Legislature(2003 - 2004)
05/04/2004 09:07 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE CS FOR CS FOR HOUSE BILL NO. 336(JUD)
"An Act relating to motor vehicle insurance; limiting recovery
of civil damages by an uninsured driver; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken commented that this legislation would prohibit a
person operating an uninsured motor vehicle from recovering non-
economic losses in situations in which injury or death might occur.
He noted that SCS CS HB 336(JUD), Version 23-LS1254\I, and two
accompanying fiscal notes are before the Committee.
REPRESENTATIVE KEVIN MEYER, the bill's sponsor, pointed out that
the two accompanying fiscal notes indicate that no expenses would
be incurred were this bill implemented. He explained that this bill
would decree that, "if you are knowingly going to operate a car
without State required car insurance, then you simply cannot sue
for non-economic damages such as pain and suffering;" however, he
clarified that a person could sue for punitive and economic damages
such as wages, medical expenses, and car repair expenses. He noted
that the word "knowingly" was incorporated into the bill by the
Senate Judiciary (JUD) Committee. Other language added by the JUD
Committee he explained, stated that a person who knowingly drove
without the required vehicle insurance could sue for non-economic
damages in situations in which the other driver: was driving while
intoxicated or was on drugs; intentionally caused the accident; was
fleeing from the scene of the crime; or was at the time of the
accident committing "a felony, or was driving recklessly or with
gross negligence." He voiced his support for the amendments
incorporated into the JUD committee substitute.
SFC 04 # 106, Side B 4:11 PM
Representative Meyer stated that this legislation was developed as
a result of a constituent who is a single woman with "a low-paying
job" and who struggled to pay $1,500 a year for her car insurance,
contacted him after discovering that her neighbor, admittingly, did
not have vehicle insurance. This woman, he shared, thinking this
was unfair, began to research the situation, and found that
numerous states, such as California, have adopted legislation
prohibiting uninsured motorist from collecting non-economic awards,
and that other states also prohibit the furthering of economic
awards. He shared that the JUD committee substitute before the
Committee resembles law currently in effect in Louisiana. In
addition, he disclosed that insurance agencies pass non-economic
lawsuits award expenses on to the 82-percent of vehicle owners who
pay insurance premiums. Therefore, he stressed that those who do
pay are essentially subsidizing the costs incurred by the 18-
percent that do not.
Representative Meyers disclosed that a member of his family, while
driving, has experienced two instances in which she was hit by an
uninsured motorist, and at the time, he thought, "no problem, this
is why I have insurance coverage." However, he has since realized
that as a result of these types of accidents, his insurance rates
rise. Therefore, he stated that as a matter of fairness, "a person
who is not paying into the system should not be able to collect as
much out of the system." He also proclaimed that individuals who
comply with the law and pay liability insurance should be
classified as "victims" of an uninsured motorist. He also
acknowledged that an uninsured person might be unable to acquire
insurance due to having had multiple accidents or speeding tickets.
He stressed that these people should not be on the road. He stated
that the goal of this legislation would be to encourage everyone to
comply with the law as greater protection and fairness for everyone
would result. He reminded that driving is a privilege and not a
right.
Representative Meyers noted that the committee substitute also
contains "minor technical changes" that pertain to insurance
statutes.
MICHAEL LESSMIER, Attorney, State Farm Insurance, informed the
Committee that State Farm has 26-percent of the State's automobile
insurance market "with approximately 123,000 policies in force."
Continuing, he stated that every State Farm policyholder would
"positively benefit" were this legislation adopted.
Mr. Lessmier addressed the two technical changes incorporated into
the JUD committee substitute in Sections 2 through 5: one being the
"mirror rule" which resulted from a federal Supreme Court decision
that mandated the each "uninsured/underinsured motorists coverage
must mirror the coverage in your liability policy." This, he
explained, means that were one's liability policy to provide for
punitive damages, one's "uninsured/underinsured motorists policy
must also provide for punitive damages. He stated that, "there is
no good reason to require a victim of an uninsured motorist to pay
for that kind of coverage" in that, he expressed, "punitive damages
don't punish the uninsured driver at all, they just punish the
victim." Therefore, he stated that the bill addresses punitive
damage coverage by specifying that it would "not be required to be
part of the uninsured/underinsured motorist coverage."
Mr. Lessmier stated that the other technical change in the bill
addresses the system that has been established in the State through
which insurance companies provide policyholders the option to elect
one of a variety of monetary levels of the mandated offers
uninsured/underinsured coverage. He noted that while a person could
decline to purchase uninsured/underinsured motorist coverage at the
onset of purchasing a new policy, insurance companies are required
to provide these options to each policyholder every six months. He
continued that, in addition, State Courts have ruled that these
coverage offers must be provided for "umbrella policies as well as
on the underlying primary policy covering the automobile."
Therefore, he stated, the multitude of different offerings on a
multitude of different policies is difficult to manage and to
understand, and furthermore, he disclosed that one major insurance
carrier in the State has halted its issuance of umbrella and access
policies as a result of this requirement. In summary, he explained
that the technical change in this regard is that the requirement
for the mandatory uninsured/underinsured offers be limited to the
primary policy covering the automobile.
Mr. Lessmier stated that neither of these technical changes are
controversial, both would be beneficial, and that both are
supported by the Division of Insurance.
Mr. Lessmier commented that the language in Section 1 would benefit
policyholders and every single person who complies with the
insurance requirements. He stated that the New Jersey Supreme Court
recently ruled that this type of law "advances a policy of cost
containment by insuring that an injured uninsured driver does not
draw from the pool of accident victim insurance funds to which he
did not contribute. The legislation thus gives the uninsured driver
a very powerful incentive to comply with the compulsory insurance
laws, obtain automobile insurance coverage or lose the right to
maintain a suit for both economic or non-economic injuries." He
noted that while this proposed law is not as strict as the New
Jersey law, it makes good sense for Alaska and is a step in the
right direction.
LINDA HALL, Director, Division of Insurance, Department of
Community and Economic Development, informed the Committee that the
Department supports the technical language changes.
Co-Chair Green announced a conflict of interest as her family is
involved in the insurance industry.
Senator Bunde moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection SCS CS HB 336 (JUD) was REPORTED from
Committee with zero fiscal note #1, dated March 29, 2004 from the
Alaska Court System and zero fiscal note #2, dated March 30, 2004
from the Department of Law.
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