Legislature(2001 - 2002)
03/07/2001 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 150-INSURANCE PREMIUMS FOR RENTAL VEHICLES Number 0053 CHAIR MURKOWSKI announced that the first item of business would be to hear HOUSE BILL NO. 150, "An Act relating to insurance premiums for rental motor vehicles." Number 0107 AMY ERICKSON, Staff to Representative Lisa Murkowski, Alaska State Legislature, introduced HB 150 on behalf of the sponsor. She said it corrects an unintended consequence of 1999's Senate Bill 87, which required motor vehicle rental companies to hold funds for rental car insurance in separate trust accounts. That requirement was impractical and nearly impossible for rental car agencies because of the nominal money generated and the filing logistics. These agencies deal in [car] rentals, not insurance, she remarked. MS. ERICKSON explained that SB 87 gave the director of the Division of Insurance the authority to waive certain bond requirements, but it failed to do the same for rental car agencies. MS. ERICKSON stated that HB 150 remedies the waiver omission by eliminating the requirement that funds be placed in separate accounts. The Division of Insurance and the rental car industry have worked in tandem to create the language in the bill. She noted that Charlie Miller, the rental car agency representative, and Stan Ridgeway, with the Division of Insurance, were present at the hearing. Number 0217 CHARLIE MILLER, ANC Rental Corporation and Hertz Corporation, via teleconference, stated that the intended provision of the bill was to waive the requirement for the fiduciary account. "It is [an] incidental insurance product to the contract for the rental. There is no need to segregate the funds, like there is for a normal independent agent." He remarked that a person doesn't want to commingle those funds. Number 0274 MR. MILLER referred to page 2 of the bill, [referring to line 6, subsection (2)], where it says, "the carrier of the insurance has to sign a letter saying that it agrees with the waiver." He said he thinks the division will also testify that it protects the interests of the public. Number 0290 CHAIR MURKOWSKI asked about the insurer's consent form. Number 0316 MR. MILLER replied that he checked with the division but was not sure of the final outcome, other than the fact that "they" decided not to offer an amendment. He commented that there is a normal procedure for "these kind of letters," and he surmised that "they" figured it would work. Number 0343 CHARLES T. RUBIN, Rubin Fiorella LLP, counsel for some of the rental car companies, via teleconference, said similar legislation passed in 30 states. Generally speaking, the insurers provide the letter to the rental agency, and it is maintained on file under rules already in place. The insurance department would have access to [the letter] if it were requested. Number 0400 MR. RUBEN explained that no state requires funds to be held in separate trust accounts. The amount of insurance funds received by the rental companies is small, and it would almost be impossible to keep separate accounts for each rental. CHAIR MURKOWSKI said there is a letter in the committee's file that is signed by Bob Lohr, Director, Division of Insurance, which indicates the division's support of HB 150. Number 0489 STAN RIDGEWAY, Deputy Director, Division of Insurance, Department of Community and Economic Development (DCED), via teleconference, said overall, the bill properly balances the public's right to protection, while keeping the cost of regulatory compliance at a reasonable level. Number 0585 MR. RIDGEWAY relayed that the insurer has the right to waive the requirement for the account; however, the account may be large enough that an insurer might not want to do that. There is a perfect balance, and those waivers would be on record. If the Division of Insurance does a market-conduct survey or a financial examination, then [the division] would have those at its disposal to make sure that everything was working properly. CHAIR MURKOWSKI asked if there are vehicle rental companies in Alaska that put funds in a separate account. MR. RIDGEWAY replied that under the current statute, companies are supposed to do that; however, he couldn't say how that is functioning at this time. He said it might be a question for Charlie Miller. Number 0603 MR. MILLER said after the implementation of the law [SB 87], people have benignly neglected it, because everyone knows that [the requirement] was unintentional. Number 0647 REPRESENTATIVE HALCRO declared a conflict [of interest] because he is in the car-rental business. He said this bill is needed. When SB 87 was passed and the unintended consequences were realized, for a brief period of time it looked like it was actually going to be enforced, he said. His company considered stopping the coverage because it was such a small monetary amount and the cost of abiding by the laws was not economically feasible. Number 0762 REPRESENTATIVE MEYER made a motion to move HB 150 out of committee with individual recommendations and a zero fiscal note. There being no objection, HB 150 was moved from the House Labor and Commerce Standing Committee.
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