Legislature(2017 - 2018)BARNES 124
03/07/2017 01:30 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB132 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 132 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 132-TRANSPORTATION NETWORK COMPANIES
1:31:46 PM
CO-CHAIR STUTES announced that the only order of business would
be HOUSE BILL NO. 132, "An Act relating to transportation
network companies and transportation network company drivers."
[Before the committee was the proposed committee substitute (CS)
for HB 132, Version 30-LS0522\J, Wallace, 2/27/17, adopted as a
work draft during the House Transportation Standing Committee
meeting on 3/21/17.]
1:32:50 PM
RAFEAL BARBOSA, as a long-time taxi driver, opined that
transportation network company (TNC) actually stands for "taxi
not in compliance." He said that the network system TNCs use
could have easily been adopted by the already established
business of taxi cab companies. He opined that cities such as
San Francisco, Seattle, and New York must have been sleeping or
not paying attention when they allowed TNCs and completely
abandoned the taxi cab force. He pointed out that TNCs come in
and purchase medallions for upwards of $500,000. He surmised
that TNCs are pushing taxis to the brink of extinction, not only
in the three aforementioned cities but also in 47 states. He
offered his belief that it looks as though Alaska is next. He
gave the analogy that what is happening with TNCs and taxi cabs
is just like Walmart eliminating mom and pop stores. He
surmised that allowing TNCs to operate unregulated is giving
them a premium not afforded to taxi cabs. He declared that he
paid close to $120,000 for his taxi cab permit. He concluded
that a level playing field is important.
1:36:02 PM
REPRESENTATIVE CLAMAN asked Mr. Barbosa whether he owns his own
taxi permit or drives for someone else.
MR. BARBOSA answered that he does both.
REPRESENTATIVE CLAMAN inquired whether the owner of the permit
and the taxi or the driver of the taxi is responsible for paying
for insurance.
MR. BARBOSA answered the owner. He added that the owner also
pays for the maintenance, insurance, and dispatch.
REPRESENTATIVE CLAMAN asked what, if any, is the required level
of insurance coverage.
MR. BARBOSA said it is $300,000 "for personal and private
property," $100,000 for something he said he does not remember,
and $50,000 "for uninsured coverage."
REPRESENTATIVE CLAMAN asked whether those limits are what the
city requires or if that is just what he carries on his own
accord.
MR. BARBOSA stated that is all that he could afford to carry.
He shared his desire to carry higher liability.
1:38:00 PM
ARMAND FELICIANO, Vice President, Property Causality Insurers
Association of America (PCI), explained that PCI is a national
trade insurance organization that represents roughly 1,000
insurance companies nationwide. He said that although PCI is in
support of HB 132, there is concern about a proposed amendment
that looks to increase the coverage in period one to one million
dollars. He said the main concern is about affordability. He
added that PCI believes that bumping limits up in the first
coverage period would be cost prohibitive for drivers. He
pointed out that it is important to ensure more drivers are not
driving around uninsured because they cannot afford to carry
minimum coverages.
MR. FELICIANO said the second point he wanted to discuss is
flexibility. He explained that if drivers feel more coverage is
needed in the first coverage period ("period one"), then there
is nothing in HB 132 that would prevent a driver from purchasing
additional insurance beyond the minimum requirements.
1:39:37 PM
REPRESENTATIVE DRUMMOND asked Mr. Feliciano whether he is
opposed to or in favor of HB 132.
MR. FELICIANO replied that PCI supports HB 132 as currently
drafted.
REPRESENTATIVE DRUMMOND asked Mr. Feliciano to clarify whether
he would be opposed to the amendment that would raise the
insurance coverage limit in period one to $1 million.
MR. FELICIANO expressed PCI's concern that that increase would
make carrying coverage unaffordable.
1:40:50 PM
REPRESENTATIVE CLAMAN asked Mr. Feliciano to share his
understanding about who, under HB 132, would be paying for
period one insurance.
MR. FELICIANO answered that he thinks HB 132, as drafted, would
allow flexibility for either the driver or the TNC to pay for
period one coverage.
CO-CHAIR STUTES informed Representative Claman that there were
representatives from both Uber Technologies Inc. ("Uber") and
Lyft, Inc. ("Lyft") online available for questions.
REPRESENTATIVE CLAMAN asked Mr. Feliciano to assume, for
purposes of insurance policy rates, that TNCs are actually
paying for period one insurance rather than the individual
drivers. He asked what the change in higher or lower coverage
in period one would be.
