Legislature(2007 - 2008)BELTZ 211

02/08/2007 01:30 PM LABOR & COMMERCE

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Heard & Held
Bills Previously Heard/Scheduled
Moved SB 59 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                        February 8, 2007                                                                                        
                           1:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Johnny Ellis, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Bettye Davis                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Con Bunde                                                                                                               
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 59                                                                                                              
"An  Act  relating   to  the  use  of   broadcasting  to  promote                                                               
charitable raffles and lotteries."                                                                                              
     MOVED SB 59 OUT OF COMMITTEE                                                                                               
SENATE BILL NO. 68                                                                                                              
"An  Act  requiring motor  vehicle  insurers  to provide  to  the                                                               
commissioner  of   administration  a  database   listing  vehicle                                                               
insurance policy information that  will allow the commissioner to                                                               
verify  whether  mandatory  motor   vehicle  insurance  has  been                                                               
obtained, limiting  access to the database,  establishing methods                                                               
for proving that  mandatory motor vehicle insurance  is in place,                                                               
allowing the additional penalties  of suspending registration and                                                               
vehicle impoundment and forfeiture  for failure to have mandatory                                                               
motor   vehicle  insurance,   and   authorizing  hearings   after                                                               
suspension of  registration for failure  to have  mandatory motor                                                               
vehicle insurance."                                                                                                             
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB  59                                                                                                                  
SHORT TITLE: BROADCASTING PROMOTING CHARITABLE GAMING                                                                           
SPONSOR(s): SENATOR(s) STEVENS                                                                                                  
01/19/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/07       (S)       L&C                                                                                                    
02/06/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/06/07       (S)       Heard & Held                                                                                           
02/06/07       (S)       MINUTE(L&C)                                                                                            
02/08/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB  68                                                                                                                  
SHORT TITLE: MOTOR VEHICLE INSURANCE                                                                                            
SPONSOR(s): SENATOR(s) FRENCH                                                                                                   
01/26/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/26/07       (S)       L&C, TRA, FIN                                                                                          
02/08/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
STUART WHITE                                                                                                                    
KFMJ Radio                                                                                                                      
Ketchikan AK                                                                                                                    
POSITION STATEMENT: Supported SB 59.                                                                                          
BOB KERN, President                                                                                                             
TLP Communications                                                                                                              
Ketchikan AK                                                                                                                    
POSITION STATEMENT: Supported SB 59.                                                                                          
JULIE SLANAKER                                                                                                                  
Rainy Day Quilter Guild and Ketchikan Little League Baseball                                                                    
Ketchikan AK                                                                                                                    
POSITION STATEMENT: Supported SB 59.                                                                                          
SENATOR HOLLIS FRENCH                                                                                                           
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SB 68.                                                                                         
DUANE BANNOCK, Director                                                                                                         
Division of Motor Vehicles                                                                                                      
Department of Administration                                                                                                    
PO Box 110200                                                                                                                   
Juneau, AK  99811-0200                                                                                                          
POSITION STATEMENT: Supported SB 68.                                                                                          
KENTON BRINE                                                                                                                    
Property Casualty Insurers Association of American (PCI)                                                                        
Olympia WA                                                                                                                      
POSITION STATEMENT: Opposed section 5 of SB 68.                                                                               
STEVE FLASHER                                                                                                                   
Insurance Agent                                                                                                                 
Anchorage AK                                                                                                                    
POSITION STATEMENT: Opposed SB 68.                                                                                            
ACTION NARRATIVE                                                                                                              
CHAIR JOHNNY ELLIS called the  Senate Labor and Commerce Standing                                                             
Committee meeting to order at 1:30:23  PM. Present at the call to                                                             
