Legislature(1999 - 2000)
04/21/1999 01:10 PM House JUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 158 - NOTICE OF INS. CANCELLATION TO ELDERLY
CHAIRMAN KOTT announced that the next order of business is HB 158,
"An Act relating to the annual report of the director of the
division of insurance and to notice of cancellation of personal
insurance."
CHAIRMAN KOTT indicated that the committee will take up CSHB
158(L&C), Version 1-LS0128\I.
Number 0889
REPRESENTATIVE ROKEBERG, Sponsor of HB 158, explained that the bill
would permit the Division of Insurance [Department of Commerce and
Economic Development] to gather in-depth statistical information
regarding health insurance policies. The bill would also provide
a mechanism by which to inform Alaskan seniors of a missed
insurance payment. Representative Rokeberg informed the committee
that one of his constituents, an over 80-year-old man, was in a
substantial automobile accident and did not realize that he had not
paid his premium.
REPRESENTATIVE ROKEBERG noted that the House Labor and Commerce
Standing committee worked with the insurance industry in order to
develop a compromise bill. The original bill required certified
mailings. This bill covers personal insurance which includes
property, casualty, automobile, and liability type insurance.
Under HB 158, notification is provided to all insurers in Alaska
that a person 70 years old or older has the right to designate a
third party to receive notice of payment of premium and/or
cancellation on three occasions per current statute. The industry
is willing to send multiple notices for the three different
statutory notification requirements. This is believed to be of
lesser cost to the insurance industry and would not create a
mandate as would requiring certified return receipt mailings. This
bill is supported by a number of senior groups around the state.
CHAIRMAN KOTT noted that the committee substitute elevates the age
from 67 to 70. He asked Representative Rokeberg why that was
changed.
REPRESENTATIVE ROKEBERG informed the committee that testimony in
the House Labor and Commerce Standing Committee from the Division
of Motor Vehicles [Department of Administration] and senior groups
revealed that the condition of dementia increases with age and
becomes particularly acute around the age of 70. Therefore, rather
than using the new social security age of 67, the age was raised to
70 which would include some 16,000 people.
CHAIRMAN KOTT asked whether all of the personal insurance policies
addressed in the bill require a person to provide his age.
REPRESENTATIVE ROKEBERG stated the industry believes that
information would be available due to underwriting purposes.
CHAIRMAN KOTT asked whether that applies to homeowner's insurance.
REPRESENTATIVE ROKEBERG noted that was discussed. The testimony
indicated that the age information would be available and it would
not be a burden on the insurance industry. If the insurance
industry does not have this information, it will have to gather it.
CHAIRMAN KOTT inquired as to why the certification and registered
mail requirement was omitted.
REPRESENTATIVE ROKEBERG explained that, currently, the insurance
industry mails by certification with a computer printout and
delivers the mail to the U.S. Post Office. That list is filed as
their proof of mailing for cancellation. The insurance industry
felt that if an individual certified mail, return receipt requested
there would be fairly substantial fiscal note implications which
would be passed on to the consumers. Representative Rokeberg did
not want to, in the process of protecting people, end up raising
their premiums.
Number 1255
REPRESENTATIVE GREEN asked whether there would be any litigation
caused later if a notice was sent to the designated recipient.
REPRESENTATIVE ROKEBERG clarified that the notice would be sent to
both parties. The insurance industry is mandated to inform an
individual of the availability of this option in the regular
notification.
REPRESENTATIVE GREEN asked, if the insurance company fails to
notify the bill payer, would that alleviate the fact that the
elderly are not covered because the payments were not made.
REPRESENTATIVE ROKEBERG stated that the level of notification has
been increased. The desire is to avoid a situation in which the
individual does not have coverage as was the case for
Representative Rokeberg's constituent. He acknowledged that some
coverages have grace periods.
REPRESENTATIVE MURKOWSKI noted that there were discussions
regarding grace periods in the House Labor and Commerce Standing
Committee. She feels that if this is going to be done for personal
insurance, it should also be done for life and health insurance as
well. She informed the committee that typically, life insurance
has an allowance for a grace period for reinstatement, which is not
the case for personal insurance policies.
CHAIRMAN KOTT pointed out that the committee packet includes a
letter from the Alliance of American Insurers which indicates that
homeowner's policies do not make any reference to the age of the
insured. He said, "Is that just a 'red herring' that they are
throwing up or would they change there way of doing business and
require age to be recognized?"
REPRESENTATIVE ROKEBERG deferred the question to Mr. George
[lobbyist for the National Association of Independent Insurers].
REPRESENTATIVE KERTTULA indicated that there may be a language
error in Section 2(1) of the committee substitute.
REPRESENTATIVE ROKEBERG stated that the language was taken from
existing law.
Number 1498
JOHN GEORGE, Lobbyist for the National Association of Independent
Insurers, informed the committee that it does not really matter
whether the insurance company has the age of the individual in the
file. This requires that everyone be offered a notice saying that
if a person is 70 years of age or older, that person may request to
be placed in the multiple notification program. At some point,
there would have to be a determination that the individual
requesting this multiple notification is actually age 70 or older.
That information could be ascertained upon request of the program.
Mr. George noted that this would apply primarily to homeowner's
insurance, fire insurance, and auto insurance.
REPRESENTATIVE MURKOWSKI asked whether it would be possible to
request dual statements for individuals under the age of 70.
MR. GEORGE noted that there are notices to lenders, however there
is no statutory requirement for an insurance company to offer that.
Mr. George assumed that some insurance companies would offer that
service if requested. This legislation would require that the
insurance company provide that notification if the individual is
over the age of 70. Mr. George emphasized that insurance companies
are not in the business of canceling insurance, but rather
insurance companies are in the business of writing insurance.
Insurance companies would like to keep a policy in effect once it
is in effect.
CHAIRMAN KOTT closed the meeting to public testimony.
Number 1643
CHAIRMAN KOTT moved to report HB 158 [CSHB 158(L&C), Version
1-LS0128\I] out of committee with individual recommendations and
accompanying zero fiscal notes. There being no objection, HB 158
was so moved from the House Judiciary Standing Committee.
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