MR. FELICIANO apologized that he did not currently have that
information. He shared that PCI's concern is regarding the
logic behind period one. He explained that conceivably a driver
could just be roaming around with the application ("app") on and
no intention of ever engaging in ridesharing, which is different
from period two where the driver is engaged in prearranged
activity. He said that the rationale behind the higher coverage
in period two is that passengers would be involved at that
point. He deferred to the Uber and Lyft representatives to
further answer Representative Claman's question.
REPRESENTATIVE CLAMAN asked for clarification whether companies
or drivers would pay the insurance. He asked Mr. Matthews to
share his understanding of whether HB 132 would require Uber to
pay the insurance for drivers.
1:43:26 PM
MITCHEL MATTHEWS, Senior Operations Manager, Pacific Northwest
Region, Uber Technologies Inc. ("Uber"), explained his
understanding that HB 132 would not require Uber to pay for
coverage; however, Uber has its own insurance and drivers are
welcome to purchase additional coverage for period one.
REPRESENTATIVE CLAMAN asked whether Uber purchases all the
insurance for periods two and three.
MR. MATTHEWS answered yes.
REPRESENTATIVE CLAMAN asked Mr. Matthews if he could share his
best projection of how many drivers Uber would have in Alaska.
MR. MATTHEWS explained that the number would be subject to the
amount of people who would download the app, tourism rates, and
how many people would be interested in driving on the platform.
He noted that when Uber was operational in Anchorage, it
employed over 80 drivers.
REPRESENTATIVE CLAMAN, assuming 100 drivers in Alaska, asked Mr.
Matthews what the difference in insurance would be for scenario
one, a $50,000-$100,000 policy in period one and a $1 million
policy for periods two and three, verses scenario two where Uber
would have a $1 million policy in all three periods.
MR. MATTHEWS said that he could not answer that question at this
time, but he would be happy to take the question back and
provide a follow-up answer. He explained that period one
coverage is similar to Alaska's private passenger automobile
insurance coverage. He noted that Alaska has the highest
[indisc.] in the country. He shared his understanding that the
insurance is engaged simply by turning on the app, so keeping
the limit at the state limit would remove any moral hazard or
risk that someone would turn on the app just to receive better
coverage without any intention of ever engaging in ridesharing.
REPRESENTATIVE CLAMAN asked Mr. Matthews whether it was Uber's
view that it should never be "on the hook" if one of its drivers
gets in an accident in period one, beyond the minimum limits in
the state of Alaska.
MR. MATTHEWS clarified it is Uber's view that the insurance in
period one represents the private passenger auto coverage
minimum in Alaska. He stated that Uber would prefer to keep it
at the state limit to remove the moral hazard or risk that
someone would scam the rideshare system for higher insurance
coverage.
1:47:28 PM
REPRESENTATIVE CLAMAN asked Mr. Matthews whether he has
statistics about claims made against Uber in Portland, Oregon.
MR. MATTHEWS said that he does not currently have that
information but would be happy to provide it at a later time.
REPRESENTATIVE CLAMAN clarified that he was asking Mr. Matthews
to provide both the total number of rides called in Portland and
the total number of accidents from periods one, two, and three.
MR. MATTHEWS said that he would have to confirm with Uber's
insurance team whether or not those figures are public
information.
REPRESENTATIVE CLAMAN shared that some of the more suburban
Alaskan communities, like Eagle River, that are 10-15 miles from
downtown Anchorage feel there is not adequate cab and taxi
service there. He described a hypothetical scenario in
Anchorage where a driver is parked two blocks away from the busy
downtown convention center waiting or could even be sitting in a
coffee shop. He asked for clarification whether the driver in
that scenario would be in period one coverage.
MR. MATTHEWS indicated that location does not matter in period
one; the driver could be in his/her house folding laundry or in
the vehicle when waiting for a rider in period one.
REPRESENTATIVE CLAMAN asked, "If the driver's sitting two blocks
from the convention center in his house, he's in period one,
correct?"
MR. MATTHEWS replied that if the driver had the app on at the
time, then the answer to the question is yes. In response to a
follow-up question, he indicated that upon acceptance of a
request received via the app and while driving to connect with
the rider, the driver would be covered under period two. He
explained that period three commences upon picking up the
passenger and starting the trip.
REPRESENTATIVE CLAMAN offered a scenario in which the driver
returns without a passenger to the starting location but gets
involved in an accident on route wherein another individual
sustains severe bodily injury. He asked Mr. Matthews whether
the driver in that situation would be under period one coverage.
MR. MATTHEWS answered that if the driver was driving with the
app turned on, then he/she "would be in period one, which is
reflective of Alaska's passenger/automobile limit." In response
to a follow-up question, he noted that the driver could opt for
self-paid additional insurance for period one, but without that
he/she would have the following: $50,000 for bodily injuries,
$100,000 for bodily injury per accident, and $25,000 for
property damage per accident. He added that that coverage
mirrors Alaska's private passenger auto insurance, which is the
highest in the United States. In response to a follow-up
question, he said he did not know the minimum coverage
requirements set by the State of Washington, but he offered to
find out and report back to the committee.