order were Senators Davis, Bunde, Stevens and Ellis.                                                                            
        SB  59-BROADCASTING PROMOTING CHARITABLE GAMING                                                                     
CHAIR ELLIS announced SB 59 to be up for consideration.                                                                         
STUART WHITE, KFMJ Radio, Ketchikan,  supported SB 59 and said it                                                               
will not  allow more gambling  in Alaska. It fixes  problems with                                                               
AS 05.15.640(a) that should have  been fixed long ago by enabling                                                               
over-the-air  broadcasters  to   advertise  activities  that  are                                                               
already legal. Newspapers are not  banned from this activity, but                                                               
it  may  deny broadcasters  equal  protection  under federal  and                                                               
state  constitutions  as well  as  just  being confusing  to  the                                                               
potential advertisers who are not aware of this discrepancy.                                                                    
1:34:55 PM                                                                                                                    
SENATOR HOFFMAN joined the committee.                                                                                           
1:36:30 PM                                                                                                                    
SENATOR  BUNDE stated  that Mr.  White said  this bill  would not                                                               
expand gambling, but he also  said advertising on the radio would                                                               
increase  the number  of customers  who know  about a  lottery by                                                               
three or four times. Therefore,  he reasoned, it may not increase                                                               
new kinds of  gambling, but it would encourage more  people to be                                                               
involved in gambling.                                                                                                           
MR. WHITE  countered that  non-profit organizations  already have                                                               
the legal right  to present these games and, "The  fact that they                                                               
would either survive or go away  is kind of the important crux of                                                               
it there."                                                                                                                      
He  told  them  that  increased  ticket  sales  for  groups  that                                                               
contribute to the  community would be a positive  result and that                                                               
new  types  of gambling,  like  riverboats  and Bali's,  wouldn't                                                               
happen here.                                                                                                                    
1:39:21 PM                                                                                                                    
BOB  KERN, President,  TLP  Communications,  Ketchikan, said  TLP                                                               
owns and operates  KFMJ Radio and publishes  the local newspaper.                                                               
He supported  Mr. White's comments  and expanded  specifically on                                                               
the huge confusion among broadcasters  between what the state and                                                               
federal  governments allow.  He  thought  this legislation  would                                                               
prevent station owners from being  fined or having their licenses                                                               
threatened  by  the  actions  of  employees  or  others  who  are                                                               
misunderstanding the  conflicting regulations  they have  to deal                                                               
with. What  is legal to broadcast  in 48 of the  United States is                                                               
not legal in Alaska.                                                                                                            
Another issue he clarified is  that gaming spots could be allowed                                                               
to be broadcast  as free public service  announcements (PSAs). In                                                               
fact, though, most  of the day air-time is sold  out and any free                                                               
PSAs get relegated  to the midnight to 5 a.m.  time period, which                                                               
would do the non-profits very  little good. Newspapers don't give                                                               
away their space  and he didn't think radio  stations should have                                                               
to either.                                                                                                                      
MR. KERN also  added that passing this  legislation would clarify                                                               
how   to  advertise   self-conducted  lotteries   and  that   the                                                               
definition  of "broadcasting"  should  include  the Internet.  He                                                               
said that just putting up a web  page that anyone can click on is                                                               
broadcasting and that audio is now getting streamed regularly.                                                                  
He suggested  deleting the broadcasting definition  section in SB                                                               
68 because he  didn't know of anybody in television  or radio who                                                               
transmitted by  2,500 megahertz. He  also didn't know  of anybody                                                               
who broadcasts  on microwave video since  it is a point  to point                                                               
communication system; and slow-scan  television has not been used                                                               
for  years  by  anyone  except   maybe  amateur  operators.    He                                                               
suggested  deleting  "programming  by  way  of  satellite,  cable                                                               
teletype",  which   nobody  uses   anymore,  and   "or  facsimile                                                               
transmission  and distribution  methods". He  suggested inserting                                                               
"digital  distribution  methods",  since  so  many  stations  are                                                               
transmitting in  the digital  mode now, which  is not  exactly in                                                               
the traditional definition of broadcasting.                                                                                     
He also suggested  that the state and  federal regulations should                                                               
be more aligned  with each other. As an example,  he related that                                                               
