HB 168-TRAVEL INSURANCE  9:18:25 AM CHAIR DUNLEAVY announced the consideration of HB 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." He noted that this was the first hearing and that CSHB 168(L&C) was before the committee. 9:19:05 AM ANNA LATHAM, Staff, Representative Kurt Olson, sponsor of HB 168, stated that HB 168 is based on National Council of Insurance Legislators (NCOIL) model legislation that is being implemented nationwide. It has a goal of improving consumer protection and creating consistency in travel insurance sales. Section 1 redefines travel insurance so that the definition is standardized in all 50 states. She noted that Alaska's definition was slightly modified. Section 2 adds a new section defining travel insurance, and who may transact travel insurance. It allows a person that transacts travel services the ability to sell those products under the direction of a person holding a travel insurance limited producer license. It requires a travel insurance limited lines producer to maintain a register of all persons selling insurance on their behalf, and to provide a training program. The bill limits the information that a person transacting travel insurance may and may not provide to a customer. It makes the travel insurance limited producer liable for the acts of a person selling travel insurance on their behalf. MS. LATHAM explained that NCOIL developed this model legislation to streamline the process for selling travel insurance on the Internet or across state lines. The problem is that there are 41 different licensing qualification codes to become licensed to sell travel insurance in all 50 states and many states do not accept the same electronic application. As a result, it takes about six months to become licensed. This is burdensome for this high turnover industry when insurance sales account for just two percent of travel agents overall revenue. The NCOIL model establishes a licensing framework that reflects the unique distribution system of travel insurance in the industry and places the regulatory burden on the insurer who develops and distributes the product. This improves consumer protection by requiring clear accountability and notice to the consumer and regulator regarding who is responsible for the sale. To date, a version of this model legislation has been enacted in eight states and is awaiting governor signatures in two other states. Legislation is pending in 16 other states, including Alaska. MS. LATHAM said the only difference between the original bill and the committee substitute (CS) appears on page 5, line 7. The phrase "an employee of the person transacting travel insurance" was changed to "a person transacting travel insurance" because the former lacked clarity. 9:23:08 AM SENATOR OLSON asked how many people purchase travel insurance. MS. LATHAM said there are 259 resident and non-resident licensed producers within the state, and she could get that information from them. SENATOR OLSON asked if the trend was up, down, or stable. MS. LATHAM said the trend is toward on-line sales. She estimated that up to 90 percent of policies are purchased that way. SENATOR MICCICHE commented that most people don't realize that the option to purchase insurance is available whenever a person purchases a ticket. 9:26:18 AM MARTIN HESTER, Deputy Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), Juneau, AK, introduced himself. SENATOR STEDMAN asked if the department had received any complaints about travel insurance. MR. HESTER replied he wasn't aware of any. He said this legislation allows an employee to sell insurance under their employer's limited producer license, and the Division of Insurance has no problems with the language. It is model legislation. SENATOR STEDMAN asked if the model included recommendations for the training program and how that comports with the division's regulatory responsibilities. 9:28:24 AM MR. HESTER offered to follow up with information, but his understanding was that the legislation does not lay out the training regimen. It simply states that the employer must implement a training program for employees. SENATOR STEDMAN requested the information. 9:29:50 AM VICE-CHAIR MICCICHE, acting as chair, asked if this was any different than purchasing travel insurance from an employee at a rental car counter. MR. HESTER said that scenario is similar to what this legislation would do. His understanding was that the employee at the rental car counter is acting under the authority of the limited producer license that belongs to the rental car company. SENATOR OLSON asked the administration's position on the bill. MR. HESTER reiterated that DCCED has no objection to the language in HB 168. 9:31:22 AM VICE-CHAIR MICCICHE opened public testimony, and noted it would remain open through the next meeting. 9:31:37 AM JOHN FIELDING, Attorney, Steptoe & Johnson, LLP, stated that his firm represents U. S. Travel Insurance Association (USTIA). He urged the committee to support HB 168, describing it as a step forward for consumers, regulators and industry players. The legislation is good for consumers because it requires employee training and disclosures to the consumers, neither of which is currently required. With regard to the question about training, he said that some states have asked the insurers to provide copies of the training materials to the regulatory department to ensure that the training is sufficiently robust. He suggested that Alaska might do that in the future. The legislation is good for the regulators because it provides a more streamlined process. It is also good for the industry because it places much of the regulatory burden on the insurers or intermediaries that develop and distribute the products. He urged the committee to support HB 168. 9:35:34 AM SENATOR OLSON asked about the penalties for noncompliance. MR. FIELDING said the current authority of the insurance department remains intact. SENATOR OLSON questioned the need for the legislation since Mr. Hester said there have been no complaints. He commented that it appeared to add to bureaucracy. MR. FIELDING said this lessens the bureaucracy. It streamlines the process by focusing on the insurers and intermediaries that put the product together and provide it. It's a process his firm has worked through with other stakeholders as it was debated by NCOIL and other states. They all thought it would be helpful, less burdensome, and more effective. SENATOR OLSON asked where training would be held. MR. FIELDING said there is a requirement for a training program to be in place, but it doesn't dictate the type of training or location. The training could take place on-line. SENATOR OLSON maintained that it was another level of bureaucracy and quite possibly unnecessary since there have been no complaints. 9:39:23 AM VICE-CHAIR MICCICHE noted that Paul Brown with AIG was available for questions. Finding no further questions or public testimony, he stated that he would hold HB 168 in committee.