Insurance & Commerce- House

Members thank you so much we are we are online now and we will go ahead and resume no representa Ferguson just had his ex parte meeting with them Mr acres so. He he might want to share with us. You know where we were represent Ferguson you're recognized the mistake is of answered all my questions to so I'm good. Okay you want to share. No. Well the following question was those cemeteries basically all by churches who were not the personal care cemeteries and of course this bill would not affect them at all eighty P. of of those cemeteries did not making application will be and they would have no way of knowing yep to be a perpetual care cemetery but he cleared that up so okay as all of that person I missed you thank you so much absolutely well I have a question about this section that is repealed on cemetery advisory boards are there currently any cemetery advisory boards in the state to my knowledge the governor has never created a cemetery Advisory Board anytime in the last twenty years this is kind of This is clean up in my estimation the code as it's currently written at twenty seventeen dash ten twenty nine I believe is the cemetery Advisory Board essentially the very first paragraph of that pointed to a referenced that the government create a cemetery advisory board on cemeteries that were created under twenty seventeen ten oh three oh six I think which was repealed. The whole deal is the section that was repealed back in the two thousand seventeen legislative session. Where is addressing the old cemetery board that was abolished effective July first two thousand eighteen the new code that established the Arkansas state board of embalmers funeral directors cemeteries and burial services is different chapter in the code. The thing is is I think that the original referenced in ten twenty nine. Referenced in incorrect chapter began with its my position and it should not have been referencing ten of six because ten of six essentially was the duties and responsibilities of the old cemetery board but that didn't established licensure for these perpetual care cemeteries those were established under ten oh eight I believe was the code that was established so it's six of one half dozen the other if the code reference within the first paragraph of that section ten twenty nine if it. References funeral homes that are set up as a perpetual care cemeteries under ten oh eight instead of ten oh six I think that would make it correct per the code in the absence of making that with a little tweak I think the request was to just do away with ten twenty nine altogether because again to my knowledge the governor has never established a cemetery Advisory Board typically that gets that put you in the area when a a cemetery become so financially distressed that they either become put into receivership or file bankruptcy and then there needs to be a mechanism in place if you don't have the cemetery owner actively running things and performing maintenance and doing services an advisory board that would be comprised of members of the community who have relatives that are interred at that particular cemetery people in the industry people with historical cemetery perspective and so forth that part of the code. Could possibly be utilized in the future but at this particular point in time and has and so the debate was whether or not it just completely gets repealed or gets tweaked okay so without really going into a lot of detail there there are protections though other than the cemetery advisory boards to be able to make sure that The the service cemeteries are taking care of the dead if they've gone into receivership there still is a back up plan Jr the overseen by the I guess the state mmhm there is to my knowledge there has been one cemetery property in central Arkansas that was put into receivership about fifteen years ago while the perpetual care cemeteries were administrated under the Arkansas securities department they took active ownership and they were the receiver essentially again there has not been a case to my knowledge in the last fifteen years of a similar type case fortunately for us when we get a property that becomes financially distressed or what we're seeing a lot of at this particular point in time is the ownership structure age and infirmity gets them to the point there's no there's no succession plan they're not passing it on to the next generation or they're trying to sell it and get out from under it because they don't want they don't want to have it anymore they want to deal with it anymore we're saying change of ownership the Department the code allows that the Arkansas state board of embalmers funeral directors cemeteries and burial services can approved changes of ownership and what we've seen. almost a dozen cases in the last two and a half years since I've been under the new board is funeral or cemetery operators deciding to sell up to someone and so fortunately most of those cases in the in the instance of the two funeral homes Inc or cemeteries in question in Fort Smith the same thing is happening at this particular point in time is there is a change of ownership that is about to be transaction and the new owners of already taken an active interest in. Trying to get some of the repairs made to the the property so they can generate new interest in the the properties okay and take care of the existing customers thank thank you represented Hodges I believe you have a question. Okay thought it would it would non. Thank you thank you Mr. A couple questions if I may how long how long has this Hello this law been in place that that that were That we're working on now omit it. The way the way set up where you can only you can do if I understand or you can only you can only utilize the interest that have accrued off the print for that correct. Program. Thank you for coming out from that particular one goes back twenty five or thirty years I would say probably early early mid nineties I can check the code to be sure but it's been on the books for quite awhile and again. Back in the late eighties to the mid nineties rates of return or a lot more favorable on those and you could earn enough money an interest to do your maintenance items and since rates of flat lined over the last two decades there's just not a lot of money being earned on those exactly that's the point I'm trying to make because it's been on the books that a long time and in the right of return is not the same that used to be