SB 195-BD OF DIRECTORS: DOMESTIC INSURERS  3:18:03 PM CHAIR SPOHNHOLZ announced that the first order of business would be SENATE BILL NO. 195, "An Act relating to election of a domestic insurer's board of directors." 3:18:37 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community & Economic Development, stated that in 2019 Moda Health applied for a certificate of authority. The Division of Insurance had not received a certificate of authority application to establish a domestic insurer that is headquartered or incorporated within the state for approximately 35 years. During the process, the division noticed that Moda Health would not be in compliance with AS 21.69.340(b) based on the insurers organizational structure, articles of incorporation, and bylaws. She said further research revealed that 44 jurisdictions had revised or eliminated their statutes that mandate the board of directors be elected from the members or stockholders. She reported that the matter recurred when CopperPoint purchased Alaska National Insurance Company in 2019. Investors were concerned that the division - knowing that this was a compliance issue - would take enforcement action leading to fines and penalties. She explained that the division with the agreement with the governors office and the Department of Law, went on record to say that they would address taking no enforcement action with the administration and the legislature. She stated that the intent of this legislation is to clean up the issue of compliance. 3:21:02 PM MS. WING-HEIER paraphrased the sectional analysis [included in the committee packet] for SB 195, which read in its entirety as follows [original punctuation provided]: Section 1. AS 21.69.340(b) Eliminates the mandate that the board of directors be elected from and by the members or stockholders of a domestic insurer. Provides that, unless contrary to the bylaws of the insurer, board members (directors) need not be a member or a stockholder of the insurer. Section 2. AS 21.69.350 As respects domestic stock life insurers, amends statute to allow policyholders to participate in the election of directors without stockholders. 3:22:24 PM REPRESENTATIVE HANNAN pointed out that there are currently no domestic stock life insurance holders in Alaska. She questioned whether Section 2 could be modernized so that it applies to life insurance holders as they operate in the state. MS. WING-HEIER acknowledged that the state does not have a domestic life insurer, much less a stock life insurer; therefore, Section 2 could be deleted without consequence. Nonetheless, she stated that the individuals who drafted the bill decided to fix the section now, rather than come back to the legislature to change it later when there is a domestic life insurer in Alaska. REPRESENTATIVE HANNAN sought to clarify that throughout the insurance statutes, the term domestic is defined as being incorporated in Alaska. MS. WING-HEIER confirmed that. She noted that Alaska has six domestic insurance companies: Moda Health, Umialik Insurance Company, Alaska National Insurance Company, ARECA Insurance, Tongass Timber Trust, and Alaska Timber Insurance Exchange. CHAIR SPOHNHOLZ clarified that SB 195 essentially broadens the eligibility criteria for being a director on the board of an insurance company. MS. WING-HEIER answered yes. 3:25:11 PM REPRESENTATIVE STUTES moved to report SB 195 out of committee with individual recommendations and the accompanying fiscal notes. Without objection, SB 195 was moved from the House Labor and Commerce Standing Committee. 3:25:29 PM The committee took an at-ease from 3:25 to 3:27 p.m. 3:27:41 PM The committee took a brief at-ease. 3:27:47 PM