Legislature(2007 - 2008)BUTROVICH 205

03/27/2007 01:30 PM TRANSPORTATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 130 Out of Committee
Moved CSSB 68(TRA) Out of Committee
Bills Previously Heard/Scheduled
                 SB  68-MOTOR VEHICLE INSURANCE                                                                             
CHAIR KOOKESH announced the consideration  of SB 68. He asked for                                                               
a motion to adopt the committee substitute (CS).                                                                                
1:53:18 PM                                                                                                                    
SENATOR COWDERY moved to adopt  the proposed committee substitute                                                               
to  SB  68,  labeled  25-LS0342\N,  Version  N,  as  the  working                                                               
document of the  committee. There being no  objection, the motion                                                               
CHAIR KOOKESH asked the sponsor to present the bill.                                                                            
1:54:04 PM                                                                                                                    
SENATOR  FRENCH explained  that SB  68  will make  it easier  for                                                               
police to  verify whether a  driver does have insurance  on their                                                               
car or not.  14 percent of Alaskan drivers are  uninsured, but 28                                                               
percent  of  crashes  involve   an  uninsured  driver.  Currently                                                               
there's no method  for enforcing a mandatory  insurance law; this                                                               
bill will make points of  contact for verification. There will be                                                               
an online method,  which has been shown to be  effective, as well                                                               
as a  provision that allows  municipalities to  impound uninsured                                                               
He pointed  out that  the committee substitute  is the  result of                                                               
many hours  of work  with industry  representatives to  make sure                                                               
that the bill is acceptable to everyone.                                                                                        
1:58:02 PM                                                                                                                    
SENATOR COWDERY  asked if  the Division  of Motor  Vehicles (DMV)                                                               
checks for insurance on a car.                                                                                                  
SENATOR FRENCH replied that currently it's an honor system.                                                                     
SENATOR  COWDERY asked  if the  new system  proposed by  the bill                                                               
will make proving insurance mandatory.                                                                                          
SENATOR FRENCH  replied that if  the online system is  adopted it                                                               
will make it much easier to  prove insurance, and gave an example                                                               
of how people will show false proof of insurance.                                                                               
SENATOR  COWDERY  asked  if an  amendment  to  exempt  commercial                                                               
vehicles would be accepted.                                                                                                     
SENATOR FRENCH said that he  would; most states exempt commercial                                                               
vehicles  from  the online  verification  system  because of  the                                                               
relatively low risk of non-insurance.                                                                                           
SENATOR COWDERY asked  where in the bill an  amendment would best                                                               
SENATOR FRENCH replied that section five would be best.                                                                         
SENATOR COWDERY made a motion  to adopt a conceptual amendment to                                                               
SB 68, allowing for the exemption of commercial vehicles.                                                                       
SENATOR  WILKEN  objected, and  said  what  works for  automobile                                                               
drivers should be good for commercial drivers.                                                                                  
SENATOR  WIELECHOWSKI asked  why  commercial  vehicles should  be                                                               
exempted from the bill.                                                                                                         
SENATOR  FRENCH replied  that  the DMV  said  that virtually  all                                                               
commercial vehicles carry insurance  through the driver, and it's                                                               
not concerned about such drivers carrying insurance.                                                                            
SENATOR  WIELECHOWSKI asked  if  the bill  creates  some sort  of                                                               
burden for  commercial vehicles, and  why they should  be treated                                                               
SENATOR  FRENCH replied  that the  DMV would  have to  answer the                                                               
2:01:44 PM                                                                                                                    
MR. BANNOCK said that commercial  vehicles would only be exempted                                                               
from  electronic  verification  of insurance.  Many  commercially                                                               
owned vehicles are self insured  and thus wouldn't be included in                                                               
the system;  also, in  the commercial  category there  are 50,000                                                               
vehicles  in the  state  out  of a  total  of 900,000  registered                                                               
vehicles, so clearly most vehicles are not commercial.                                                                          
He  added that  he would  prefer  to use  the language  "vehicles                                                               
registered  commercially" as  opposed  to "commercial  vehicles";                                                               
rental  car companies  are  self-insured  commercial vehicles  as                                                               
SENATOR WIELECHOWSKI replied that  he understood the difficulties                                                               
of including commercial vehicles in  the online system, and asked                                                               
for  the  number  of  accidents  involving  uninsured  commercial                                                               
MR.  BANNOCK replied  that he  didn't have  state data,  but that                                                               
nationally, accidents and  injuries involving commercial vehicles                                                               
compose  less  than  5  percent  of  the  total,  even  including                                                               
situations where the commercial vehicle is not at fault.                                                                        
2:05:33 PM                                                                                                                    
SENATOR WIELECHOWSKI asked  for a summary of  any burden incurred                                                               
by including commercial vehicles in the bill.                                                                                   
MR. BANNOCK  replied that he  didn't have a prepared  answer, but                                                               
that self-insured  vehicle information  is not  readily available                                                               
SENATOR COWDERY asked how many  drivers without insurance also do                                                               
not have a valid license.                                                                                                       
MR. BANNOCK replied that he didn't have the number available.                                                                   
SENATOR OLSON asked how often  commercial vehicle accidents cause                                                               
the  victims  to go  on  social  assistance  due to  injuries  or                                                               