so you got artsy and a lot of uh a cruel on the principal amount you guys just want to do this once every ten years is that correct. Yes Sir what I read in the bill that you want to just withdrawal you have I have the option to withdraw leave once yes Sir I think that the plan is in an pending approval by the legislature I think that the plan is for the current Board the Arkansas State board of a bonus Senator cemeteries and burial services to developer to put into place the mechanism by which a cemetery operating company can petition the board and say listen we need to get our roads repaved we need to get drainage put in we need to get Muslims repaired we're not talking about temporal a recurring things like we're not gonna pay the grounds creative mode this weekend in two weeks later PM essentially it's durable infrastructure repairs but essentially what the program was envisioned as is the cemetery. Operating company can petition the board and say we need to repay the roads we've got potholes and people can't get back to the backside of the cemetery because the roads are so bad and then the board would allow the cemetery operating company. One time every decade one time every ten years to tap into some of the principal I would say it did well it doesn't say in the bill we were thinking fifteen to twenty percent might be a reasonable amount and then essentially it would be upon the cemetery operating company to find a vendor who will agree to perform those services those repair services and then once that. Quote or whatever is presented to the board the board would say we approve the plan they do the work and then once the work has been completed then it would be an inspection by our inspector of the perpetual care cemeteries to make sure the work has been done and then the board could approve the disbursement of those funds out of the principle of the perpetual care trust to reimburse for the services that have been performed we would not want the cemetery operator to just take the money out of the trust and hope that those repairs get made so essentially the cemetery ownership would not have access those funds but would ask the board for approval to get those structural errors that when the question of it are we are you seeing more people apply to be a part of these Perpetual care cemeteries. I'm like sitting in the two and a half years that the perpetual care cemeteries has been over the Arkansas injures Department miles we've only received one application for a new perpetual care they did not meet the qualifications so we did not process the application it's been a number of years since any cemeteries have applied to become perpetual care cemeteries so this is would you agree question so we see a rate of return if a you know on on on on the principles not it has declined we see that you know more people getting cremated and and we see that you know you're not getting a lot of people that are applying to be you know fo fo fo for the ninety if the people are paying dues whatever have to pay to get into this program so would you agree this is the need you know I but you know I talked to one of my my cemetery owners back home. Several months prior to come to come into session he kinda and light me no I know nothing about the going home business we kinda like me on on the on this this issue that I didn't know existed so so I agree there is a need for this piece of legislation would you agree I would say your assessment is correct without me advocating for it I acknowledge that there are several properties in the state of Arkansas who become financially distressed and they need a little help financially to get their property I mean I can certainly understand I'm very sympathetic towards those people who have relatives that are interred at Roselawn Holy Cross and Forest Park in Fort Smith the conditions have been pretty deplorable over the last few years to the point where you can't you can't travel the roads in the loosest sense I mean they're not even good past I wouldn't go off road on some of these things and we have received a number of consumer complaints we receive voice their heart of elderly lady was crying saying she couldn't even go visit her husband's grave because it was at the backside of Forest Park cemetery and the roads are impassable and she can't walk two hundred yards back to where he's you know entered There I think you're assessment that this allowing Principal to be utilized for infrastructure and capital improvements would be helpful to several properties yes. Thank you Representative Richardson you're recognized. Motion at the proper time. We have a several other questions but I will take that motion represented fielding. Thank you Mr I believe you might have read a. Is amended to read current senator you have here in the state. There are one hundred and for perpetual care cemeteries currently so this bill is to pay. On the fourth mail. No Sir it would be something that would apply to all one hundred and for perpetual care cemeteries. But when I have a problem at the hundred and two would have a problem with those two out a hundred to four. We are. Sir we're aware that there are several properties throughout the state who were in a similar financial situation they can't make repairs we do get a considerable considerable number of consumer complaints from people talking about conditions of cemeteries I think that the two in Fort Smith would be able to utilize the program to do the much needed repairs to the roads and and drainage and so forth there were in my estimation there would be others that would take advantage of that as well. Not just the two enforcement. Representa fielding any any follow up for you Sir okay represented would. Thank you Mr chairman. You for me with the Edgewood cemetery in north or a yes Sir I am. There has similar situation Sir what was the status of their. Edgewood cemetery north of Iraq in the levy area is one of eight properties that are currently owned by serenity cemeteries out of Phoenix Arizona those that property as well as two properties in elder radio in one property in pine bluff were purchased as liquidated properties here several years back by serenity cemeteries the challenges that are in place at Edgewood cemetery is the location the location is they've got a lot of crime in that area if you'll recall in the news just within the last year and a half one of the grounds keepers was shot and killed and that was in the news they have had a. From what I've seen