COMMITTEE ON BANKING AND INSURANCE

Minutes of Meeting

Monday, January 25, 2010

House Hearing Room 5 -- 2:00 p.m.

Chairman McLain called the meeting to order at 2:00 p.m. and attendance was noted by the secretary.

Members Present

Mr. Ash	Mr. Meza	Mr. Quelland, Vice-Chairman
Mr. Bradley	Mr. Seel	Mrs. McLain, Chairman
Mr. Campbell CL	Mr. Tobin

Members Absent

None

Committee Action

HB2075 – DPA (7-0-0-1)

HB2579 – DP (7-0-0-1)

HB2161 – Held by Chairman

CONSIDERATION OF BILLS:

HB2161 – payday loans; regulation – HELD BY CHAIRMAN

Mr. Tobin asked that the Committee hold HB2161 because clearly there is not enough support yet for it to be debated. He said he looks forward to working with stakeholders to see if some resolution can be arrived at and perhaps bring the legislation back at a later date. He said there is no consensus at the present time to move forward with this legislation.

Mr. Quelland related that many people from his district have come to this meeting to hear Members deliberate this issue. He asked Mr. Tobin if he would speak to some of the people. Mr. Tobin replied that he will submit a date and time to all Committee Members for distribution should a stakeholders meeting be scheduled.

Mr. Meza thanked the groups present. He acknowledged all the efforts made by the groups who have opposed payday loans in the past.

Chairman McLain announced that HB2161 will be held.

HB2075 – state board of investment; continuation – DO PASS AMENDED

Vice-Chairman Quelland moved that HB2075 do pass.

Heidi Nitz, Majority Intern, stated that the Banking and Insurance Committee of Reference met last week and recommended that the State Board of Investment (SBI) be continued for ten years (Attachment 1). HB2075 extends the termination date of the SBI to July 1, 2020, contains a purpose clause and a retroactivity clause.

Vice-Chairman Quelland moved that the McLain seven-page amendment to HB2075 dated 1/21/10 be adopted (Attachment 2).

Ms. Nitz explained that the seven-page amendment increases the number of members on the Board from five to six, establishes three-year terms for new members, states that members must be confirmed by the Senate, and establishes staggered term end dates (Attachment 2).

Vice-Chairman Quelland noted that the bill changes the membership on the Board from five to six and asked what happens when there is a tie vote. Ms. Nitz said she will get back to Members on that question.

Kimberly Yee, Director, Communications and Government Affairs, Office of the Arizona State Treasurer, spoke in support of HB2075. She advised that the Board determines the investment policies of the Treasurer’s Office so a super majority is something that is strived for. She said tie-breaker decisions are not foreseen. She reviewed other provisions of the bill: staggering of terms to maintain consistency from administration to administration and confirmation by the Senate to avoid anyone being on the Board who does not have the financial qualifications to determine important investment strategies.

In reply to Chairman McLain, Ms. Yee replied that the legislation establishes minimum qualifications for the additional member by the Education Endowment community. It does not change any of the other members’ qualifications.

Mr. Seel queried the benefit of having an additional member on the Board. Ms. Yee stated that this is an important addition because the Treasurer’s Office invests money for the Education Endowment and the Board currently does not have anyone with expertise in that area.

Mr. Campbell asked what kind of safeguards are in place to ensure a super majority vote.
Ms. Yee answered that the Board has a history of having no controversial issues on which to decide.

Question was called on the motion that the McLain seven-page amendment dated 1/21/10 to HB2075 be adopted (Attachment 2). The motion carried.

Vice-Chairman Quelland moved that HB2075 as amended do pass. The motion carried by a roll call vote of 7-0-0-1 (Attachment 3).

HB2579 – insurance; continuing education; continuation – DO PASS

Vice-Chairman Quelland moved that HB2579 do pass.

Heidi Nitz, Majority Intern, advised that HB2579 is a measure that eliminates the repeal of the state’s continuing education requirements for insurance agents currently set for June 30, 2010 (Attachment 4). The bill contains an emergency clause.

Karlene Wenz, Legislative Liaison, Department of Insurance (DOI), in support of HB2579, asked Members to move this bill forward. She advised that if the statutes are repealed the Department, at considerable expense and employee time, would be required to overhaul its licensing procedures. She mentioned that it is anticipated that there would be loss of licensure revenue, up to $7 million per year, to the General Fund because fewer residents of other states would seek licensure in Arizona. In addition, this could lead to the Department’s loss of accreditation by the National Association of Insurance Commissioners (NAIC).

Lanny Hair, Executive Vice President, Independent Insurance Agents & Brokers of Arizona, testified in support of HB2579. He advised that he is the original author of the existing statute. He related that Arizona was the last state in the nation to provide a continuing education requirement. Before Arizona implemented the continuing education law in 1998, agents who had different licenses from other states had to comply with multiple state laws on licensure each year. The objective of that legislation was reciprocity with every other state. This legislation does not make any changes; it maintains the status quo, so that if a person has 50 non-resident licenses, he only has to comply with one law which can be accomplished in Arizona. He pointed out that many large insurance companies are domiciled in Arizona. Without this law, it would cost a company approximately $3,000 per licensed agent per year to comply with 50 different laws. He opined that it would cause businesses who are considering Arizona as a potential place to locate to look elsewhere. He asked Members to maintain the status quo by voting for this legislation.

In response to Mr. Seel’s question relating to the outcome of not passing this legislation,
Mr. Hair replied that it would hurt consumers by restricting competition, thereby driving up the cost of coverage.

Vice-Chairman Quelland announced the names of those who signed up in support of HB2579 but did not speak:

Kerry Hayden, Government Affairs Representative, Farmers Insurance Group of Companies

Don Hughes, representing Property and Casualty Insurance Association of America

Gregory Harris, representing Progressive Insurance

Ellen Poole, Executive Director, SouthWest Region, Government Relations, USAA

Question was called on the motion that HB2579 do pass. The motion carried by a roll call vote of 7-0-0-1 (Attachment 5).

Without objection, the meeting adjourned at 2:23 p.m.

______________________________

Joanne Bell, Committee Secretary

January 29, 2010

(Original minutes, attachments and audio on file in the Chief Clerk’s Office; video archives available at http://www.azleg.gov)

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COMMITTEE ON BANKING AND INSURANCE

January 25, 2010

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