ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 21, 2013
1:30 p.m.
MEMBERS PRESENT
Senator Mike Dunleavy, Chair
Senator Peter Micciche, Vice Chair
Senator Donald Olson
Senator Bert Stedman
Senator Johnny Ellis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 26
"An Act extending the termination date of the Board of Public
Accountancy; and providing for an effective date."
- HEARD AND HELD
SENATE BILL NO. 65
"An Act relating to property exemptions for retirement plans,
individual retirement amending Rule 64, Alaska Rules of Civil
Procedure, and Rule 301(a), Alaska Rules of accounts, and Roth
IRAs; relating to transfers of individual retirement plans;
relating to Evidence." the rights of judgment creditors of
members of limited liability companies and partners of limited
liability partnerships; relating to the Uniform Probate Code,
including pleadings, orders, liability, and notices under the
Uniform Probate Code and the Alaska Principal and Income Act,
the appointment of trust property, the Alaska Uniform Prudent
Investor Act, co-trustees, trust protectors, and trust advisors;
relating to the Alaska Principal and Income Act; relating to the
Alaska Uniform Transfers to Minors Act; relating to the
disposition of human remains; relating to the tax on insurers
for life insurance policies; relating to insurable interests for
certain insurance policies; relating to restrictions on
transfers of trust interests; relating to discretionary
interests in irrevocable trusts; relating to the community
property of married persons; and
- HEARD AND HELD
SENATE BILL NO. 55
"An Act relating to actions by insurers based on credit history
or insurance score."
- MOVED SB 55 OUT OF COMMITTEE
SENATE BILL NO. 52
"An Act providing that portable electronics insurance is not a
service contract; defining portable electronics insurance;
authorizing the director of insurance to issue a limited
producer license to a portable electronics vendor for the sale
of portable electronics insurance; and authorizing the employees
and representatives of a vendor to transact portable electronics
insurance."
- MOVED CSSB 52 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 26
SHORT TITLE: EXTEND BOARD OF PUBLIC ACCOUNTANCY
SPONSOR(s): REPRESENTATIVE(s) HAWKER, THOMPSON
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) L&C, FIN
01/28/13 (H) L&C AT 3:15 PM BARNES 124
01/28/13 (H) Moved Out of Committee
01/28/13 (H) MINUTE(L&C)
01/30/13 (H) L&C RPT 7DP
01/30/13 (H) DP: CHENAULT, HERRON, REINBOLD,
SADDLER, MILLETT, JOSEPHSON, OLSON
02/12/13 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/12/13 (H) Moved Out of Committee
02/12/13 (H) MINUTE(FIN)
02/13/13 (H) FIN RPT 8DP 1NR 1AM
02/13/13 (H) DP: NEUMAN, COSTELLO, EDGMON, HOLMES,
MUNOZ, THOMPSON, T.WILSON, STOLTZE
02/13/13 (H) NR: KAWASAKI
02/13/13 (H) AM: GARA
02/15/13 (H) TRANSMITTED TO (S)
02/15/13 (H) VERSION: HB 26
02/19/13 (S) READ THE FIRST TIME - REFERRALS
02/19/13 (S) L&C, FIN
02/28/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/28/13 (S) -- Meeting Postponed to 3/19/13 --
03/19/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/19/13 (S) -- MEETING CANCELED --
03/21/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 65
SHORT TITLE: RETIREMENT PLANS; ROTH IRAS; PROBATE
SPONSOR(s): SENATOR(s) COGHILL
02/27/13 (S) READ THE FIRST TIME - REFERRALS
02/27/13 (S) L&C, JUD
03/21/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 55
SHORT TITLE: INSURER'S USE OF CREDIT SCORES
SPONSOR(s): LABOR & COMMERCE
02/15/13 (S) READ THE FIRST TIME - REFERRALS
02/15/13 (S) L&C
02/26/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/26/13 (S) Heard & Held
02/26/13 (S) MINUTE(L&C)
03/19/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/19/13 (S) -- MEETING CANCELED --
03/21/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 52
SHORT TITLE: PORTABLE ELECTRONICS INSURANCE
SPONSOR(s): COGHILL
02/13/13 (S) READ THE FIRST TIME - REFERRALS
02/13/13 (S) L&C
02/26/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/26/13 (S) Heard & Held
02/26/13 (S) MINUTE(L&C)
03/21/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
CECILE ELLIOT, Staff
Representative Mike Hawker
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Introduced HB 26 on behalf of the sponsor.