1:53:36 PM
CO-CHAIR WOOL asked whether the three insurance coverage periods
are the same in every state where Uber operates.
MR. MATTHEWS answered yes. He added that the language is the
same in 41 states.
CO-CHAIR WOOL asked whether Uber has encountered a state that
wants to have $1 million coverage no matter what the driver is
doing and if Uber would consider such coverage.
MR. MATTHEWS shared his understanding that no other states have
looked to adjust. He said that the state of Colorado previously
evaluated period one and determined there was no reason to
change that level of coverage.
1:56:15 PM
CO-CHAIR STUTES, after ascertaining that there was no one else
who wished to testify, closed public testimony on HB 132.
REPRESENTATIVE CLAMAN asked whether there are any states that
require under state law and through regulation that there be $1
million held by drivers in underinsured coverage.
1:57:44 PM
JARED EBER, Associate Counsel, Insurance, Uber Technologies Inc.
("Uber"), said that there are some states that require that the
uninsured motorist/underinsured motorist (UM/UIM) coverage in
periods two and three to match the state requirement. He said
that Uber does comply in those instances.
REPRESENTATIVE CLAMAN offered his understanding that current
Alaska law does not require the underinsured limits to match the
liability limits. He added that there could be higher
underinsured and lower liability or vice versa, so he asked
whether there are any states that require specific matching
amounts for the underinsured and the liability coverage.
MR. EBER shared that to his knowledge there is no state that
differentiates between the limits of UM and UIM; if both are
required, they would be at the same level. He said that is
based on state statute, and Uber would follow suit and do what
is required in each state under statute.
REPRESENTATIVE CLAMAN mentioned Washington legislation that
actually specifically lists the amount of liability coverage as
$1 million and the underinsured also as $1 million. He asked
whether Washington is the only state that specifies that amount.
MR. EBER said that he did not know but would be happy to get
back to the committee with that information.
REPRESENTATIVE CLAMAN asked Mr. Eber whether he knew about any
of the TNC accident statistics from Portland, Oregon.
MR. EBER answered that he does not have that information at this
time.
2:00:38 PM
ANNABEL CHANG, Director, Public Policy, Lyft, Inc. ("Lyft")
clarified that Representative Claman is referencing figures
published from a pilot program in Portland.
CO-CHAIR WOOL asked Ms. Chang whether Lyft would still operate
in a state that raised coverage limits in period one to $1
million.
MS. CHANG indicated that of the states in which Lyft operates,
six have legislation that reflects differences between periods
one, two, and three. She explained that the reason for the
period one coverage is because a driver could be home in his/her
pajamas and not in a car at all versus periods two or three
where a driver is actually connected to a ride or already has a
passenger in the car. She said Lyft would not be able to
operate in Alaska with the period one limits proposed under
Version J.
2:02:31 PM
REPRESENTATIVE NEUMAN asked whether Ms. Chang knew if that
insurance was even available to purchase in Alaska.
MS. CHANG explained that in terms of periods one, two, and
three, Lyft purchases insurance through [Zurich Insurance
Group]; however, she pointed out that the applicable legislation
provided in other states allows Lyft drivers to [buy additional
insurance] and insurance companies to market new insurance
products. She listed State Farm Mutual Automobile Insurance
Company ("State Farm"), Government Employees Insurance Company
(GEICO), Progressive Casualty Insurance Company ("Progressive"),
and Metropolitan Life Insurance Company ("MetLife") as all being
insurance companies that created new insurance products
recognizing the differences in the TNC model. She said that to
Lyft's knowledge the $1 million period one coverage is not
available. She clarified that there are also concerns about
"the moral hazard question" relating to when the state wishes to
have [coverage levels for TNCs] that are significantly higher
than personal insurance limits in Alaska and even taxi/limousine
[coverage requirements] in the state.
REPRESENTATIVE NEUMAN, in follow up to Representative Claman's
comment about minimum requirements, asked whether there are also
minimum requirements for taxi drivers.
CO-CHAIR WOOL said that local laws vary. He explained that
municipality regulations in Anchorage, Fairbanks, and Juneau all
require taxi drivers to carry the following coverage: $300,000
aggregate injury sustained, $100,000 personal, and $50,000
property. He pointed out that for those three Alaska cities,
there is no mention of any sort of $1 million-dollar insurance
coverage requirement.
REPRESENTATIVE NEUMAN asked about different coverage periods for
taxi drivers.
