Committee hears bill to reclassify prepaid legal plans, adds consumer protections
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Summary
HB 211 would exempt prepaid legal plans from insurance regulation while requiring specified consumer protections; LegalShield and industry witnesses supported the change, the Division of Insurance explained regulatory and complaint‑handling implications, and the committee held the bill for a future hearing.
Keenan Miller, staff to Representative Jimmy, presented House Bill 211 on March 30, explaining the bill would (1) exempt prepaid legal plans from regulation as insurance products and (2) add explicit consumer protections for subscribers.
Julia Jensen, chief legal officer at LegalShield, testified the plans fill a middle tier of legal need for people who earn too much to qualify for legal aid but cannot afford traditional attorney fees. She said plans typically cost between about $30 and $60 per month and provide consultations, document review and other limited services; some litigation benefits are capped by hours, while routine advice and document review can be uncapped.
"All of our plans can be canceled at any time," Jensen said, describing practices to prevent subscription‑trap abuses and noting the bill includes statutory protections enumerating covered services and consumer rights.
Heather Carpenter, director of the Division of Insurance, told the committee the product has been regulated as insurance in Alaska since roughly 2016; filings and consumer complaints currently come to the division. If HB 211 passes, jurisdiction for industry complaints would move to the Department of Law, and attorney misconduct complaints could go to the Bar Association. Carpenter also noted LegalShield is presently the only company filing this product in Alaska and reported about 1,113 policies currently in force.
Committee members raised questions about statutory detail (including the adopted Amendment #2 enumerating protections), cancellation rights, capacity for complaint handling, and whether removing insurance regulation would lower consumer protections. Sponsor staff said statutory language protects consumers and that the sponsor would consider additional clarifications requested by committee members.
The bill was held for a future hearing; committee members requested follow‑up information on complaint processes and Division of Law capacity.
