Testimony of
Rep. Sharon Treat
Sponsor
LD 157 – “An Act to Enhance Oversight
of Fraternal Benefit Societies”
February 3, 2009
Senator Bowman, members of the Committee, my name is Sharon Treat,
and I am here to present L.D.157, a bill proposed by the Department
of Professional
and Financial Regulation.
This bill is intended to clarify and strengthen the Bureau of Insurance’s
oversight over the insurance operations of fraternal benefit societies
(fraternals) which some of you may know as orders or lodges. Currently
fifteen fraternals offer insurance coverage in Maine. Fraternals
are subject to regulation under one specific chapter of the Insurance
Code
and only under that Chapter unless other provisions of the Code
are expressly made applicable to them. Accordingly, regulatory tools
otherwise available
with respect to other licensees of the Bureau frequently do not
apply to fraternals.
Maine’s current regulatory provisions with respect to fraternals
have been in place since the early 1960’s with only minor amendments
since that time. They are based on model legislation from the 1950’s.
It is not often that bills relating to insurance provided by fraternals
have come before the Legislature. Unfortunate events over the past couple
years involving two fraternals, however, have demonstrated the need to
update Maine law as provided in this bill. The principal areas in need
of updating are clarification and streamlining of administrative enforcement
mechanisms available to the Superintendent as well as clarification that
trade practices and claims practices deemed by law to be unfair and illegal
when conducted by others are also illegal when conducted by fraternal
benefit societies.
Superintendent Mila Kofman will be following me to the podium today
to discuss in detail the scenarios that have arisen and the necessary
changes
proposed by this bill. I ask that you defer questions until then,
but I would be happy to try to answer any you may have for me.
Thank you.
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