Legislature(2003 - 2004)

05/04/2004 01:55 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
      CSHB 540(L&C)-WORKERS' COMPENSATION INSURANCE RATES                                                                   
                                                                                                                                
CHAIR CON BUNDE announced HB 540 to be up for consideration.                                                                    
                                                                                                                                
MR.  JOSH   APPLEBEE,  staff  to  Representative   Tom  Anderson,                                                               
sponsor,  explained that  the  CS  to HB  540  addresses a  long-                                                               
standing  problem with  Alaska  Workers'  Compensation loss  cost                                                               
filing. It makes the statute  a more open and transparent process                                                               
that gives  stakeholders in the  system an opportunity  for input                                                               
and  understanding  of  the  "loss cost"  filings,  which  are  a                                                               
fundamental building  block of  the workers'  compensation rates.                                                               
Initially, the  Division of  Insurance voiced  concerns regarding                                                               
timeline and  process issues.  At the  request of  the committee,                                                               
the company  who brought  the issue forward  and the  Division of                                                               
Insurance  worked together  to produce  the committee  substitute                                                               
before them now. It has their full support.                                                                                     
                                                                                                                                
MR.  CHARLIE MILLER,  Alaska National  Insurance Company  (ANIC),                                                               
said  that loss  costs are  the basic  component of  what becomes                                                               
workers'  compensation  rates.  The  rating  agency  reviews  the                                                               
previous data and tries to project  what the loss cost will be in                                                               
the  upcoming rate  year.  It's an  actuarial  exercise and  ANIC                                                               
hoped to  be able  to participate  more in  setting the  rate. He                                                               
supported the committee substitute.                                                                                             
                                                                                                                                
MS. SARAH  MCNAIR GROVE, Property  Casualty Actuary,  Division of                                                               
Insurance, said  the CS has a  good process that meets  the needs                                                               
of all  the participants, including  the insurer.  Currently, the                                                               
National Council  on Compensation Insurance (NCCI)  sets the rate                                                               
that is then reviewed by the  division. Now the insurer will have                                                               
a seat at the table.                                                                                                            
                                                                                                                                
SENATOR  FRENCH commented  that  some people  might view  raising                                                               
rates as a way of making up for past losses.                                                                                    
                                                                                                                                
MS. GROVE denied that was the  intent of this bill. The intent is                                                               
to  give more  stakeholders the  ability to  raise questions  and                                                               
provide information in the process.                                                                                             
                                                                                                                                
MR. BOB  LOHR testified in  support of the SCS  to HB 540  as the                                                               
former director for the Division  of Insurance. He explained that                                                               
the filings have  a detailed hearing process set out  by a rating                                                               
organization like the NCCI. However  he questioned whether the 20                                                               
- 25 day time-frame (on page 3)  in which to have a hearing after                                                               
receipt of a filing was an  adequate window to conduct a hearing.                                                               
Lines 15 - 16 on page 4  clarifies that the hearings are a public                                                               
record, which he supported.                                                                                                     
                                                                                                                                
Page 5,  line 18,  requires the rating  organization to  make the                                                               
information  available  as soon  as  possible  and he  asked  the                                                               
committee to consider making it  available immediately. The order                                                               
must  include details  of the  director's reasoning  and presumed                                                               
the order must  state the director's reasoning on line  22 and he                                                               
felt that it should just be stated.                                                                                             
                                                                                                                                
On  page  6,  lines  22  -   25,  the  final  definition  says  a                                                               
perspective  loss cost  filing  is a  term  defined, but  doesn't                                                               
label  it as  a filing  submitted  by a  rating organization.  He                                                               
thought it should explicitly state  that it is a filing submitted                                                               
by a rating organization.                                                                                                       
                                                                                                                                
CHAIR  BUNDE  asked  Ms.  Grove   if  she  supported  Mr.  Lohr's                                                               
suggestions  about the  time-frame, the  soon as  possible versus                                                               
immediately issue and the definition.                                                                                           
                                                                                                                                
MS. GROVE explained that 20 -25  days was the time-frame in which                                                               
it could be  determined that a hearing needed to  be held and she                                                               
was comfortable  with it. She  felt that  as-soon-as-possible and                                                               
immediately meant the same thing  and had discussed that with the                                                               
rating organization  that would have  a website on which  to post                                                               
the  information.   She  said  the  definition   section  mirrors                                                               
language  that is  already  in regulation  and  felt that  should                                                               
stay.                                                                                                                           
                                                                                                                                
SENATOR  RALPH  SEEKINS  moved  to  pass  SCS  HB  540(L&C)  from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note.  Senators French,  Gary Stevens,  Seekins, Davis  and Chair                                                               
Bunde voted yea and CSHB 540(L&C) moved from committee.                                                                         

Document Name Date/Time Subjects