KRIS CURTIS, Legislative Auditor
Division of Legislative Finance
Legislative Agencies & Offices
Juneau, AK
POSITION STATEMENT: Testified on HB 26 to describe the sunset
audit of the Board of Public Accountancy.
KAREN TARVER, CPA
State Board of Public Accountancy
Juneau, AK
POSITION STATEMENT: Answered questions about HB 26.
DON HABEGER, Director
Division of Corporation, Business and Professional Licensing,
Department of Commerce, Community and Economic Development
Juneau, AK
POSITION STATEMENT: Addressed a question about the fiscal note
for HB 26.
CHAD HUTCHISON, Staff
Senator Coghill
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Introduced SB 65 on behalf of the sponsor.
BETH CHAPMAN, Attorney
Juneau, AK
POSITION STATEMENT: Provided supporting information on SB 65.
DAVE SHAFTEL, Attorney
Anchorage, AK
POSITION STATEMENT: Provided supporting information on SB 65.
DOUGLAS BLATTMACHR, President and CEO
Alaska Trust Company
Anchorage, AK
POSITION STATEMENT: Testified in strong support of SB 65.
BRET S. KOLB, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Anchorage, AK
POSITION STATEMENT: Answered questions on SB 65.
MICHAEL DUNSMORE, representing himself
Anchorage, AK
POSITION STATEMENT: Testified in opposition to SB 55.
DANIEL LYNCH, representing himself
Soldotna, AK
POSITION STATEMENT: Testified in opposition to SB 55.
GEORGE PIERCE, representing himself
Kasilof, AK
POSITION STATEMENT: Testified in opposition to SB 55.
KENTON BRINE, Northwest Regional Manager and Assistant Vice
President
Property Casualty Insurers Association of America (PCI)
Olympia, WA
POSITION STATEMENT: Provided supporting testimony on SB 55.
KARI NORE, Intern
Senator John Coghill
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Introduced SB 52 on behalf of the sponsor.
RYNNIEVA MOSS, Staff
Senator John Coghill
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Provided supporting information on SB 52.
ACTION NARRATIVE
1:30:53 PM
CHAIR MIKE DUNLEAVY called the Senate Labor and Commerce
Standing Committee meeting to order at 1:30 p.m. Present at the
call to order were Senators Stedman, Ellis, Micciche, and Chair
Dunleavy. Senator Olson joined the meeting soon thereafter.
HB 26-EXTEND BOARD OF PUBLIC ACCOUNTANCY
1:31:38 PM
CHAIR DUNLEAVY announced the consideration of HB 26. "An Act
extending the termination date of the Board of Public
Accountancy; and providing for an effective date." He noted that
this was the first hearing on the bill.
1:31:49 PM
SENATOR OLSON joined the meeting.
CECILE ELLIOT, Staff, Representative Mike Hawker, sponsor of HB
26, explained that it is statutorily required for boards and
commissions to undergo sunset audits. The legislative auditors
have conducted the required sunset audit of [the Board of Public
Accountancy] and have recommended extending the termination date
until June 30, 2021.
1:32:41 PM
KRIS CURTIS, Legislative Auditor, Division of Legislative
Finance, Legislative Agencies & Offices, said the agency
conducted a sunset audit of the Board of Public Accountancy and
found that the board was operating in the public's interest so
they recommended an eight-year extension. She noted that the
agency had one continuing recommendation from 2008 to take steps
to address the problems with the investigative case management
system in the Division of Corporations, Business and
Professional Licensing.
1:33:50 PM
KAREN TARVER, CPA, State Board of Public Accountancy, Juneau,
AK, introduced herself.
SENATOR MICCICHE asked if the annual board costs of $161,700
were in line with fiscal notes from previous years.
MS. TARVER suggested the state was better prepared to answer
that question, but it was similar to previous years.
SENATOR MICCICHE asked if the eight-year extension was typical.
MS. TARVER offered her understanding that this extension was a
little longer because issues found in the last audit were
resolved.
