Legislature(2013 - 2014)BARNES 124
03/27/2013 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB175 | |
| HB125 | |
| HB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 175 | TELECONFERENCED | |
| *+ | HB 125 | TELECONFERENCED | |
| += | HB 74 | TELECONFERENCED | |
HB 175-ELECTRONIC POSTING OF INSURANCE POLICIES
3:25:11 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 175, "An Act allowing, under certain conditions,
a property or casualty insurer to provide policies and
endorsements to an insured by posting the policies and
endorsements on the insurer's Internet website."
3:25:27 PM
KONRAD JACKSON, Staff, Representative Kurt Olson, Alaska State
Legislature, stated that HB 175, sponsored by the House Labor
and Commerce Standing Committee, would permit insurers to
provide standard property and casualty insurance policies and
endorsements to those insured by posting the policies and
endorsements on the insurer's website. Current law requires
companies to mail or deliver policies in all 50 states. The
bill would add posting as a means of access to policies and
endorsements. Posting property and casualty insurance policies
on insurer's websites will allow insurers to dramatically reduce
the number of bulky policy contracts and endorsements they mail
to customers each year while improving the accessibility and
usefulness of the documents. He referred to an example of an
insurance policy in members' packets from Progressive Insurance.
Again, the documents are typically lengthy ones so posting
represents a direct savings to the consumer and the company.
The intent of the bill is to post policies that contain no
personally identifiable information and are filed and approved
before use. Further, public posting to the website will pose no
privacy risk to insureds or any competitive risk to insurers and
are strictly policy and endorsement documents. Market research
shows consumers often do not read the entire documents, but
instead thumb through the document or read a page or two. The
website access to lengthy documents such as these is not
uncommon, since consumers often receive software licenses or
other agreements on-line when purchasing software or other
items.
3:27:59 PM
MR. JACKSON said some people, including his mother, would not
use website technology. Thus, a paper copy is available to
those who so desire. He pointed out the documents would be
searchable and paper contracts will remain available to
consumers. The U.S. Postal Service has increased postage five
times since 2006 and this bill is designed to help alleviate
some of the postage costs, as well.
3:28:41 PM
REPRESENTATIVE HERRON asked if those opposed to this bill would
likely be the U.S. Post Service and the paper supply companies.
MR. JACKSON responded that no one has contacted the sponsor in
opposition to the bill.
CHAIR OLSON recalled this is an opt-in program.
MR. JACKSON agreed that this bill merely would authorize
companies to post the documents on their website since the
general policies do not contain any personally identifiable
information and thereby anyone who wished to could access the
policy via the website.
3:30:34 PM
REPRESENTATIVE REINBOLD moved to adopt the proposed committee
substitute (CS) for HB 175, labeled 28-LS0327\O, Bailey,
3/22/13, as the working document.
CHAIR OLSON objected for purpose of discussion.
3:31:11 PM
MR. JACKSON, referring to page 1, line 7, pointed out that the
language "provide a policy or endorsement" is inserted to
indicate specifically what will be posted is the policy or
endorsement. The second change on page 1, line 11, would insert
the language "or endorsement," for consistency purposes.
Similar changes are made on page 2, lines 1-2, where the
language "and endorsements," is inserted and on page 2, line 5,
after policy, the language "and endorsements" is inserted.
CHAIR OLSON removed his objection. There being no further
objection, Version O was before the committee.
3:32:44 PM
JOSH ZIELASKIESWISC, Attorney, Progressive Insurance, stated his
primary focus is e-commerce. He explained that his chief
executive officer visited the Progressive Insurance mailing
center and observed numerous boxes of policy contracts awaiting
mailing. He related the Progressive Insurance policy is 35
pages in length, which is on the short side for policies. The
CEO subsequently tasked him to figure out how to limit mailing
out so many policies. The company has conducted product testing
and typically the outcome is that policies are thrown out since
the policyholders are typically interested in their
identification cards and their declarations page since these
items contain the information on deductibles, vehicles, and
drivers covered under the specific policy.
MR. ZIELASKIESWISC outlined the goal of HB 175, which is first,
to dramatically reduce the number of paper property and casualty
insurance contracts and endorsements printed and mailed each
year. Next, the company would like to provide property and
casualty insurance contracts and endorsements on a publicly
available website for existing and potential insureds to review,
save and print whenever they like. Thus, Progressive Insurance
would like to post their policies on a publicly available
website so people can read the policies and perhaps compare them
to other policies. He said one of the added consumer benefits
would be to allow comparison. In fact, consumer groups have
asked for more openness and transparency between carriers.
Additionally, to assist policyholders, each form they purchase
will be itemized on their declarations page or issued along with
it. Finally, the goal of HB 175 would be to provide simple
mechanisms for insureds to access their documents and allow them
to request paper copies free of charge.