2:05:23 PM
CO-CHAIR STUTES offered her understanding that taxi drivers have
only one period of coverage.
REPRESENTATIVE NEUMAN said he wants to make certain the playing
field is even for a taxi cab company.
CO-CHAIR WOOL explained that the aforementioned figures are the
minimum requirements and drivers can buy more coverage. He
added, "There's no minimum of a million dollars ... when there's
someone in your car or not in your car."
REPRESENTATIVE NEUMAN asked whether it would be the same for
taxi companies as it would be for TNCs.
CO-CHAIR WOOL answered that both taxi drivers and TNC drivers
can opt to buy additional insurance coverage.
REPRESENTATIVE CLAMAN asked Ms. Chang about differing gas prices
in Seattle and Anchorage and how that gets accounted for in the
price Lyft charges riders.
2:06:38 PM
MS. CHANG said that prices vary according to each market in
which Lyft operates.
REPRESENTATIVE CLAMAN asked whether Lyft's computer systems have
the ability to factor in fuel price differences and adjust fares
according to local gas prices.
MS. CHANG answered yes. She elaborated that a multitude of
factors can be taken into consideration. She said that one of
Lyft's key factors is competing for drivers and making sure the
platform is appealing to not only the driver but the passenger
as well.
REPRESENTATIVE CLAMAN opined that the same way Lyft's computer
system can make adjustments for the rate of fuel, it can make
adjustments to factor in the differences of insurance costs for
Lyft between, for example, Alaska and Washington.
MS. CHANG explained that it would be a little different because
insurance is purchased from one specific provider and [according
to each state's requirements]. She added that the coverage is
purchased nationwide depending on the state. She offered her
understanding that Representative Claman was trying to ask
whether Lyft could adjust the insurance for Alaska. She said
Lyft could match the UM/UIM set in the state of Alaska. She
opined that a $1 million coverage for period one doesn't make
sense for the TNC model. She noted that 39 states and 6
insurance-only states recognize the difference as does the
National Conference of Insurance Legislators (NCOIL) and the
insurance industry.
2:08:48 PM
REPRESENTATIVE CLAMAN asked Ms. Chang whether the $1 million
coverage is required currently under Alaska law or proposed
under HB 132.
MS. CHANG responded that currently there are no rules in Alaska
regulating TNCs. She noted that HB 132 would be the legislation
regulating and dictating insurance requirements for TNCs.
REPRESENTATIVE CLAMAN shared that he understands the point that
has been repeated by industry representatives about the
potential for a driver to not even be in his/her car in period
one coverage. He opined that a driver sitting at home in
his/her pajamas is at a much lower risk of getting into an
accident. He asked Ms. Chang whether she agreed.
MS. CHANG replied yes.
REPRESENTATIVE CLAMAN reiterated his case for the need for
higher period one coverage by reviewing his aforementioned
scenario wherein a driver has dropped off a Lyft customer 20
miles from the source of the next passenger, is not on a call
but the app is on, and by chance has an accident and hits and
severely injures someone. He said that he understands why the
lower coverage would apply when a driver is sitting at home. He
asked why there seems to be such a problem for TNCs to have
higher coverage for a driver working for TNC purposes and
anxious to serve the needs of the corporation when the driver
may not be doing personal business and might just be trying to
make him/herself more available for rides to further the
business model.
MS. CHANG said that she would be happy to provide the committee
with the state of Colorado report that looked into period one
requirements. She noted that Colorado was the very first state
to pass TNC regulations. She explained that since TNCs have
been operating there for a longer period of time, it has the
most statistical data.
2:12:07 PM
REPRESENTATIVE CLAMAN said that he would like to see that
report. He mentioned that one of the TNC representatives
previously testified that period one is actuarially the lowest
risk period for TNCs. He asked Ms. Chang if, based on that
data, she would agree that the cost for increasing coverage in
period one would actually be fairly small. He concluded that
the claim made by TNCs that the increase would cost millions of
dollars might not be supported by actuarial data.
MS. CHANG said that she would be happy to further research
Representative Claman's question. She shared that based on
previous discussions in other state legislatures the main
concern is how to make sure passengers are covered in period
one. She stressed that the period one coverage matches state
insurance levels for personal driving. She pointed out that not
only would Lyft match coverage levels at the personal insurance
levels in the state of Alaska, it would go much higher for
periods two and three insurance levels.
2:14:01 PM
CO-CHAIR WOOL asked Ms. Chang how many drivers Lyft currently
employs nationwide.
MS. CHANG estimated that Lyft employs hundreds of thousands of
drivers and connects over 10 million rides per week across the
nation. She noted that the number of drivers fluctuates because
some people only drive seasonally such as for school holidays,
summer break, or just for a short time to meet a financial goal.