1:35:07 PM
DON HABEGER, Director, Division of Corporation, Business and
Professional Licensing, Department of Commerce, Community and
Economic Development (DCCED), addressed the question about the
fiscal note for HB 26. He explained that the cost of a board
program will fluctuate from year-to-year and those fluctuations
are driven by things such as investigative costs and travel.
However, the fiscal note reflects an average and fees fluctuate
from time-to-time to recoup those costs.
1:36:12 PM
CHAIR DUNLEAVY found no further questions or testimony and
stated he would hold HB 26 in committee.
SB 65-RETIREMENT PLANS; ROTH IRAS; PROBATE
1:36:29 PM
CHAIR DUNLEAVY announced the consideration of SB 65. "An Act
relating to property exemptions for retirement plans, individual
retirement accounts, and Roth IRAs; relating to transfers of
individual retirement plans; relating to the rights of judgment
creditors of members of limited liability companies and partners
of limited liability partnerships; relating to the Uniform
Probate Code, including pleadings, orders, liability, and
notices under the Uniform Probate Code and the Alaska Principal
and Income Act, the appointment of trust property, the Alaska
Uniform Prudent Investor Act, co-trustees, trust protectors, and
trust advisors; relating to the Alaska Principal and Income Act;
relating to the Alaska Uniform Transfers to Minors Act; relating
to the disposition of human remains; relating to insurable
interests for certain insurance policies; relating to
restrictions on transfers of trust interests; relating to
discretionary interests in irrevocable trusts; relating to the
community property of married persons; and amending Rule 64,
Alaska Rules of Civil Procedure, and Rule 301(a), Alaska Rules
of Evidence." This was the [first] hearing.
1:37:35 PM
CHAD HUTCHISON, Staff, Senator Coghill, sponsor of SB 65, said
he would present the bill with assistance from Beth Chapman and
David Shaftel. He described these attorneys as the predominant
engines behind the drafting of the bill. He noted that previous
legislatures considered substantially similar versions of SB 65,
but failed due to time constraints. He reviewed the bills from
previous sessions.
MR. HUTCHINSON explained that SB 65 focuses on trusts and
updates trust law in Alaska. He reminded members that a trust is
a legal relationship created at the direction of an individual,
in which one or more people hold the individual's property,
subject to certain duties, to use and protect it for the benefit
of others. Trusts are useful planning tools that are created for
the benefit of a child, for somebody who is unable to manage
assets him or herself, to avoid probate proceedings, and to
reduce estate taxes.
He relayed that Alaska first modernized its trust statutes in
1997, which put Alaska at the forefront and resulted in commerce
and jobs for Alaskans. People in the state and nationwide were
able to plan their financial future and security in Alaska.
Since 1997, some states have kept pace with Alaska trust law and
some states have surpassed it. SB 65 seeks to update the
statutes and again put Alaska at the cutting edge of trust law.
SB 65 will encourage job growth, trust investments, banking,
legal industries, and will diversify the economic portfolio of
the state. It will show that Alaska can compete in the highly
competitive financial planning sector. It will encourage both
residents and nonresidents to plan their financial futures in
this state. He deferred questions about specific sections of the
bill to Ms. Chapman and Mr. Shaftel.
1:42:55 PM
BETH CHAPMAN, Attorney, Juneau, AK, said she has practiced in
the area of trusts and estates for 25 years, and has worked on
this legislation for several years. It will provide flexibility
in trust and estate laws to respond to changing circumstances so
that families can protect their assets from generation to
generation. She pointed out that the bill also adopts the
Uniform Disposition of Remains Act. This law, which is new to
Alaska, allows an individual to designate his or her own burial
or cremation wishes and makes them legally binding. Alaska
currently has no guidelines in this area and there has been
litigation among family members about who had authority to make
a burial decision. She noted that in many of these cases, the
decedent's wishes were not followed.
1:44:09 PM
SENATOR ELLIS asked if Alaska is updating its trust laws to
address changing legal circumstances or to make Alaska more
attractive than other jurisdictions for parking money and doing
this kind of business. If Alaska is only competing to have the
most attractive laws, he wondered at what point it would be good
for just professionals, not consumers, and when common sense
would dictate that it's enough.
