House Insurance and Commerce Committee

January 25, 2023

 

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• HB 1050 Removes requirement that people selling prepaid legal plans be licensed
• HB 1147 Allows sales reps for home builders to sell without a real estate license
• HB 1402 Updates prostate cancer screening guidelines

 

Rep Maddox: I was given strict instructions to start on time. So I’m going to try to do that from here on out. We have just a little bit of housekeeping to do at this stage. Representative Warren, you’re recognized. 

Rep Warren: Thank you, Mr. Chairman. I would like to make a motion that we adopt the procedures for use of health benefit actuary. 

Rep Maddox: Thank you. There’s been a motion made by Representative Warren, and what this is going to do is it is a motion to adopt the procedures that were instituted and explained to us by BLR at the last meeting. After the meeting, we were contacted and asked to actually make that a formal motion and adopt it. So we have a motion on the table to adopt that. Is there any discussion on the motion? Seeing no discussion, all in favor of the motion say aye. Any opposed? Motion carries. Thank you. 

Okay, I believe Representative Ray– did I see Representative Ray? Yes, sir. You are recognized to present your bill. If you would just introduce yourself and I don’t see any witnesses, but introduce yourself and proceed. 

 

HB 1050 Removes requirement that people selling prepaid legal plans be licensed

Rep Ray: All right, David Ray, State Representative, District 69. Thank you, Mr. Chairman, colleagues. It’s good to be back in Insurance and Commerce. I’m sorry I’m not back with you this time around on this committee but glad to have the opportunity to present House Bill 1040. This bill would repeal the Arkansas Legal Insurance Act. If this sounds familiar it’s because I brought this bill to the Committee two years ago and we passed it 94 to nothing in the House and went to the Senate, where I think they got tired of running House bills at the end of session. 

So anyway, I’ll go back over just briefly what it does. The Legal Insurance Act was written in the 1970s and hasn’t been updated since that time. What it really refers to, legal insurance really refers to, is what’s known today as legal plans. So most legal plans today are not what we would think of as insurance in the typical way we think about insurance. What they are today is typically a subscription-based prepaid legal plan. The way it works is the user will pay a monthly fee and in exchange for that fee they’ll get access to a local attorney and a basic set of services, things like document review, basic consultation, will preparation, things of that nature. And then beyond what’s included in the basic services, they can get a discounted rate that’s pre-negotiated for things above and beyond that. 

A lot of times individuals will buy these plans much like you’d buy a AAA membership for roadside assistance or something like that. A lot of times businesses will buy these plans and they’ll offer it to their employees as an employee benefit. 

Another thing that’s worth noting is the sales associates for companies that sell these legal plans, they have to be licensed by the state in order to sell them. And it’s really not a license either in the way that we think of licensure. There’s no education requirements. There’s no testing. There’s no training involved. The only requirement is that they pay a biannual fee to the state. So it’s basically a license just for the sake of licensure. 

There’s 33 states that never regulated this area as an occupational license and of the states that did, a majority of those have repealed their licensure. And in fact, in the last couple of years, I believe Arizona, Nebraska, Tennessee, and Texas have repealed their requirements as well. So basically, the bill just conforms Arkansas law to match what most states have done in this area which is not to regulate it, and it eliminates an unnecessary licensure. So that’s what the bill does.

Rep Maddox: Thank you, Representative Ray. Are there any questions by the Committee? Okay, seeing no questions by the Committee, no one has signed up but is there anyone in the audience who would like to speak for or against this bill? Okay, no one has signed up to speak, there’s no one there. Representative Lundstrum, you are recognized for a motion.

Rep Lundstrum: Motion do pass. 

Rep Maddox: We have a motion do pass by Representative Lundstrom. Is there any discussion on the motion? No discussion, we have a motion do pass. What is the will of the Committee on the motion? All in favor say aye. Any opposed? Your motion carries. Congratulations, Representative Ray, you have passed your bill. 

Rep Ray: Okay. Thank you, Committee. 

Rep Maddox: Representative Vaught, I believe is– yes, there she is. You’re recognized. 

 

HB 1147 Allows sales reps for home builders to sell without a real estate license

Rep Vaught: Thank you, Mr. Chair. Good morning, everybody. You’ll remember back last session, several of you might remember that I tried to pass a bill similar to this bill. And I want to thank the leaders of the Arkansas Realtors Association for sitting down with the leaders of the homebuilders and working during the interim to come up with something that they could both live with. And I appreciate their leadership in working on this bill. 

This bill simply allows the sales employees of a licensed homebuilder to help sell its own property, just like an individual is allowed to sell his or her own property. It is common for a licensed real estate development and homebuilder company to have sales employees. These employees work exclusively for that company and simply facilitate the sales of the inventory owned by their employer. Unlike licensed realtors, they do not represent the public or any other sellers or buyers of real estate in the open market. 

Because these sales employees do not represent the public and only sell property for their employer, these sales employees do not provide services like a licensed real estate agent. However, in Arkansas, these sales employees are still required to obtain a real estate license simply to sell the property of their employer. This would be like requiring you or I to have a real estate license before we could sell our own property. This bill adds an exemption to the existing real estate license law to allow these sales employees to only sell the property of their employer without a need for a real estate license but only if certain conditions are met. 

So this bill was drafted– I probably should tell you that– this bill was drafted in cooperation with the Arkansas Real Estate Commission and has been approved by both the AREC and the Board of Realtors Legislative Committee. Every single state surrounding us already has an exemption like this. This helps Arkansas to stay current and competitive and attract more great homebuilding companies to Arkansas and keep sales jobs here in our state. 