CO-CHAIR WOOL asked Mr. Matthews how many drivers Uber currently
has.
MR. MATTHEWS answered that the number of drivers nationwide for
Uber is in the hundreds of thousands. He added that the number
of drivers fluctuates depending on drivers' specific needs. For
example, drivers could be driving just to bridge a gap for a
goal or only driving during rush hour, while some could be
taking a break. He echoed Ms. Chang's comments about connecting
millions of rides a week.
CO-CHAIR WOOL asked for confirmation that although there are
other TNCs, Uber and Lyft are the two largest in the country,
and he observed that the cost of raising the limit in period one
would vary depending on the size of the TNC.
2:16:59 PM
REPRESENTATIVE DRUMMOND inquired whether the available period
one coverage is the same in every state that Lyft and Uber
already have under contract.
MS. CHANG answered that in most states it is the same. She
noted that while there are some slight variations from one or
two outliers, it is not to the degree that is being discussed
for HB 132.
2:17:56 PM
MR. MATTHEWS said that period one coverage levels are very
consistent in the states where Uber operates.
REPRESENTATIVE DRUMMOND asked whether Uber and Lyft currently
operate in 49 states.
MR. MATTHEWS answered that Uber has the ability to operate in 49
states, and he offered his understanding that the company
currently operates in 40.
MS. CHANG noted that the numbers change every day. She shared
her belief that Alaska is one of only a few states where Lyft is
not currently in operation.
REPRESENTATIVE DRUMMOND asked Ms. Chang to clarify the one or
two outliers she mentioned in an earlier response.
MS. CHANG said that she would have to double check, but she
offered her belief that there are some pieces of legislation
from 2014, when TNCs were just coming online, which might be
slightly different. She said that overall coverage numbers and
limits are very consistent.
REPRESENTATIVE DRUMMOND asked whether any of the states Lyft or
Uber operate in have health care costs that are as high as in
Alaska. She opined that while the coverage limits have been
discussed in today's hearing, what has failed to be mentioned is
that Alaska has the highest health care costs in the nation. She
recognized that although TNCs cannot control the cost of health
care, that factor does certainly give cause for alarm when
considering the low level of coverage for period one. She
pointed out that there is no way to shop for low cost health
care in Alaska. She shared that she is unsure whether TNCs have
their drivers' best interest in mind, in terms of covering them
in period one. She pointed out one concern for Alaska drivers
is the possibility of hitting a moose.
2:20:52 PM
REPRESENTATIVE KOPP offered his understanding that HB 132 would
set insurance requirements during periods two and three to be
three times greater than what Alaska currently requires
commercial cab drivers to carry. He said that no one is arguing
the TNC insurance coverage for periods two and three isn't
pretty fantastic. He asked whether Uber or Lyft would alter
their decision to operate in Alaska if the basic requirement
that taxi drivers carry coverage at $300,000 and $100,000 were
required of TNCs in period one.
MR. MATTHEWS said that Alaska has the highest minimums in the
United States. He said that the TNC model reflects that high
coverage in period one. He claimed that if Alaska were to
change that minimum, then Uber might have to adjust period one
to reflect that. He noted that that action may cause Uber to
have to reevaluate its decision to come to Alaska or not. He
shared his belief that it is up to the state to determine the
appropriate minimum coverage levels.
REPRESENTATIVE KOPP asked for clarification about a previous
statement regarding period one requirements in most states being
basically the same. He asked how much higher Alaska is in
comparison to other states.
MR. MATTHEWS stated that in the state of Washington coverage
limits are $25,000, $50,000, and $10,000. He deferred to Mr.
Eber to explain the difference between Washington and what
limits would be in Alaska.
2:23:37 PM
MR. EBER stated that Alaska's limits of $50,000 and $100,000 are
significantly higher than those in the rest of the country,
which range from $20,000 to $30,000 per person, $40,000 to
$50,000 per accident, and with a maximum of $15,000 to $25,000
in property damage. He said that there are a couple states
where property damage coverage in period one is required to be
carried at $30,000. He shared that typical state minimum
liability requirements are $10,000 to $20,000 for injury to one
person and $40,000 to $50,000 for multiple people per accident
and $25,000 to $50,000 for property damage. To further
illustrate that Alaska has high coverage limits, he added that
Florida has $10,000, $20,000, and $10,000 coverage limits.
CO-CHAIR WOOL asked whether Uber's period one coverage in the
states with legislation is satisfying those states' minimums or
if Uber is introducing insurance coverage similar to what it is
introducing in Alaska, which just happens to be the same as the
state minimum.