financial ramifications.                                                                                                        
MR. BANNOCK said that he didn't have any related data.                                                                          
SENATOR OLSON asked if the sponsor had such information.                                                                        
SENATOR FRENCH said that he couldn't answer the question.                                                                       
SENATOR OLSON asked how a person proves self-insurance.                                                                         
MR. BANNOCK said that the matter is addressed in AS 28.10.                                                                      
CHAIR KOOKESH  asked for  a suggestion  for an  appropriate place                                                               
for the conceptual amendment.                                                                                                   
SENATOR FRENCH suggested language for  the amendment, and that it                                                               
could be put in section five of the bill.                                                                                       
SENATOR WIELECHOWSKI  asked if it  was Chair Kookesh's  intent to                                                               
move the bill that day.                                                                                                         
CHAIR KOOKESH replied that he had  intended to move the bill, but                                                               
that there seemed to be concern about the amendment.                                                                            
SENATOR FRENCH  said that  the timeline  was at  the will  of the                                                               
SENATOR OLSON  said that commercial vehicles  would be encumbered                                                               
by being included in the bill's online verification element.                                                                    
CHAIR KOOKESH said  that he didn't have the  intention of keeping                                                               
the bill in committee.                                                                                                          
SENATOR  FRENCH  commented  that  the bill  does  go  to  another                                                               
committee  after  leaving   the  Senate  Transportation  Standing                                                               
CHAIR KOOKESH replied that he'd like  to get the work done in the                                                               
current committee.                                                                                                              
SENATOR   FRENCH  repeated   the  suggested   language  for   the                                                               
conceptual amendment.                                                                                                           
2:11:23 PM                                                                                                                    
CHAIR  KOOKESH  asked  if  there was  further  objection  to  the                                                               
SENATOR WILKEN said that he maintained his objection.                                                                           
There  was  a  roll  call  vote,  and  Senators  Cowdery,  Olson,                                                               
Wielechowski, and  Chair Kookesh voted yes;  Senator Wilken voted                                                               
no. Therefore, the conceptual amendment to SB 68 passed 4:1.                                                                    
2:12:21 PM                                                                                                                    
CHARLES  PECCHIO,  president  of VeriSol  Verification  Solutions                                                               
Incorporated,  said that  the major  issue with  the approach  to                                                               
verifying  insurance  is  that  proof can  easily  be  forged  or                                                               
misrepresented. There  have been  pilot programs done  in several                                                               
states  with  the  online  approach,  which  performs  real  time                                                               
verifications;  the   accuracy  is  equivalent  to   calling  the                                                               
insurance company  on the phone.  He explained that  the existing                                                               
system  isn't   changing  with  the  bill,   just  becoming  more                                                               
He added  that less than  one half  of one percent  of commercial                                                               
vehicles are  uninsured. Commercial vehicles will  be included in                                                               
the program in the future.                                                                                                      
2:17:21 PM                                                                                                                    
SENATOR  COWDERY asked  if insurance  companies can  legally give                                                               
out insurance information in response to public inquiry.                                                                        
MR.  PECCHIO replied  that the  insurance  companies provide  the                                                               
data directly to the state, and it is not made public.                                                                          
SENATOR COWDERY asked how the  situation of cancelled policies is                                                               
MR. PECCHIO replied  that the system can  automatically check for                                                               
cancelled insurance, and it is updated on a daily basis.                                                                        
SENATOR COWDERY asked for the cost of the program to the state.                                                                 
MR.  PECCHIO replied  that  the  state would  pay  a monthly  fee                                                               
ranging from 1 to 3 cents per vehicle per month.                                                                                
2:19:54 PM                                                                                                                    
SENATOR  WILKEN remarked  that two  states  are starting  full-on                                                               
online verification programs,  and asked for any  others that may                                                               
be using it.                                                                                                                    
MR. PECCHIO replied  that Florida was the first state  to use the                                                               
program, and Wyoming is currently  in a pilot stage. Oklahoma and                                                               
Texas are getting the program started soon.                                                                                     
SENATOR  WILKEN asked  if there  are  any states  that have  been                                                               
operational for at least a year.                                                                                                
MR. PECCHIO replied that the  specifications were released only a                                                               
year ago.                                                                                                                       
SENATOR  WILKEN   asked  how  the   software  would  work   in  a                                                               
theoretical situation.                                                                                                          
MR. PECCHIO explained how the software operates.                                                                                
SENATOR  WILKEN  asked  for  clarification  on  the  use  of  the                                                               
MR.  PECCHIO  replied  in  explaining   that  there  are  several                                                               
different ways of researching a vehicle in the system.                                                                          
2:24:25 PM                                                                                                                    
SENATOR  WILKEN   asked  if  an  active   and  reliable  internet                                                               
connection  is  needed  at  all  times for  the  system  to  work                                                               
MR.  PECCHIO replied  that that  was  correct. The  same sort  of                                                               
technology is used with credit card verification software.                                                                      
SENATOR WILKEN replied that many  places in the state have uneven                                                               