In order for a sales employee to qualify for this exemption, several conditions must be met. The exemption only applies to sales employees who work for a licensed Arkansas homebuilding company, and that company must employ a licensed principal broker to be responsible for the sales employees, even though they are not licensed. That broker can still be held accountable by AREC even though the sales employees are not licensed. 

The sales employees must provide a written disclosure to any potential buyer advising them that the employee only represents the seller and the buyer has the right to hire his or her own real estate agent if they choose. The sales employee cannot work or sell for multiple employers at the same time. The exemption only applies to the sale of brand new built homes by the employer. This bill removes unnecessary red tape and allows more Arkansans to find great sales jobs in Arkansas but still provides consumer protection for the public.

Rep Maddox: Thank you, Representative Vaught. Questions by the Committee? Representative Eaves, you’re recognized for a question.

Rep Eaves: Thank you. I’m just trying to follow this. So if the homebuilder is selling his or her own inventory, I get that part, why do they need a principal broker?

Rep Vaught: Because the employees after this will no longer need their real estate license. So they need that broker. We need somebody to be held accountable. 

Rep Eaves: Wouldn’t that be the builder?

Rep Vaught: And this gives accountability. 

Rep Eaves: Okay, I’m kind of confused on why you even need the principal broker if you don’t need a real estate license to sell the inventory, which I fully agree with. Another question, since the salesman is only representing the builder, the inventory, do they have to provide a disclosure to the purchaser that they do not have a fiduciary duty to the buyer? 

Rep Vaught: Yes, sir. 

Rep Eaves: Okay, thank you. 

Rep Maddox: Thank you, Representative Eaves. Any further questions by the Committee? Okay, seeing none at this time, we do have members of the public who have signed up to speak on behalf of this bill. It appears that Josh Carson if he’s in the room has signed up to speak for this bill. No? Okay, I’m getting word that it is not necessary. There are three others who have signed up. Paulette Richie. Okay, let me ask, does anyone want to speak for or against this bill? Okay, thank you. Representative Vaught, would you like to close for your bill?

Rep Vaught: I’m closed. I hope that we’ll get a do pass in here. 

Rep Maddox: I think Representative Johnson was first with a motion do pass. That is a proper motion, and we’ll take discussion on the motion at this time. Representative Wooten, do you have discussion on the motion?

Rep Wooten: Yes. Colleagues, I don’t know how many of you are familiar with how these folks work. And I just want to share with you that in my community in Beebe, there are, I don’t know, 90 maybe 100 homes and maybe another 50 or 60 to be built by one of these firms. If it were not for them there are many, many young couples that would not have the ability or access to a new home. And then in addition to that, there are many elderly folks who also purchase these homes. And they have made a tremendous impact upon the home life if you will, of individuals living within the city limits of Beebe. And they have been very, very helpful and very good citizens in our community in providing affordable homes. 

And I have been in the construction business and built homes, my wife owned her own company. The only difference between – and she sold her own homes individually – and the only difference between being a small builder like she was or being a developer like these are, is they just sell more homes but they sell their own homes, what they built. And the other people, the other that don’t sell anyone else’s property but their own. So they make a tremendous economic contribution and employ several people. So I just wanted to share that with you because we are familiar with how they operate. Thank you, Mr. Speaker or Mr. Chairman.

Rep Maddox: Thank you, Representative Wooten. Any further discussion on the motion? Okay we have a motion do pass, and all in favor of the motion say aye. Any opposed say no. Congratulations, Representative Vaught, you’ve passed your bill.

Rep Vaught: Thank you. Thank you, Committee. 

Rep Maddox: I believe, Representative Allen, would you like to run 1042? 

HB 1402 Updates prostate cancer screening guidelines

 

Rep Allen: Thank you, Mr. Chairman and members. House Bill 1402– actually in 2009 I passed the prostate cancer act. It’s called Act 75. And what Act 75 provides is prostate screening for all men beginning at the age of 40. Now what this bill will do today, it’s just simply going to bring us into guidelines of 2023. Nothing in the bill is going to change. There was no financial impact statement. And the only thing that it’s going to do is just put us in line with what the NCCN guideline says for 2023. That’s simply it. 

Rep Maddox: Thank you, Representative Allen. Are there any questions by the Committee? Thank you. No one has signed up, but is there anyone in the audience who would like to speak for or against this bill? Okay, seeing no one, Representative Allen, would you like to close for your bill? 

Rep Allen: I’m closed. 

Rep Maddox: Closed. And I see Representative Warren, you’re recognized. 

Rep Warren: Motion do pass. 

Rep Maddox: Motion do pass by Representative Warren. That is a proper motion. Is there any discussion on the motion? No discussion. We have a motion do pass by Representative Warren. All in favor say aye. Any opposed say no. Congratulations, Representative Allen, you’ve passed your bill. 

Rep Allen: Thank you. Let the record reflect Ken Ferguson asked me if I was on my way to a funeral since I was dressed in black, and let the record reflect that I’m not. 

Rep Maddox: Thank you, Representative Allen. Members, I do not see anyone else who is wanting to run a bill that’s on the agenda for today. We do have just a couple of housekeeping measures. We will have a picture at 9:45 next Wednesday. So be here just a little early. Let’s try to do that and then have the meeting at 10 o’clock. So 9:45 everyone be ready for that. Okay, I do want to commend the Committee for something that is very important, we’re doing a good job of leaving the restroom door open. It’s very important so thank you for that. Remember, open when you leave, closed when you’re in there. Thank you. Seeing no further business we’re adjourned.