SENATE COMMITTEE ON

TRANSPORTATION AND ECONOMIC DEVELOPMENT

 

 

March 10, 2003                                                                                                       Hearing Room C

8:00 AM                                                                                                                         Tapes 46-49

 

MEMBERS PRESENT:         Sen. Rick Metsger, Chair

Sen. Bruce Starr, Vice-Chair

Sen. Ryan Deckert

Sen. David Nelson

 

GUEST MEMBER:               Sen. Charlie Ringo

 

STAFF PRESENT:                 Jim Wiles, Committee Administrator

Annastasia Suess, Committee Assistant

Charlie Cheek, Legislative Counsel

Greg Chaimov, Legislative Counsel

 

MEASURE/ISSUES HEARD: Informational Meeting – Invited Testimony

                                                    Christopher Davie, SAIF

                                                    Peter Shepherd, Attorney General’s Office

                                                           

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 46, A

002

Chair Metsger

Calls the committee to order at 8:03 a.m., and opens an informational meeting.

INFORMATIONAL MEETING

005

Peter Shepherd

Attorney General’s Office. Begins discussion on the State Accident Insurance Fund (SAIF) corporation. Provides written testimony (EXHIBITS A, B, C).

100

Shepherd

Continues discussion:

·         Oregon Workers Comp history

·         81 Million dollar “Transfer Act”

·         Frohnmeyer versus SAIF

·         Current litigation: Oregonians for Sound Economic Policy versus SAIF

·         Current litigation: Artisan Laboratories versus SAIF

·         Concludes discussion

260

Chair Metsger

Asks about SAIF tax exempt status, and inquires if the status is determined by the Internal revenue services IRS)

270

Shepherd

Comments and defers the question to a SAIF representative.

280

Chair Metsger

Inquires about the public records law.

 

Shepherd

Comments.

305

Chair Metsger

Asks about the Artisan laboratory case, and wonders that if there is a  legal obligation for the state to return dividends, and if the legislature can change this policy.

315

Shepherd

Responds.

330

Chair Metsger

Inquires about the general belief that SAIF is the insurer of last resort.

340

Shepherd

Defers the question to the SAIF corporation.

380

Chair Metsger

Asks about the public perspective that wonders whether SAIF is a public agency or state agency.  Asks how the legislature can determine if SAIF is a state agency or public agency.

390

Shepherd

Suggests the legislature look at the specific powers and functions of SAIF. 

405

Sen. Nelson

Inquires about who regulates SAIF.

410

Shepherd

Answers Department of Consumer Business Services.

420

Sen. Nelson

Asks if this differs from other insurance agencies.

TAPE 47, A

010

Shepherd

States he is unaware, however, will find out and report back to the committee members.

015

Sen. Nelson

Asks if the standard of reserves for SAIF differs from other agencies.

020

Shepherd

Responds.

030

Sen. Nelson

Asks about actuary’s standards and asks if SAIF operates under these standards.

035

Shepherd

Defers the question to SAIF.

040

Greg Chaimov

Legislative Counsel.  Asks if the department believes that SAIF has a basis for withholding disclosure of records that the legislative assembly may consider necessary to its decision making.

045

Shepherd

Answers.

070

Chaimov

Asks under what circumstances the legislative assembly has authorized SAIF to spend monies from the industrial accident fund to investigate contributions made to members of the legislative assembly.

080

Shepherd

Responds.

090

Chaimov

Asks if the department has considered how to parse the industrial accident fund into monies deposited before and after the Transfer Act.

095

Shepherd

Responds.

115

Charlie Cheek

Legislative Counsel.  Asks at what point the funds in the industrial accident fund come under the control of the legislative assembly.

120

Shepherd

Defers the committee to the language of ORS 656.634 Sub 2.  States there are a variety of conditions established in the language

125

Cheek

Asks who has the authority to make the decision, the Legislative Assembly or SAIF.

130

Shepherd

Answers SAIF.

150

Sen. Deckert

Asks about the language of ORS 656.634, and if it meets the standards that the Legislative Assembly might take this session.

160

Shepherd

Responds.

170

Sen. Deckert

Asks what the differences are between Surplus funds and Reserve funds.

178

Shepherd

Defers the question to SAIF.

180

Sen. Deckert

Asks if the question has been litigated.

185

Shepherd.

Answers not to his knowledge.

190

Christopher Davie

SAIF corporation. Begins discussion on SAIF corporation, Industrial Acts Fund. Provides written testimony (EXHIBITS D, E).