MR. EBER explained that Uber is not matching the state minimums
in other states. He said that Uber's typical coverage is
similar to what is proposed under HB 132. He said that many
states have $25,000, $50,000, and $15,000 coverage limits. He
added that even though those are the minimums, Uber has $50,000,
$100,000, and $25,000 coverage for period one, except for the
rare couple incidences where the property damage coverage was
raised to $30,000.
2:26:32 PM
REPRESENTATIVE NEUMAN asked whether the state's Division of
Insurance has the authority to change the requirement for
minimum insurance.
2:27:03 PM
MICHAEL RICKER, Actuary P/C, Division of Insurance, Department
of Commerce, Community & Economic Development (DCCED), answered
no. He added that minimums are set in statute.
REPRESENTATIVE NEUMAN pointed out that it is a problem for the
department not to have the ability to make adjustments when it
sees problems arise. He posed the question as to whether the
department should have the authority to make adjustments, and he
noted it could do so through regulation. He noted that trying
to change statue is very difficult.
REPRESENTATIVE CLAMAN, in follow up to Representative Kopp's
question about raising minimums from $50,000 and $100,000 for
aggregate and liability coverage to match taxi coverage
requirements of $100,000 and $300,000, asked Mr. Matthews to
restate the answer to that question.
MR. MATTHEWS shared that although he cannot speak for Uber
globally, he can say that the Pacific Northwest region would
have to evaluate whether or not Uber would pursue operations in
Alaska in light of that change.
REPRESENTATIVE CLAMAN offered his assumption that the
determination would be in part based on what the actual cost
would be for the slight increase in insurance coverage.
MR. MATTHEWS explained that Uber would prefer to determine the
effects of HB 132 in its entirety through a cost benefit
analysis.
REPRESENTATIVE CLAMAN asked Ms. Chang whether, if HB 132 were to
pass with higher requirements for period one, Lyft would do an
economic analysis to determine if the economic impacts would be
worth it to operate in Alaska, even if that meant Alaska had
period one requirements different from those in other states.
MS. CHANG answered that Lyft would run an economic analysis.
She clarified that if coverage limits were close in terms of
numbers to those currently being discussed, in the one-million-
dollar range, it would be very problematic for Lyft to try to
operate in Alaska. She said that if the coverage requirements
were closer to the $50,000/$100,000/$25,000 limits that would
make a much easier case. She stressed that period one is a very
unique model compared to periods two and three. She raised the
moral hazard question of a driver possibly having the app on to
gain higher coverage, yet never intending to pick up a fare.
She said that a driver in drive mode in an area where it can be
difficult to get ride connections would have the higher coverage
and that presents a moral hazard problem. She explained that
the reason why the insurance industry regulators and TNCs have
been so hung up on the numbers for period one is because the
lower coverage recognizes the different nature of period one.
She added that lower period one coverage also provides
flexibility for insurers to provide new products for drivers to
purchase that could help to address some of the issues without
having to raise the moral hazard problem.
2:32:09 PM
REPRESENTATIVE CLAMAN asked Ms. Chang to clarify what exactly
she means by a moral hazard [problem]. He pointed out the
various examples TNC representatives have given in regard to
what a driver could be doing in period one that has nothing to
do with ridesharing but said none of those examples address his
previously stated example of when a driver, after dropping off
one rider, is returning to the original spot where he/she has
more opportunity to get more riders.
MS. CHANG clarified that Representative Claman raised two
distinct issues. Regarding the issue of a driver returning from
a remote location back into a city, she said that Lyft's goal is
to expand service areas so that drivers can stay in their own
neighborhoods and connect to a ride within 10 to 15 minutes at
the most. She shared Lyft's goal for the future is to have no
large gaps in areas where coverage is not likely or where people
would wait a very long time to be connected to a ride. She said
that as Lyft grows in terms of size and ridership, the hope is
for those period one connection times to be reduced so that
rides are being connected within minutes of turning on the app.
In regard to Representative Claman's second question about the
definition of a moral hazard, she said that in a situation where
there are significantly higher limits, such as the $300,000,
$100,000, and $50,000 limits, and a driver is driving around
with the app in drive mode, has an accident, and submits a
claim, the driver would have the higher coverage limits. She
added that there could be a situation where someone could be
potentially tempted to turn the app to driver mode just to have
the higher level of insurance. She shared that the
aforementioned situation is a known risk. She suggested
Colorado's reports would hopefully help to clarify some of the
questions from the committee.
