resident and nonresident limited lines of insurance registered in the state. She advised that the Division of Insurance reported very few complaints; however, she agreed any complaints would be addressed by the producer. 3:29:13 PM JOHN FIELDING, Attorney, Steptoe & Johnson, LL&C, stated his firm represents the U.S. Travel Insurance Association. He urged members to adopt HB 168. He said the U.S. Travel Insurance Association believes this bill is good for consumers, regulators, and the industry. First, this bill is good for consumers since it will provide training to retail travel agents who offer and disseminate the products. It also requires disclosures to consumers, not currently required, in terms of the product and the retail travel agents permitted to offer it. Second, it is good for regulators since it provides a streamlined process to provide regulators information in case anything goes wrong. Finally, it is good for the industry, such as the U.S. Travel Insurance Association (USTIA) members, since the process is difficult for retail travel agents to comply with obligations throughout the U.S. The industry has changed significantly and some agents must be licensed in numerous states across the country, but these agents are travel agents and not insurance agents. This bill would appropriately place the onus on the insurance members and the intermediaries who are the insurance "players" in this program. They must comply and ensure that everyone in the system is in compliance. He urged members to support HB 168. CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on HB 168. 3:32:26 PM REPRESENTATIVE JOSEPHSON stated he would support the bill since it is a good bill. People need to be careful about their policies, he said. He recalled his own experience in which he represented four deceased Germans who died west of Whitehorse. The case became a vicious dispute about jurisdiction and questions arose as to whether the case should be filed in Alaska or in Canada. This bill just brought back his experiences and he reiterated his support for HB 168. 3:34:09 PM CHAIR OLSON remarked he has been involved with the bill from the NCOIL perspective and declared a conflict. The intent of this bill is to provide standardization, level the playing field, and remove unnecessary hurdles. 3:34:38 PM REPRESENTATIVE REINBOLD moved to report the proposed committee substitute (CS) for HB 168, Version O, [labeled 28-LS0562\O, Bailey, 3/22/13] out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, the CSHB 168(L&C) was reported from the House Labor and Commerce Standing Committee. 3:34:57 PM The committee took an at-ease from 3:34 p.m. to 3:38 p.m.