MS. CHAPMAN confirmed that the bill does have an element of
trying to ensure that other states are not taking business from
the state of Alaska. However, the provisions in SB 65 are
dictated by common sense and, based on her practice, are not
designed to compete with other states; they generally address
problems that have arisen during litigation. More and more
individuals and families are relying on trusts and it's
important to continue to develop the law, she said.
1:46:50 PM
SENATOR OLSON asked what the IRS consequences would be if this
legislation were to become law.
MS. CHAPMAN explained that the bill is written to provide
safeguards against tax consequences. Many of the provisions
update current statutes to ensure that an individual cannot
inadvertently create a tax problem.
SENATOR OLSON asked if she was saying that if he received assets
from his parents' trust, that would not create adverse IRS
consequences if he kept the assets or transferred them to his
children.
MS. CHAPMAN said it would depend on how the trust was written,
but the proposed laws would allow parents to draft a trust to
pass assets from generation to generation without any additional
estate or gift tax.
SENATOR OLSON asked how that is different from current law.
MS. CHAPMAN said Sections 9-11 provide an example of the
safeguards the bill provides. These sections relate to
modifications of trusts, referred to as decanting. This is a
provision that allows a trustee to extend the term of a trust
when it is deemed necessary. For example, a parent has
established a trust for a child that terminates at age 25, but
the child has developed significant substance abuse problems and
the parent does not want to give the child the money. The
decanting provision allows the trust to continue. The concern
with the current statute is that the IRS potentially could argue
that it gives the trustee too much power. The bill addresses
this by focusing on how much power a trustee can be given to
ensure that it does not conflict with the IRS code and
accidentally invoke an estate or gift tax.
1:49:10 PM
SENATOR OLSON asked if a beneficiary could use trust assets as
collateral for a loan.
MS. CHAPMAN said it would depend on how the trust is written. If
it is a spendthrift trust, which is designed to protect the
assets from the beneficiary's creditors, the individual would
not be able to pledge the assets of the trust for a personal
loan. However, the trust could borrow the money from a
commercial institution in which case the trust assets would be
pledged as collateral.
SENATOR OLSON asked what the bill does to protect the
beneficiary when the writer of the trust dies and has creditor
claims.
MS. CHAPMAN explained that if the trust was established as
irrevocable (meaning that the writer could not take the money
back) the creditors of the decedent would not be able to attach
the funds in the trust. The funds would pass on to the
beneficiary free of those claims, because it is considered a
completed gift at the time the trust is established.
SENATOR OLSON asked what protection a creditor has in that
circumstance.
MS. CHAPMAN explained that if it is a spendthrift trust and
there are outstanding creditors, there is a statute of
limitations for when claims can be presented. However, if the
assets in the trust were pledged as security, the trust cannot
defeat a perfected security interest.
DAVID SHAFTEL, Attorney, Anchorage, AK, said he practices in the
area of estate planning and trust and estate administration. He
related that he is a member of a group of attorneys and trust
officers that, since 1997, have suggested improvements to
Alaska's trust and estate laws. Responding to Senator Ellis, he
said there are 17 subjects in this bill that this group has
worked on for about three years. As Mr. Hutchinson indicated,
most of the provisions were reviewed by both the Senate and
House last year, but didn't make it through the process due to
time considerations. He offered his belief that 80 percent of
the provisions are designed to assist Alaskan residents with
Alaska trust and estate law, not to attract business from other
jurisdictions. The provisions are intended to upgrade and
improve Alaska statutes for administration of trusts and estates
and for estate planning purposes. For example, in 2003, the
legislature adopted the Alaska Uniform Principal and Income Act
and the IRS has since issued final regulations. Sections 16-32
of the original bill propose amendments based on those
regulations that will allow Alaska to take advantage of the
flexibility that Congress has approved for trusts.
MR. SHAFTEL explained that Sections 1-3 conform Alaska law to
the majority rule among the states to exempt the beneficiary's
interest in a retirement plan or IRA under state law. In Section
43, there is a new provision that allows for the transfer of an
IRA interest. This will give Alaska residents (and residents of
other states who want to take advantage of it) the ability to
transfer an IRA interest to a trust.