CO-CHAIR WOOL said that Representative Claman bought up an
interesting situation with the hypothetical driver who drives
from downtown Anchorage to Eagle River. He offered a further
alternative that the driver could stop to visit a friend and
maybe the friend has a kid who needs a ride into Anchorage. He
clarified that the period one situation he is explaining would
be a non-work-related situation. He said that some people might
argue that the driver would still be commercially driving if the
app was on while heading back to pick up more fares, and
simultaneously giving the friend's kid a ride, and thus the
driver should have the highest level of coverage possible. He
posed the question of whether a TNC should be responsible for a
multimillion-dollar policy in period one if a driver has a 20-
minute window and needs to drop his/her kid off at school and
has the huge misfortune of hitting a kid. He offered his belief
that the essential question is whether a driver out running
errands with the app on constitutes work. He contended that
TNCs should not be required to have a multimillion-dollar policy
in period one, and he added that if a driver wants that much
coverage, then he/she can purchase it through his/her personal
insurance company.
2:37:07 PM
REPRESENTATIVE CLAMAN moved that the committee adopt Amendment
1, labeled 30-LS0522\J.1, Wallace, 3/3/17, which read:
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Insert "$1,000,000"
Delete "$100,000"
Insert "$1,000,000"
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Delete "as required under AS 21.96.020 and
AS 28.20.440"
Insert "in the amount of at least $1,000,000 for
death and bodily injury for each person, $1,000,000
for death and bodily injury for each incident, and
$25,000 for property damage"
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CO-CHAIR WOOL objected.
REPRESENTATIVE CLAMAN stated that Amendment 1 would address
appropriate coverage limits. He opined that it is really
interesting to hear TNC representatives point out that Alaska
has the highest coverage limits in the nation and claim that
million-dollar coverage would cost them so much money. He said
he finds it interesting that upon examination of variations
insurance rates, the rates don't go up uniformly. He opined
that to go from $50,000 in coverage to one million is far less
than a 20-fold increase. He listed a few different oil
companies and other types of companies such as delivery and
floral companies that are all driving vehicles with million-
dollar coverage. He stated that million-dollar coverage shows
good corporate practice.
REPRESENTATIVE CLAMAN suggested that the question with $1
million-dollar coverage is not what the face value is but rather
what the actual dollar increase is for TNCs to cover folks in
period one. He said that the argument from TNC representatives
against million-dollar coverage for period one, such as a driver
can be sitting at home in his/her pajamas or just going to the
store, are not the reasons for his concern about insurance
limits. He said that Alaska is not like a big city such as
Boston, Massachusetts so there would inevitably be situations
where a driver drops off a fare in a remote location and
immediately tries to get back to a location where he/she could
more advantageously collect another fare. He surmised that a
certain amount of risk is included when a driver is driving back
from a remote drop off. He said that with Alaska's high health
care costs, $50,000 coverage limit would not provide for the
necessary coverage in the event of an injury. He said that in
the world of consumer protection, it is really important to
increase period one coverage to $1 million dollars. He opined
that because Alaska is "out of sync" in terms of UM/UIM
coverage, it is really important that the actual underinsured
coverage be specifically listed at one million dollars so that
the coverage would match the one-million-dollar coverage in
periods two and three.
2:41:00 PM
REPRESENTATIVE NEUMAN stated that he doesn't support Amendment
1. He shared that he sees the business environment in Alaska as
the reason the state seems to be able to develop only one
resource. He said that too often industry does risk assessments
that come back in the negative and investments in the state are
lost. He shared that he would like for Alaska to be more
inviting to outside industries. He opined that TNCs appear to
be playing by the same rules by which most others have to play.
He concluded that he is very concerned about putting coverage
limits in statute.
CO-CHAIR WOOL spoke to his objection. He shared his belief that
Representative Claman's concern is valid because there are
underinsured drivers driving around legally in the state of
Alaska. He explained that the drivers would be legal because
they purchased whatever coverage the state required. He said
that he is in agreement with Representative Neuman that Alaska
needs not to be obstructionists to new industries. He shared
that he would hate to not have TNCs in Alaska. He offered his
belief that 60,000 people tried to call an Uber in Anchorage
last year. He declared that he did not want HB 132 to get so
altered that TNCs would not come to Alaska.
REPRESENTATIVE CLAMAN noted that TNC representatives claim
drivers can buy their own higher period one insurance coverage.
He pointed out that the drivers are poorly equipped to spread
the risk, whereas, if it were the corporations buying the higher
coverage, then the cost could be spread out equally over all
company drivers. He said the increase could be built directly
into the rate so that it would have little to no impact. He
opined that even with the coverage increase, TNC fares would be
lower than the taxi prices.
CO-CHAIR STUTES asked Representative Wool if he still maintained
his objection.
CO-CHAIR WOOL answered yes.
2:44:33 PM
A roll call vote was taken. Representatives Drummond and Claman
voted in favor of Amendment 1. Representatives Neuman, Kopp,
Sullivan-Leonard, Wool, and Stutes voted against it. Therefore,
Amendment 1 failed by a vote of 2-5.