internet access,  and asked  who else  in America  offers similar                                                               
MR. PECCHIO replied that there are no competitors so far.                                                                       
2:25:30 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if the  system has ever been hacked or                                                               
if any data has ever been lost.                                                                                                 
MR. PECCHIO  replied that the  system has never been  hacked, and                                                               
the company doesn't maintain any data itself.                                                                                   
2:26:09 PM                                                                                                                    
SENATOR FRENCH said  that the bill includes  language that allows                                                               
for proof  of insurance  such as  a card,  and that  the internet                                                               
system is just an option.  The department and individual officers                                                               
will have room for interpretation.                                                                                              
SENATOR   OLSON  said   that  some   people  are   suspicious  of                                                               
questionable or erroneous information, and  he wants to make sure                                                               
that there won't be any harassment incurred by the bill.                                                                        
SENATOR FRENCH said he shares the concern.                                                                                      
SENATOR OLSON  asked if there's  a way to lower  premiums through                                                               
the action of the bill.                                                                                                         
SENATOR  FRENCH  replied that  the  objective  is to  reduce  the                                                               
number  of  uninsured  drivers, and  ideally  premiums  would  be                                                               
reduced as a result.                                                                                                            
SENATOR WILKEN cautioned against moving  the bill too quickly, as                                                               
it's  a huge  policy call  that  could end  badly; more  opinions                                                               
should be solicited.                                                                                                            
CHAIR KOOKESH  said that he  had previously  let the bill  sit in                                                               
committee for a week.                                                                                                           
SENATOR FRENCH  commented that  he neither  pushes nor  pulls his                                                               
2:30:49 PM                                                                                                                    
TOM MCGRATH, representing  himself, said that he  has worked with                                                               
similar bills  in the past,  and asked the committee  to consider                                                               
the  bill,  which  is  well-crafted.   People  who  do  not  have                                                               
insurance  are  a costly  liability.  He  related the  impact  of                                                               
uninsured drivers  on his business, and  encouraged the committee                                                               
to move the legislation forward.                                                                                                
2:33:31 PM                                                                                                                    
KENTON  BRINE,   Northwest  Regional  Manager  of   the  Property                                                               
Casualty Insurers  Association of  America (PCIAA), said  that he                                                               
thinks the  bill is  now headed  in the  right direction.  He has                                                               
been  working with  Senator French  and his  aide to  improve the                                                               
legislation, in the areas of the  effective date and terms of use                                                               
of the program by the DMV.                                                                                                      
He  added that  more specification  should be  added in  terms of                                                               
access  to the  database. The  PCIAA  is also  interested in  the                                                               
forms of  identifiers to  be used;  some companies  don't provide                                                               
Vehicle   Identification  Numbers   (VIN)   in  their   insurance                                                               
He cautioned  the committee that  there is no perfect  system for                                                               
getting uninsured drivers off the  roads; any crackdown will work                                                               
for a certain  amount of time, but not  forever. Making insurance                                                               
as affordable  as possible is  perhaps the most effective  way of                                                               
fixing the problem.                                                                                                             
2:39:21 PM                                                                                                                    
SENATOR WIELECHOWSKI asked  if the ideal effective  date would be                                                               
in 2009.                                                                                                                        
MR. BRINE replied affirmatively.                                                                                                
SENATOR WIELECHOWSKI asked if the  sponsor had any comment on the                                                               
effective date.                                                                                                                 
ALLISON BIASTOCK,  aide to  Senator French,  said that  the final                                                               
bill  would include  language pertaining  to the  effective date.                                                               
The DMV has said it would be ready earlier than 2009.                                                                           
SENATOR WIELECHOWSKI  asked if the  effective date,  as currently                                                               
written, would be 90 days from signing.                                                                                         
MS.  BIASTOCK replied  that  the DMV  would be  able  to get  the                                                               
program up and running with the 90-day effective date.                                                                          
SENATOR OLSON asked if the  major difficulty would be getting the                                                               
technology in place.                                                                                                            
MS.  BIASTOCK  replied  that  the  program  would  be  using  the                                                               
existing computer system; it's a matter of getting the software.                                                                
SENATOR OLSON said  that there's no reason to wait  until 2009 to                                                               
put the program in place.                                                                                                       
2:41:14 PM                                                                                                                    
CHAIR KOOKESH asked for the will of the committee.                                                                              
SENATOR COWDERY  motioned to report  the committee  substitute to                                                               
SB   68,    as   amended,   from   committee    with   individual                                                               
recommendations  and accompanying  fiscal notes.  There being  no                                                               
objection,  CSSB 68(TRA)  moved  from  the Senate  Transportation                                                               
CHAIR KOOKESH asked the sponsor to  look at the amendment to make                                                               
sure the title would still be appropriate.                                                                                      

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