a revolving door of personnel at that location part of it is because of the location they are one of our one hundred and for perpetual care cemeteries that we regulate. How how would this bill impact that situation. I don't know if serenity cemeteries has indicated the certainty cemeteries owns dozens and dozens of cemetery properties nationwide as far as I am aware they are not having liquidity issues or funding issues to do repairs they given the. Dimmock or the the geographical area they don't have a lot of problems with flooding or drainage issues and so forth like that I don't think that age would under serenity cemeteries would utilize the program because we've not we've not since I have had oversight over the perpetual care cemeteries had any consumer complaints against Edgewood okay so are they maintaining it yes Sir I was out there a few months ago I go out and make the rounds occasionally and did look reasonably well capped. This this bill will help to alleviate that situation that was out there before surrender involved right. Hopefully yes Sir I think I think an important thing is is we really. Given given our staffing constraints I don't see that we have the capability of acting as receiver on any Cemetery properties it takes a lot of resources and a lot of money to do that the hope is that if you do find a cemetery operating company that becomes financially strained and they're unable to effect repairs we don't want to file bankruptcy we don't want in the end up going into receivership that doesn't help the consumers that doesn't help anybody and so if there's a mechanism by which they can tap into some of the trust. In the perpetual care maintenance fund to do repairs that are needed the at think that'll probably help. Curtail some of that in my estimation. Thank you thank you Mr chairman thank you represented brown you have a question. Thank you Mr chair I understand roads in cemeteries do not have to be constructed to interstate highway standards however if they're only able to tap into these funds every ten years is there going to be some sort of. Some sort of oversight so that the road that is built or repaired will be anticipated to last for ten years. That is a good question I'm not sure that we thought that in that direction we do have an auditor that does onsite inspections of the perpetual care cemeteries we do as a matter of fact in my multiple visits to the Fort Smith properties I've taken literally hundreds and hundreds of photographs I've documented. In memorandums to the board the various conditions that were visually inspected I think given. No more traffic that happens on these roads and what one thing is is there is no requirement that a road in the cemetery B. blacktop or concrete it can be gravel and a lot of more finding or gravel Wow as the regulatory agency we tend to be a little reactive in the fact that Well before they came over the Arkansas insurance department the old cemetery board would only instruct the auditor for the perpetual care cemeteries to do an on site audit or inspection if there was a consumer complaint we're trying to be in the last two and a half years a little more proactive and make it out to these properties to visually inspect hopefully if we're doing our job in making out at least once a year if not maybe a couple times a year we can see if there's any degradation in the infrastructure and then address that in a more timely manner with the ownership of the cemetery thank you yes ma'am thank you represented Richardson you are recognized for your motion. Thank you Mr chairman moved to pass okay members we have a motion of a do pass is there any discussion among the membership. Representative Rick Crawford you do get an opportunity to close if you would like. Yes thank you for the M. good questions and thank you Robert for being here. And I thank you for a good vote so that the cemeteries in Fort Smith will look pristine and those across the state thank you thank you members we have a motion of do pass on this bill all those in favor signify by saying aye. Any opposed say no. And there's none your. Bill as passed congratulations thank you thank for much. Represented excuse me we have before us now Senate bill eighty four and I believe represented board is going to be presenting that four Senator Davis. Yeah. Thank you Mr chair I have someone with me from the auditor's office just in case their questions to go over my head if so if you can be recognized. Hey good morning my name is Scott covert on the chief deputy auditor for auditor of state and really. Thank you Mister thank you for the opportunity present this bill by Senator Davis this might be the easiest bill I've ever done it literally just strike some language that's redundant in the current code. Okay represented by believe that there is a handout from the auditor's office on this so if you will just hold for a moment while This Is disseminated. Okay you are. Three percent so in in your hand out of literally the first two sentences tell you exactly what the bill does And so with that I think would be open any questions. Any questions from the membership. Represented by. Thank you Mr chair We had a similar discussion the other day about publishing things in the newspaper It seems that a lot of a lot of people aren't taking the paper these days Is there any other option R. eight. I had a advertises so that more people have an opportunity to know about it. So just for history we serve the publishing entire list of names actual names of thousands hundreds of thousands of our Kansans about four years ago we changed it and now we just print this one notice in each county once per year so we don't list individual names we just encourage you to go online search your name surgery mas names if we owe you anything that's just one tool in our tool chest we actually utilize your round advertising online on Facebook we also have a team of claim agents to search for you using various different arrays of data that we have access to so we'll send you some letters I will never call you and so this is just one tool chest piece one tool in our tool chest and in the end it's just redundant language we're still going to advertise the newspaper as as this law requires that we are doing other things as well to help I'll find folks. Thank you I looked online and found I was of seven dollars and fifty cents. Well congratulations. Members and any other questions. Not to represent a boarding close for the bill I thank you Mr chairman