2:45:23 PM
REPRESENTATIVE CLAMAN moved that the committee adopt Amendment
2, labeled 30-LS0522\J.2, Wallace, 3/3/17, which read:
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"* Sec. 8. AS 29.35 is amended by adding a new
section to read:
Sec. 29.35.148. Regulation of transportation
network companies. (a) Notwithstanding AS 28.01.010, a
municipality may by ordinance
(1) prohibit a transportation network
company or driver from conducting activities under
AS 28.23 within the municipality; or
(2) regulate the operation of a
transportation network company or driver in a manner
that is more restrictive than the provisions of
AS 28.23.
(b) This section applies to home rule and
general law municipalities.
(c) In this section, "transportation network
company" and "driver" have the meanings given in
AS 28.23.180."
CO-CHAIR WOOL objected for purposes of discussion.
2:45:29 PM
REPRESENTATIVE CLAMAN said that at the House Transportation
Standing Committee hearing on 3/2/17, it was reported that a
number of cities have their own regulations that are distinct
from state regulations. He offered his belief that Portland has
its own regulations that are more expansive than the State of
Oregon's regulations. He shared the importance of local control
over these matters. He opined that the state should not take
the option for local control away from municipalities. He said
that the committee heard from both Uber and Lyft that in cities
where regulations are independent of state regulations, the
companies just adapt. He offered his belief that Amendment 2
would be very supportive of local communities without changing
the basic goal of setting a statewide structure for TNCs.
REPRESENTATIVE NEUMAN asked Mr. Ricker whether there is a
process where people could appeal to the division.
2:47:24 PM
MR. RICKER answered that he is not aware of an appeal process.
REPRESENTATIVE NEUMAN expressed surprise that there isn't an
appeal process and opined that there should be one.
CO-CHAIR WOOL, in speaking to his objection, expressed concern
that municipal carve-outs would create gaps in coverage. He
said that there would be instances where someone could get
dropped off but not picked up, or vice versa. He noted that
Alaska is a low population state. He asked about the origin of
legislation in one of the first cities to have TNC operation,
Seattle, where TNCs were able to negotiate with the city
individually, as opposed to a state like Wyoming, which is one
of the more recent states to adopt statewide legislation. He
offered his belief that just like with the insurance limits, the
statewide legislation is a necessary component for TNCs to
operate in more states.
2:49:12 PM
MR. MATTHEWS said that Uber would look to the state bill to
provide an equal opportunity for all Alaskans to access enhanced
transportation services. He said that Alaska is similar to
Wyoming with low population density and vast distances between
communities. He surmised that a state bill where the rules are
enshrined at the state level would provide a level playing field
for all residents to be able to access the technology and
ridesharing. He said that there is an economic argument that it
is essentially less feasible for a TNC to negotiate with every
jurisdiction within a state with a lower population density and
such a large land base. He pointed out that in Alaska there are
over 164 cities, unified municipalities, and boroughs. He said
that having to negotiate with that many jurisdictions would
create a barrier to the ability of TNCs to operate in Alaska.
CO-CHAIR WOOL shared that from what he has gathered about the
issues between the Anchorage Assembly and the taxi industry, he
is not so sure local control is going that well. He shared his
understanding that the medallion system in Anchorage is going to
be phased out in the near future and there are pushes both to
increase medallions and not increase medallions. He surmised
that in a limited market, like Anchorage, the ability to be able
to add vehicles to the system during peak hours when there is
demand and take them away when there is less demand would be a
good system. He opined that local control at the municipality
level would be a hindrance to TNC operation.
REPRESENTATIVE CLAMAN shared that Amendment 2 would provide an
opportunity for local control with no requirement to exercise
that control. He said that TNCs could make their case to
municipalities to not exercise that control.
CO-CHAIR STUTES asked if Representative Wool maintained his
objection.
CO-CHAIR WOOL answered yes.
2:52:22 PM
A roll call vote was taken. Representatives Claman and Drummond
voted in favor of Amendment 2. Representatives Kopp, Sullivan-
Leonard, Neuman, Wool, and Stutes voted against it. Therefore,
Amendment 2 failed by a vote of 2-5.
2:53:20 PM
REPRESENTATIVE DRUMMOND moved to report CSHB 132, Version 30-
LS0522\J, Wallace, 2/27/17, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 132(TRA) was reported from the House
Transportation Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB132 ver J Amendment #1.pdf |
HTRA 3/7/2017 1:30:00 PM |
HB 132 |
| CSHB132 ver J Amendment #2.pdf |
HTRA 3/7/2017 1:30:00 PM |
HB 132 |