Section 37 contains provisions to update the insurable interest
provision in Alaska law. He explained that it is common for a
person to buy an insurance policy and place it in a trust so
that the proceeds won't be taxable under the estate tax when the
insured dies. This clarifies that it is still an insurable
interest and valid under state law. He noted that the current
law does not address that.
MR. SHAFTEL said his practice is similar to Ms. Chapman's in the
respect that about 95 percent of his clients are Alaska
residents. The legislature's continuing efforts to update these
laws is for the benefit of all Alaskans, he said.
1:58:19 PM
DOUGLAS BLATTMACHR, President and CEO, Alaska Trust Company
(ATC), Anchorage, AK, said ATC strongly supports SB 65, which
updates Alaska trust laws. In the past these laws have helped
create jobs and commerce and have helped bring revenue to the
state.
SENATOR OLSON asked if the bill would affect the cost of
establishing a trust.
MR. BLATTMACHR said ATC bases its fees on the facts and
circumstances of a particular individual or family situation.
The bill does not address those fees; it simply modernizes the
law.
2:00:02 PM
BRET S. KOLB, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
AK, offered to answer questions on SB 65.
SENATOR OLSON asked why this legislation hasn't made it through
the process in previous years if it's such a good law.
MR. KOLB offered his understanding that it was a matter of
timing, not the merits of the bill.
2:01:08 PM
CHAIR DUNLEAVY found no further questions or public testimony.
He announced he would hold SB 65 in committee and continue to
take public testimony at a subsequent meeting.
SB 55-INSURER'S USE OF CREDIT SCORES
2:01:27 PM
CHAIR DUNLEAVY announced the consideration of SB 55. "An Act
relating to actions by insurers based on credit history or
insurance score." He noted that this was the second hearing.
2:01:46 PM
At ease
2:02:35 PM
CHAIR DUNLEAVY reconvened the meeting and opened public
testimony.
2:02:49 PM
MICHAEL DUNSMORE, representing himself, Anchorage, AK, testified
in opposition to SB 55. He said that the basic concept of
allowing credit scores to be used to determine insurance rates
is flawed. He heard testimony that an insurance company could
impose a higher rate if a person has a poor credit score and
lower the rate if a person has a good credit score. However, he
has a hard time believing that an insurance company would
voluntarily give a lower rate than was offered initially,
because that is not a good business model.
He offered his belief that it would be a poor decision to allow
insurance agencies to base their billings on a credit score that
is inherently not transparent and that the legislature can't
review. This would not benefit the people of Alaska, but it
would give insurance companies another arbitrary reason to deny
coverage or increase rates. In particular, the concept of this
bill has the potential to hurt low-income people. They are more
likely to have other concerns than paying attention to their
credit scores and are more likely to have difficulty paying
their bills. This bill would make it possible for insurance to
penalize them more and provide higher costs for their insurance
coverage. He asked the committee not to pass SB 55.
2:07:43 PM
DANIEL LYNCH, representing himself, Soldotna, AK, said he was
testifying in support of common sense and against SB 55. He said
credit ratings should have zero influence on insurance rates.
Insurance worthiness would be better judged by high school and
college grades, height, weight, or physical health, not credit
scores from an independent corporate business that is known to
have up to 40 percent inaccurate information.
He pointed out that people are constitutionally entitled to a
right of privacy. Therefore, it is a violation of a person's
privacy for a private credit rating organization to use the
person's credit information if the person doesn't voluntarily
provide it. A person's driving record, the value of their car,
home construction methods, renter's belongings and distances
from fire suppression or flood plains is information that can be
obtained without privacy violations. Noting that some
legislators have stated that accessing a person's credit score
is already allowed when the initial policy is written, he said
two wrongs don't make a right and the initial policy procedure
should be voided.
MR. LYNCH said he has a commercial driver's license and has
driven in Alaska for 20 years with no DUIs, moose collisions,
accidents, or tickets, yet his premiums have increased with each
bill. He imagined that his credit score is nonexistent or skewed
since he has no loans, credit cards, payment plans, or
subscriptions to credit agencies. He said that most young people
are just beginning to establish credit, but one layoff slip,
late payment, or health problem increases their insurance rates
and that isn't right. He urged the committee to get back to the
basics and protect the consumer, not the corporations.
