Legislature(1993 - 1994)
04/12/1994 01:40 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATOR KELLY announced HB 403 (AUTOMOTIVE LIABILITY INSURANCE COVERAGE) to be up for consideration. ROYCE WELLER, Legislative Aide to Representative Hudson, said the best way to insure Alaska consumers competitive auto insurance premiums is to have a market place which encourages competition. HB 403 does this by not mandating unreasonable insurance coverages. Current law requires all insurance companies offering auto liability coverage to have coverage up to 1 million dollars per person for bodily injury or death and 2 million dollars per accident for more than one person. No other state mandates a company to offer such an uninsured or underinsured motorist higher than the driver selects for himself. No other state mandates even the minimum levels of coverage we have here in Alaska. HB 403 has the support of the Division of Insurance and the Alaska Independent Insurance Agents and Brokers and has a $0 fiscal note, Mr. Weller said. SENATOR DONLEY said the position of the Division was neutral, but they had formerly supported it. He said this is the kind of insurance coverage that protects us from underinsured or uninsured motorists if they hit us. He explained that the insurance industry strongly opposes mandatory auto insurance, but 80 - 85% of Alaskans support mandatory auto insurance. About 11% of Alaskan drivers are uninsured presently. This is a good figure compared to other states. People should have the choice to protect themselves from that small percentage. The problem is that some less preferred companies that do a smaller amount of the market, who specifically deal with high risk drivers, have difficulty in getting reinsurance for this type of coverage. The provisions of this bill would apply just to the people who are in the assigned risk pools now and would allow them more insurance companies to do business in the Alaska market just like they do in other places. SENATOR DONLEY said he thought the average motorist is probably underinsured against uninsured and underinsured drivers. Number 425 SENATOR RIEGER asked why the insurance industry was against mandatory liability insurance. SENATOR DONELY explained that when you have mandatory auto insurance, a lot of people who are lousy risks are forced to get insurance and that tends to make it more difficult for everybody. JOHN GEORGE, National Association of Independent Insurers, agreed with Senator Donley. He said as in other states there is an assigned risk market where someone who can't buy insurance in the voluntary market can be assured of finding insurance coverage. The problem that insurance companies face in Alaska is that they were either unable or unwilling to buy reinsurance specifically for Alaska, because of the limit. Also, it just seems like if you buy a certain amount to cover another driver if you hit him, you should be able to get the same amount of coverage for yourself if he hits you. Number 511 HOWARD JAEGER, Alaska Independent Agents and Brokers, said they are not the companies, but are the retailers of the products the insurance companies make available to them. They are in support of this bill which does not preclude insurers from buying the higher limits. The problem is that Alaska has the highest mandatory auto liability limits in the nation which has an impact on cost to the consumer. This bill would encourage more competition, Mr. Jaeger, stated. TAPE 94-27, SIDE B Number 580 MICHAEL LESSMEIER, State Farm Insurance, said 11% for uninsureds is a very good number nation wide. One of the difficulties with mandatary insurance is that no matter what form you adopt, there are certain categories of people you cannot force to buy insurance no matter what you do. Philosophically, they would prefer that the mandated offer be equal to the amount of liability coverage a person chooses to purchase, he said. SENATOR KELLY asked if the Division would support a revision that would remove the mandatory higher limits to a neutral position. DAVID WALSH, Director, Division of Insurance, said the Administration has not taken a formal position on the bill. SENATOR DONLEY said he would support other consumer options and deletion of the requirement in the present law that at each renewal they would have to make this offer. Even if we do make this change, there is no guarantee that new companies will come to Alaska. There have been no words to that effect. Number 502 CHARLES MCGEE, Anchorage, said his I.D. number is 0334797 and he would like to have his drivers license back. SENATOR KELLY thanked him for his comments. MR. JAEGER said it's important to remember we are not talking about every accident, only the one where the other driver is at fault. SENATOR LINCOLN noted that the references to underinsured and uninsured drivers was inconsistent. SENATOR KELLY said they would hold the bill to work on the questions and bring it up at another time.