Legislature(2003 - 2004)
05/04/2004 01:55 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.