closed and make a motion to pass okay we have a motion of do pass before us any discussion among members and almost did it again I forgot to ask if there's anyone in the audience that would like to speak for against the bill. We don't have anyone signed up so I guess it was okay to skip over that part we have a motion before us all those in favor of do pass on this on this bill so as P. eighty four please signify by saying aye. Any opposed say no. And the bills passed congratulations. Members I am going to go to the table to present this bill from the insurance department and my vice chair is going to chair the meeting. I waited for you to get down the represent Lowery made a pretty quickly actually. Thank you for waiting and you are recognized to present HB twelve forty two and if you would like to have your witness introduce himself please. Good morning Mr chairman members a committee my name is Russ Galbraith that I served as the chief deputy insurance commissioner for the state. Thank you you may proceed with your bill thank you Mr chair and I appreciate the insurance department you Mr McLean is here and deputy commissioner gallerist came over short notice because I asked them yesterday after we've had several of bill's sponsors say that they needed to back off on their bills so I ask them to pick the least controversial bill and this is one it really is just a cleanup language it brings up the language related to of long term care insurance reporting guidelines in line with the in the icy National association of insurance commissioners our I will just at this point just turned over to represent me to Mr Galbraith for him to just give you a full explanation of what the bill does. Thank you Representative yes so this bill brings Arkansas in line with the rest of the country when it comes to the market conduct annual statement reporting currently long term care companies in Arkansas that report less than fifty thousand dollars in gross annual premium I don't have to complete a market conduct annual statement and what a market calling and statement is is a reporting tool that regulators use around the country to assess just the insurance practices of that company I don't know the the details as to why the long term care with less than fifty thousand was was left out of that there's other companies other lines of business that report fifty thousand or more or less don't have to do it but long term care does in every other jurisdiction other than Arkansas so This Is brings us in line with the rest of the country we want to fix that clarify that. Thank you are there any questions by the committee. Okay saying nine are there any other persons would like to speak for or against this bill I believe there is someone signed up. Generators are general counsel he was just here in case or any other questions that occur okay he he had signed up to testify but I I presume is not going to that is not okay. Reversing you're recognized for a question. Hey I was just curious how many long term care facilities would this involve. That's a good question I mean they're they're long term care providers so these are insurance companies that that just right business in Arkansas and the other aspect of this is those that are that have less than fifty thousand eight or gross or probably not that many but if there are they're going ahead and and reporting this anyway this just close the loop on the the reporting requirements. Yeah I guess my only concern a lot of those long term care insurance companies are going out of business that this won't affect Charles monitoring and that this actually enhances the monitoring because if if there are some that have less than their reporting less than fifty thousand premium we're still gonna know about it now The so this enhances that okay thank you. Represent a first in your represent comes from sorry correction brown you're recognized for your question. Thank you Mr Mister Roberts where the long term care insurance company goes out of business does not another insurance company by their book of business. A not necessarily sometimes it goes into I guess what would be liquidation in the guarantee fund has to deal with those types of issues Penn treaty is a perfect example there's been a couple of different long term care companies in the news in in recent years in the past five or six years of gone under I would assume that some there are some companies that are interested in that but sometimes it does go to a liquidation type situation so to clarify are the people who have policies with these companies that go out of business are they left then uninsured or do they have the amount of insurance that their premiums have purchased already. Have like a pro rated amount yeah that's that's a a deeper question and a deeper issue and it does not affect it does anything to do with is one thing to do with this Briles and that may be something that somebody with a little bit more expertise might be able to answer or we can get that information to you thank you. Members of the committee are there any other questions. Pacing nine and there's no one else to testify represent law would you like to close for your bill. I am closed for the bill H. bill H. B. twelve forty two I make a motion to pass. Thank you that is a proper motion is there any discussion on the motion. Seeing none we have a proper motion of do pass on the table all in favor please say aye. Any opposing nine. Regulations represent our your motion is carried thank you ma'am. Thank you Mister you Mr men and committee. Thank you Mr vice chair and thank you members for your patience of give me the time to walk back up here I'm just curious someone made a reference the other day seeing me hobble around and they called me Festus how many of you. How many of you remember fast slow okay I just curious five is the only old person that remember that from the the gun smoke right. Okay members any other businesses to come before the committee. If not let me just remind you again that we will not be meeting on Monday we will be meeting next Wednesday and we will be starting with a photograph all that the House steps before we come over here next week will possibly be the last week that we only meet on Wednesday because we are starting to generate some volume from the Senate as well as the the insurance department bills will be ready to to run soon I think we also have some bills coming over from securities department so there's no other business we are adjourned.