Call to Order and Roll Call
The3rd meeting of the Interim Joint Committee on Banking and Insurance was held on Tuesday, September 27, 2016, at 10:00 AM, in Room 149 of the Capitol Annex. Senator Tom Buford, Chair, called the meeting to order, and the secretary called the roll.
Members:Senator Tom Buford, Co-Chair; Representative Jeff Greer, Co-Chair; Senators Julie Raque Adams, Chris Girdler, Christian McDaniel, Morgan McGarvey, Dennis Parrett, Albert Robinson, John Schickel, and Dan "Malano" Seum; Representatives Ron Crimm, Mike Denham, Joseph M. Fischer, Chris Harris, James Kay, Dennis Keene, Adam Koenig, David Meade, Michael Meredith, Brad Montell, David Osborne, Steve Riggs, Jonathan Shell, Fitz Steele, Wilson Stone, James Tipton, and Ken Upchurch.
Guests: Matthew Niehaus, Deputy Commissioner and Matt Lockett, Director of Health and Life Division, Kentucky Department of Insurance; Tim Mullen, Director, Market Regulation, National Association of Insurance Commissioners; Ronnie Pryor, Legislative Agent, Kentucky Land Title Association; Michelle Turner, Arnzen, Storm and Turner, P.S.C. and President of the Kentucky Land Title Association; Craig Hall, Vice President, Kentucky State Manager, Old Republic National Title Insurance Company; and Tom Campbell, First American Title Insurance Company.
Approval of Minutes
A motion by Senator Robinson and second by Representative Steele to approve the minutes of the August 23, 2016, meeting carried by voice vote.
Unclaimed Life Insurance Policies
Representative Chris Harris said he intended to refile legislation that would make the 2012 Unclaimed Life Insurance Benefits Act retroactive following an appeals court decision that the legislation did not apply to policies sold before it went into effect. Many of those policies were sold in lower socioeconomic areas. The legislation would require biannual checks of the Death Master File by insurance companies to determine if any policyholders are deceased. If so, the company must make reasonable efforts to pay any benefits owed.
Tim Mullen, Director of Market Regulation with the National Association of Insurance Commissioners (NAIC) reviewed the NAICís development of a policy locator and the role of the agency.
Co-Chair Buford noted that all 50 states will participate in the program.
Responding to Co-Chair Greerís question, Mr. Mullen said the scope of the program is to search all policies not just specific time periods.
In response to Co-Chair Greerís question, Matt Niehaus, Deputy Commissioner of the Department of Insurance, said it has yet to be determined if enabling legislation is needed or if an order from the commissioner will suffice to search all policies, not just those issued after 2012. Co-Chair Greer said there should be no exclusions in the policies available for search. Representative Harris said the online system will be a good start, but the legislature needs to ensure beneficiaries are contacted, noting that some people do not have internet access.
Deputy Commissioner Niehaus explained that the department is considering creating a similar system, and thus participating in the NAICís program will have a positive fiscal impact. The departmentís website would have a pass-through page for consumers to link to NAIC. Information for insurers, consumers, and regulators will be within the system.
Co-Chair Buford said the NAIC program will be beneficial to Kentuckians who may be named as beneficiary in another state.
Mr. Mullen said there will be no cost to participate in or use the NAICís policy locator.
Responding to Representative Crimmís question, Mr. Mullen said companies will be asked for active and inactive policy information. Representative Crimm expressed concern that beneficiaries of policies issued in other states may not be notified if the policyholder dies.
Responding to an earlier statement by Representative Harris, Deputy Commissioner Niehaus said the department hoped this is a system where the process can be started and entered into without the need for, at this moment, additional legislation, so as to avoid more layers of bureaucracy.
Title Insurance Agent Licensing
Ronnie Pryor, Legislative Agent, Kentucky Land Title Association, explained that Kentucky is the only state that does not license land title insurance agents. He asked that committee members again support legislation establishing a licensure system. There would be no cost to taxpayers.
Michelle Turner, President of the Kentucky Land Title Association, said the associationís primary concern is to give consumers a place to check licensing of agents, any agent disciplinary action, or to lodge a complaint.
Tom Campbell, First American Title Insurance Company, said uniformity with other states helps agents work in their industry.
Craig Hall, Vice President, Kentucky State Manager, Old Republic National Title Insurance Company, said licensure gives some protection to Kentuckians to ensure the person doing title work has gone through a vetting process.
Mr. Pryor said there should be minimum standards and background checks to become a title insurance agent.
Responding to Co-Chair Buffordís questions Ms. Turner said the association is looking at an approximate $100 licensure fee to be paid by the agent. A licensure requirement should be evidence of having an errors and omissions policy or a legal malpractice policy.
Representative Meredith said he wanted to make sure the process was not overly onerous. He said the Kentucky Bankersí Association agreed to language in the 2016 legislation but would like to review any 2017 legislation.
In response to Representative Koenigís question, Ms. Turner said that, to become an agent, an application is filed. Mr. Hall said that anyone can begin working as a title agent because there is no requirement to be affiliated with an agency. Ms. Turner said there have been unscrupulous people working as agents in the state.
There being no further business, the meeting was adjourned at 11:20 AM.