Legislature(1993 - 1994)
02/03/1994 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 403 - AUTOMOTIVE LIABILITY INSURANCE COVERAGE Number 010 HOWARD JAEGAR, with Shattuck and Grummett Insurance Agency and a spokesman for the legislative committee of the Alaska Insurance Agents and Brokers, explained that the insurance industry supports HB 403, as it will help the young and impaired drivers in the state get insurance by opening new markets and encouraging additional insurance companies to come into the state. Number 200 SEN. DAVE DONLEY stated he was opposed to HB 403 and outlined the history of uninsured liability insurance to the committee. SEN. DONLEY stated that he assisted former Speaker Joe Hayes in producing mandatory auto insurance law in the state. He added that this legislation was the first time that underinsured motorist coverage was ever put into statute in Alaska. Up until then, the state had uninsured motorist coverage. SEN. DONLEY explained that it was not mandated in law that an insurance company had to offer this underinsured coverage. Consequently, no insurance company wanted to be the first to offer this type of insurance, because to be the first in the market means you get all the excess exposure. After seeing this problem, the legislature passed a bill to require all insurance companies to offer this insurance. Because of this, every insurance company offered it and no one had a greater amount of excess exposure and all could write their rates appropriately and provide this option to the people of Alaska. SEN. DONLEY asserted that much of what occurs in the insurance industry depends on public education. Current law gives consumers the option of learning about this type of insurance and availing themselves of this. Sen. Donley contended that many people don't spend the time necessary to research and learn about various options out there for insurance. SEN. DONLEY commented that when a person has not chosen this option of purchasing underinsured protection and gets injured in an accident with an underinsured driver, then they may be faced with medical bills they can't pay. In this scenario, everyone pays, as we as a state subsidize the hospitals for those that can't pay. SEN. DONLEY stated that Hawaii and North Carolina require drivers to show proof of insurance before they can get license or registration. The problem with this system is that it involves a lot of paperwork and bureaucracy. In acknowledgement of that, Alaska has not gone to that system. Even though we haven't, Alaska has had great success and has cut in at least half the number of uninsured drivers. SEN. DONLEY reminded the committee that this is a voluntary compliance system until someone is caught doing something wrong. He believed this is all the more reason to give consumers the option of buying this additional uninsured and underinsured insurance to protect themselves from the persons driving around without auto insurance at all. SEN. DONLEY noted that the subsequent reminders required by law to be given to consumers by the insurance companies was written into the law as an education factor to force people into making a conscious choice in the matter. SEN. DONLEY stated that preferred drivers are not significantly impacted by HB 403 other than the fact that they will not have the option they did before. The people in the minority that this will benefit are a small percentage on nonpreferred drivers. This benefit is speculative at best, and there may be some companies that may come into this market to offer this nonpreferred insurance to this smaller group of consumers that may cause more competition. SEN. DONLEY said he would like to hear from any insurance companies that would be willing to state that if HB 403 is passed they will come to Alaska and offer this insurance. Until this happens, all the talk is just speculation. SEN. DONLEY explained that one way to protect yourself is to purchase an umbrella policy. If the consumer has a good agent and utilizes this system, they could save hundreds of dollars a year. Under HB 403 if you utilize an umbrella policy you would no longer have the option of increasing your underinsured and uninsured coverage. Number 347 CHAIRMAN HUDSON stated he would postpone hearing HB 403 until a future date when the committee had more time.