HB 403-LIFE & HEALTH INSURANCE GUARANTY ASSN.  3:44:15 PM CHAIR COSTELLO announced the consideration of HB 403. [CSHB 403(L&C) was before the committee.] 3:44:41 PM REPRESENTATIVE SAM KITO III introduced HB 403 speaking to the following sponsor statement: House Bill 403 updates the Alaska Life and Health Insurance Guaranty Act to conform to the National Association of Insurance Commissioners Life and Health Guaranty Model Act. These changes update the Act and improve uniformity nationwide in the administration of life and health guarantee associations. House Bill 403 incorporates changes made by the National Association of Insurance Commissioners to the Life & Health Insurance Guarantee Association Model Act (MDL 520) in December 2017, after House Bill 157 had been introduced. These changes added health maintenance organizations (HMOs) as members of the association, providing HMO coverage, and addressing long-term care insolvencies. With the substantial number of changes made, HB 403 was introduced to help explain these changes, though few are substantive. Throughout, numerous conforming changes are made to AS 21.79 consistent with the model law, most of which do not substantively change the bill. The Alaska Life and Health Insurance Guarantee Association (Association) is composed of insurers who transact life insurance, health insurance, or annuities in Alaska. The purpose of the Association is to guarantee that residents and certain nonresidents will continue to receive benefits in the event one of the members becomes impaired or insolvent. In order to accomplish this, the Act directs the insurers to form a board and collect assessments from members to pay for the operations of the Association and obligations of insolvent or impaired members. House Bill 403 amends terms for consistency with the model act, raises payment limits, adds language clarifying what products are included and excluded from the protections under the Act, and adds language clarifying that medical and hospital service corporations and their products are subject to the provisions of the Act. House Bill 403 amends the powers and duties section for the Association to follow the model act, authorizes the board to increase assessments, grants the Association the ability to develop procedures to remove an Association governor for cause, and adds new definitions. CHAIR COSTELLO noted that members had copies of the sectional. 3:47:35 PM SENATOR MICCICHE asked Ms. Wing-Heier her perspective of the bill. 3:48:02 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), Anchorage, Alaska, explained that HB 403 is a remake of HB 157 that was introduced last year to update the statutes for the Alaska Life and Health Insurance Guarantee Association. She reminded the committee that Sheila Talman testified last year to express Premera concern that it would be unfairly assessed, particularly for long-term care. MS. WING-HEIER said there was one insolvency last year in Alaska. The Guarantee Association will pay the $2 million loss for consumers, but the division knew that it didn't have the capacity for larger assessments. The solution that was agreeable to both sides was that the assessments for long-term care would be split 50:50 between health insurers and life insurers. The bill also brings Premera, Alaska's largest health insurer, in as a member of the Guarantee Association. Further, HB 403 changes a few limits to what would be paid out under various products and it gives some authority to the board on how it would deal with insolvencies. 3:50:22 PM SENATOR MICCICHE asked for an explanation of the increases on page 8, lines 12 and 16. MS. WING-HEIER said those provisions increase the payout on an annuity contract claim (regardless of the value of the annuity) from $100,000 to $250,000. She noted that the bill also increased several other limits none or which had been updated for about 20 years. SENATOR MICCICHE asked if this was like an FDIC minimum. MS. WING-HEIER said yes. 3:51:51 PM CHAIR COSTELLO opened public testimony on HB 403. 3:52:04 PM DONALD THOMAS, Administrator and Counsel, Alaska Life and Health Insurance Guarantee Association, stated that the Board of Governors of the Guarantee Association unanimously supports passage of HB 403. He submitted that it was incumbent on the legislature to keep the governing law of the Guarantee Association current because it was created by the legislature. The purpose was to protect Alaska policyholders, subject to certain limitations set out in the Act. Passage of HB 403 fulfills that responsibility. 3:53:15 PM JANA-LEE PRUITT, Regional Vice President, American Council of Life Insurers (ACLI), testified in support of HB 403. She pointed out that the NAIC model is updated every few years to reflect decisions about how to best protect policyholders and to address any issues that might have arisen among the states in the interpretation of the Act. There is a Life and Health Guarantee Association statute in effect in each state. It's important that state statutes are updated to reflect the current NAIC Model Act so that if an insolvency occurs, it can be handled as efficiently as possible and policyholders claims will be handled similarly regardless of their state of residence. She urged support for the bill. 3:54:35 PM CHAIR COSTELLO closed public testimony on HB 403. 3:54:51 PM SENATOR MICCICHE moved to report HB 403, 30-LS1401\J, from committee with individual recommendations and attached fiscal note(s). CHAIR COSTELLO found no objection and CSHB 403(L&C) moved from the Senate Labor and Commerce Standing Committee.