2:11:49 PM
GEORGE PIERCE, representing himself, Kasilof, AK, testified in
opposition to SB 55, because an insurance company accessing his
credit score is an invasion of his privacy.
2:12:57 PM
KENTON BRINE, Northwest Regional Manager and Assistant Vice
President, Property Casualty Insurers Association of America
(PCI), Olympia, WA, said PCI is a national trade association of
property casualty insurance companies. Many of these companies
write policies in Alaska and they represent about 35 percent of
the home and auto insurance in this marketplace. He offered to
answer questions.
SENATOR MICCICHE asked if it was his position that the bill
would not raise people's insurance rates.
MR. BRINE relayed that federal antitrust laws forbid him from
predicting rates in a marketplace, but PCI has testified
previously that credit-based insurance scores benefit consumers.
Credit is an accurate predictor and studies show it either
improves the insured's risk or does no harm. He referenced the
testimony today and clarified that credit scoring is already
allowed for insurance companies. The bill simply allows the
practice to continue when a policy renews. He highlighted that
studies show that a significant number of Alaska policyholders
are receiving rate increases because insurance companies have to
strip out the credit at renewal and rerate the policyholder
after two years. That is causing rates to go up in Alaska today,
but that would end if insurers were allowed to use a
policyholder's credit at renewal.
SENATOR MICCICHE said he understands some of the opposition. He
related an experience two constituents had when they renewed
their vehicle insurance policy and observed that the rate
increase appeared to be somewhat arbitrary. He asked what would
keep some other, potentially arbitrary, factor from being used
to set insurance rates in the future.
MR. BRINE disagreed with the characterization that rates are set
arbitrarily because the models are sophisticated and preapproved
by the insurance department. He said he couldn't speculate about
what occurred with the policyholders Senator Micciche mentioned,
but some rating factors must have been unfavorable or factors
that were not related specifically to those people might have
caused rates to increase within a tier. He reiterated that one
of the benefits of credit scoring is that it is a highly
accurate predictor of loss, although it may not make intrinsic
sense to some people. He said that other rating factors that
might interfere with a person's ability to get lower cost
insurance fall to a lower level of rating criteria and credit
tends to replace it in those circumstances. He stated his belief
that it would be an overall benefit to consumers in Alaska to
pass this legislation. It would make Alaska more competitive and
attract more insurance companies to the state.
2:20:17 PM
SENATOR MICCICHE said his concern is for those consumers that
find the process somewhat of a mystery and don't realize that
there is a correlation between their credit scores and ranking.
CHAIR DUNLEAVY asked Mr. Kolb if the administration had a
position on the bill.
MR. KOLB offered his belief that the bill would be beneficial to
consumers in Alaska and offer opportunities for insurance
companies to be more competitive in their pricing, because
credit scores or the use of an insurance score does have a
statistical correlation to future risk.
CHAIR DUNLEAVY closed public testimony and solicited a motion.
2:22:01 PM
SENATOR MICCICHE moved to report SB 55, 28-LS0404\N, from
committee with individual recommendations and attached zero
fiscal note(s).
2:22:30 PM
SENATOR ELLIS stated that a number of his constituents have had
problems with credit ratings, credit scores, and inaccurate
information, so he wasn't a big supporter of the bill. However,
he would not object to moving the bill from committee.
CHAIR DUNLEAVY found no further comments or objection and
announced that SB 55 moved from the Senate Labor and Commerce
Standing Committee.
2:22:59 PM
At ease
SB 52-PORTABLE ELECTRONICS INSURANCE
2:25:00 PM
CHAIR DUNLEAVY reconvened the meeting and announced the
consideration of SB 52. "An Act providing that portable
electronics insurance is not a service contract; providing that
a portable electronics manufacturer's warranty or extended
warranty is not regulated as insurance; relating to portable
electronics insurance; authorizing the director of insurance to
issue a limited producer license to a portable electronics
vendor for the sale of portable electronics insurance; and
relating to authorization and training of employees and
representatives of a vendor to transact portable electronics
insurance; and providing for an effective date." [CSSB 52,
labeled 28-LS0461\N, was before the committee.] This was the
second hearing.