MR. ZIELASKIESWISC stated that even when people buy insurance
they typically do not see the printed terms of the contract
until the insurance company mails the polices to the
policyholders. This bill would further benefit consumers since
it allows insurers to fine-tune their efficiencies, which can
lower premium costs. Further, the policies and endorsements
will be available on demand. Typically, people are not too
worried about their policies until they have an accident and
want to check specific coverage and exclusions. Rather than
necessitate calling an insurance company to ask for a policy or
search for it, the policyholders could check on the company's
website.
3:38:12 PM
MR. ZIELASKIESWISC reiterated the benefits. Additionally, there
are green considerations and eliminating these saves natural
resources and printing, as well as postage costs. The
electronic version is searchable in a PDF, consumers can search
and find specific sections within the policy. The policies are
typically printed using a 10 or 12 point font; however, the
online version can be increased in size for readability.
Further, this bill is good for insurance companies, too, for
many of the same reasons that the bill is good for consumers.
3:40:17 PM
MR. ZIELASKIESWISC related that insurance laws typically lag
behind the rest of the financial services. The changes in
HB 175 can help modernize insurance laws to bring them in line
with the rest of the financial services. He predicted laws like
this could also allow more insurance carriers to engage in
commerce. He reported that similar changes have been passed in
Virginia and Michigan. Additionally, other states are
considering similar bills in Arizona, Illinois, Missouri,
Kansas, Texas, Florida, Idaho, Ohio, Oregon, Alabama, Colorado,
Minnesota, Oklahoma, and Pennsylvania.
3:42:38 PM
REPRESENTATIVE JOSEPHSON asked whether the amendment labeled
"O.1" has been discussed.
MR. JACKSON responded it has not yet been offered.
3:42:45 PM
REPRESENTATIVE SADDLER asked whether people could inadvertently
change their policy or if this relates to elections that the
policyholders have previously elected.
MR. ZIELASKIESWISC agreed it only applies to what the
policyholders have elected to purchase. The items they
purchased will be itemized on their declaration page, but
policyholders cannot change their policies inadvertently.
3:44:02 PM
REPRESENTATIVE REINBOLD moved to adopt Amendment 1, labeled 28-
LS0327\O.1, Bailey, 3/27/13, to HB 175, which read:
Page 1, line 2:
Delete "and" in both places
Insert "or" in both places
Page 1, line 9:
Delete "personal"
Page 2, line 1, following "policy":
Delete "and"
Insert "or [AND]"
Page 2, line 3:
Delete "and"
Insert "or [AND]"
Page 2, line 10, following "policy":
Insert "or endorsement"
Page 2, line 12, following "policy":
Insert "or endorsement"
Page 2, line 13, following "policy":
Insert "or endorsement"
Page 2, line 18:
Delete "endorsements"
Insert "endorsement without the insured paying a
fee [ENDORSEMENTS]"
Page 2, line 19:
Delete "endorsements"
Insert "endorsement [ENDORSEMENTS]"
CHAIR OLSON objected for purpose of discussion.
MR. JACKSON explained that Amendment 1 contains a number of
technical changes. He referred to the language "policy and
endorsement" which he said is the preferred language for
consistency. He then referred to one substantive change on page
2, line 18, of Amendment 1, which would add language
"endorsement without the insured paying a fee" to ensure that no
one would be required to pay for a paper copy of his/her policy
or endorsement.
3:46:40 PM
REPRESENTATIVE CHENAULT asked whether page 2, line 18, attaches
a fee if a person requests a copy of his/her policy.
MR. JACKSON answered no, that a person could obtain a copy
without paying an additional fee to ensure policyholders are not
charged a fee for a printed copy of their policy.
CHAIR OLSON [withdrew is objection] and upon determining there
were no further objections, announced that Amendment 1 was
adopted.
3:47:34 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 175.
3:47:54 PM
REPRESENTATIVE CHENAULT asked if anyone has addressed concerns
by the Alaska State Troopers or police associations in terms of
drivers using electronic insurance policies. He understood that
officers do not want the driver to accompany them to their
police cars for safety reasons; however, some concern has also
been expressed that if an officer were to take the phone to the
police vehicle, the driver might suggest calls were made using
the phone during the time it was in the officer's possession.
3:49:09 PM
MR. ZIELASKIESWISC stated that it seemed more like an
identification issue than a policy contract or endorsement issue
since people do not typically bring their policy contracts with
them in their vehicles and instead will have identification
cards in their glove box. The policy cards would be mailed or
e-mailed to them, in whichever manner they have elected to
receive them, he said.
3:50:00 PM
REPRESENTATIVE CHENAULT related a scenario in which advertising
shows a cartoon character handing a phone to an officer in
response to a request for proof of insurance. He surmised the
only reason for an electronic version would be if the person was
in a position in which he/she did not have his/her insurance
card in his vehicle. He also recalled some discussion about
police not wanting to take the phone device.
3:51:04 PM
CHAIR OLSON answered that in Alaska, the vehicle insurance is
required to physically be in the vehicle as a paper document.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 175.
REPRESENTATIVE REINBOLD moved to report HB 175, labeled 28-
LS0327\O, Bailey, 3/22/13, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 175(L&C) was reported from the
House Labor and Commerce Standing Committee.