300

Davie

Continues discussion:

·         State Industrial Act Committee

·         History of Oregon State contribution of funds to SAIF

·         SAIF financial history

TAPE 46, B

020

Davie

Continues discussion:

·         Legal Structure

·         Mission of SAIF corporation

·         Loss of reserves

·         Board of Directors of SAIF Corporation

·         HB 3918 (2001 Legislature) related to Auditing SAIF

·         Advantages and disadvantages of SAIF corporation

·         Summary of taxes paid by SAIF

·         History of SAIF Premiums

TAPE 47, B

040

Davie

Continues discussion:

·         Summary of SAIF comparison to other insurance companies

·         External reviews

·         SAIF Website

·         Samples of more expensive claims

TAPE 48, A

050

Davie

Concludes discussion.

060

Vice Chair B. Starr

Asks about division of the premium rates and is it consistent for all policyholders.

070

Davie

Responds that it is not consistent for all policyholders and offers to provide further information.

090

Vice Chair B. Starr

Asks about SAIF’s method of doing business via the dividend premium equation, and asks how it compares with the private industry and can the private industry provide similar benefits to their clients.

098

Davie

Responds.

105

Sen. Deckert

Asks if SAIF is currently under reserve they why the reserve has not been recalculated.

118

Davie

States that SAIF is not currently under reserved.  States the concern is the Surplus is dropping to a concern level.

120

Sen. Deckert

Restates the question to why the reserves have not been recalculated to ease the concerns of possible future under reserve status.

140

Davie

Responds.

145

Sen. Nelson

Comments on the re-insurance plan structure of Minnesota.

150

Davie

Responds.

165

Sen. Ringo

Inquires about SAIF’s political activities and wonders what causes SAIF to investigate campaign contributions.

175

Davie

Answers.

188

Sen. Ringo

Provides an opinion.

190

Davie

Responds.

195

Sen. Ringo

Asks if SAIF provides different rates to different groups.

198

Davie

Responds that SAIF has rate tiers that are filed with the insurance division.

200

Sen. Ringo

Asks if pricing information is available to the public.

210

Davie

States he is unsure of the answer, but states that while the information may not be available to the public, it is available to the insurance division.

215

Sen. Ringo

Inquires how a legislature can find out if SAIF provides special rates to reward their political allies.

220

Davie

Responds.

225

Sen. Ringo

Asks for assurance from SAIF that political favoritism rates are not paid to SAIF supporters.

230

Davie

States that both SAIF and the insurance division can provide this assurance.

260

Sen. Ringo

Asks if SAIF makes payments, or transfer funds in some way to Associated Oregon Industries (AOI).

265

Davie

Responds.

270

Sen. Ringo

Asks for confirmation that new policy holders are not automatically assigned to AOI.

280

Davie

Responds.

285

Sen. Ringo

Asks for an accounting of the history of the relationship with AOI current accounting of funds through AOI.

290

Davie

Offers to provide the information to the committee members.

300

Sen. Ringo

Asks for details about recent termination of SAIF executive, including severance pay.

303

Davie

Offers to return with additional information.

330

Chaimov

Asks what education, skills and experience does a person need to estimate the reserve and surplus that SAIF needs.

340

Davie

Answers and elaborates.

345

Chaimov

Asks if the amount of SAIF’s reserve and surplus in which reasonable actuaries can differ.

355

Davie

Responds.

365

Chaimov

Asks what records exist to explain SAIF’s decisions to set the level of reserves and surplus.

370

Davie

Answers.

378

Chaimov

Asks who at SAIF determines the satisfactory amounts in reserves and surplus.

385

Davie

States he believes the Board of Directors, guided by SAIF’s staff and actuaries.

410

Cheek

Asks about the reserving policy.

415

Davie

Answers.

422

Cheek

Asks how the sums for the reserves are determined.

425

Davie

Responds.

446

Chair Metsger

Asks if the State of Oregon is the largest employer SAIF represents.

450

Davie

Confirms.

460

Chair Metsger

Asks if the dividend policy has changed.

465

Davie

Responds.

TAPE 49, A

040

Chair Metsger

Asks if the Board of Directors determines the level of reserves is common to the level of surplus.

056

Davie

Responds.

065

Chair Metsger

Asks about risk factors due to large percentage of insurance rates.

070

Davie

Responds.

075

Chair Metsger

Asks if the 2002 report is available to the Legislative Assembly.

080

Davie

Confirms.

085

Sen. Deckert

Asks about previous testimony concerning the 52 million dollar transfer.

090

Davie

Responds.

095

Sen. Deckert

Asks again why the reserves are not recalculated, and what is the process that SAIF undergoes to do so.

100

Davie

Responds.

150

Chair Metsger

Closes informational meeting and adjourns the committee at 10:30 a.m.

 

EXHIBIT SUMMARY

 

A – Informational, written testimony, Peter Shepherd, 10 pp

B – Informational, written testimony, Peter Shepherd, 2 pp

C – Informational, written testimony, Peter Shepherd, 2 pp

D – Informational, written testimony, Christopher Davie, 43 pp

E – Informational, written testimony, Christopher Davie, 44 pp