2:25:16 PM
KARI NORE, Intern, Senator John Coghill, sponsor of SB 52,
recapped for the committee that SB 52 seeks to bring regulation
to the booming portable electronics industry, and was requested
by companies that sell these portable electronics. She noted
that there were three amendments for the committee to consider.
2:26:27 PM
At ease
2:26:53 PM
CHAIR DUNLEAVY reconvened the meeting and recognized Ms. Moss.
2:27:05 PM
RYNNIEVA MOSS, Staff, Senator John Coghill, sponsor of SB 52,
explained that the proposed amendments were prepared after
discussions with legislative attorneys and representatives of
the electronics companies. The sponsor wants to clarify in
statute that consumers have three options to protect portable
electronics: a service contract, a warranty, or portable
electronics insurance. She noted that Senator Micciche agreed to
carry the amendments and Ms. Nore would explain them.
2:28:08 PM
MATTHEW NOWELS, Attorney, Blank & Meenan, P.A., representing
Assuring, a primary provider of this produce nationwide offered
to answer questions.
CHAIR DUNLEAVY found no questions and closed public testimony.
2:28:48 PM
SENATOR MICCICHE moved Amendment 1, labeled 28-LS0461\N.2.
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR COGHILL
TO: CSSB 52( ), Draft Version "N"
Page 6, line 9, following "AS 21.36.515
Insert "and"
Page 6, lines 9-16:
Delete all material.
Page 6, line 17:
Delete "(iv)"
Insert "(iii)"
SENATOR STEDMAN objected for discussion purposes.
MS. NORE explained the purpose of the amendment is to remove
sub-subparagraph (iii). The director of the Division of
Insurance initially requested this provision because he felt
there was a possibility that enforcement would be difficult
because there was no registry. It was later determined that the
division has the authority without this provision.
MS. MOSS added that both the industry and the Division of
Insurance agreed this was not needed.
SENATOR STEDMAN removed his objection.
2:30:03 PM
At ease
2:30:13 PM
CHAIR DUNLEAVY found no further objection and announced that
Amendment 1 was adopted.
2:30:32 PM
SENATOR MICCICHE moved Amendment 2, labeled 28-LS0461\N.3.
AMENDMENT 2
OFFERED IN THE SENATE BY SENATOR COGHILL
TO: CSSB 52( ), Draft Version "N"
Page 2, line 9:
Delete "damaged by power surges"
SENATOR STEDMAN objected for discussion purposes.
MS. NORE explained that this amendment came at the request of
Apple Electronics. It broadens the language under service
contracts, which now is restricted to damages done by power
surges, not accidental damage. She noted that the sponsor
believes this potentially is a drafting error in the original
statutes.
MS. MOSS added that legislative legal agrees that this phrase
probably was a drafting error when the statute was adopted
originally.
SENATOR STEDMAN removed his objection.
CHAIR DUNLEAVY found no further objection and announced that
Amendment 2 was adopted.
2:31:50 PM
SENATOR MICCICHE moved Amendment 3, labeled 28-LS0461\N.4.
AMENDMENT 3
OFFERED IN THE SENATE BY SENATOR COGHILL
TO: CSSB 52( ), Draft Version "N"
Page 2, line 2, following "property,":
Insert "including portable electronics,"
Page 2, line 7, following "property":
Insert ", including portable electronics,"
SENATOR STEDMAN objected for discussion purposes.
MS. NORE explained that this amendment allows portable
electronics to be considered as tangible personal property and
be included under service contracts.
MS. MOSS noted that legislative legal didn't think this was
necessary, but the industry wanted it perfectly clear that it
continues to have the ability to offer service contracts.
SENATOR STEDMAN removed his objection.
CHAIR DUNLEAVY found no further objection and announced that
Amendment 3 was adopted.
2:33:05 PM
SENATOR MICCICHE moved to report SB 52, 28-LS0461\N as amended,
from committee with individual recommendations and attached
fiscal note(s).
CHAIR DUNLEAVY announced that without objection CSSB 52(L&C)
moved from the Senate Labor and Commerce Standing Committee.
2:33:37 PM
There being no further business to come before the committee,
Chair Dunleavy adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:33 p.m.