a  Ketchikan station  was reported  to the  FCC for  broadcasting                                                               
lottery  information and  promoting it  quite heavily  last year.                                                               
The FCC ruled:                                                                                                                  
        Although 18 USC 13.04 prohibits the broadcast of                                                                        
    information    concerning    a    lottery,    18    USC                                                                     
     13.07(a)(2)(a)  states that  the  provision  of 18  USC                                                                    
     13.04 shall not apply  to an advertisement concerning a                                                                    
     lottery that is authorized  or otherwise not prohibited                                                                    
     by  the state  in which  it is  conducted and  which is                                                                    
     conducted   by  a   not-for-profit  organization.   The                                                                    
     information before us  indicates [the American Diabetes                                                                    
     Association  (ADA)]  is a  not-for-profit  organization                                                                    
     that  has  conducted  the  event  and  raffle  as  fund                                                                    
     raisers and that the State  of Alaska had given the ADA                                                                    
     a charitable  gaming permit for  the period  covered by                                                                    
     the event.  Thus, [the  FCC says]  it appears  that the                                                                    
     stations did  not violate 18  USC 13.04 or  the related                                                                    
     commission  rule   in  as  much  as   their  provisions                                                                    
     specifically  are  not   applicable  to  advertisements                                                                    
     about  events  which  are  conducted  by  the  American                                                                    
     Diabetes Association. Therefore, we close this matter.                                                                     
1:49:16 PM                                                                                                                    
JULIE  SLANAKER, Rainy  Day Quilter  Guild  and Ketchikan  Little                                                               
League Baseball,  said she  has been  a fund-raising  officer for                                                               
both of these  non-profit organizations for the  last three years                                                               
and she has noticed it's more  difficult than ever to raise funds                                                               
for both groups'  expenses. The Quilt Guild that  has two raffles                                                               
every  year would  do significantly  better if  she were  able to                                                               
advertise on the radio.                                                                                                         
She said  that one thing  parents and kids can  still participate                                                               
in  is selling  raffle  tickets. In  Ketchikan, every  charitable                                                               
organization has  raffle tickets at  different times of  the year                                                               
and the  more people who  know about  a raffle, the  more tickets                                                               
can be sold. It costs a lot to  advertise in the paper - a single                                                               
ad for  one day runs  about $80 with  a nonprofit rate.  For that                                                               
same  $80 she  could advertise  with  KFMJ and  receive a  week's                                                               
worth of advertising  that would promote one of her  raffles in a                                                               
much more efficient manner.                                                                                                     
1:53:58 PM                                                                                                                    
CHAIR ELLIS  thanked her for  her comments and closed  the public                                                               
hearing. He set SB  59 aside, but said he would  take it up later                                                               
in the meeting.                                                                                                                 
                 SB  68-MOTOR VEHICLE INSURANCE                                                                             
CHAIR ELLIS announced SB 68 to be up for consideration.                                                                         
SENATOR HOLLIS FRENCH, sponsor of SB  68, said the purpose of the                                                               
bill is to  help people who have auto insurance  and are affected                                                               
by those who do not.                                                                                                            
1:55:20 PM                                                                                                                    
SENATOR FRENCH  said the Insurance  Research Council,  a national                                                               
group,  estimated that  those who  don't have  insurance make  up                                                               
about 14-15 percent  of drivers on Alaska's roads;  but of 18,000                                                               
accidents that happened  here in 2006, 28 percent  of the drivers                                                               
involved  didn't   carry  insurance.  So,  a   riskier  and  less                                                               
responsible population is  causing harm far out  of proportion to                                                               
what people might expect. What all  of us pay each month to cover                                                               
the risk  of being injured  by an  uninsured motorist is  about 6                                                               
percent of  a full coverage  policy or  14 percent of  just bare-                                                               
bones liability policy.  That translates into $75 -  $80 per year                                                               
that each Alaskan  has to pay to cover the  risk of being injured                                                               
by an uninsured motorist.                                                                                                       
He said  that currently,  there is no  real method  for enforcing                                                               
the uninsured motorist  laws and the genesis of SB  68 is to take                                                               
advantage  of   modern  data-base  capabilities  and   allow  the                                                               
insurance industry  database to communicate with  the Division of                                                               
Motor  Vehicles (DMV)  about the  number  of uninsured  motorists                                                               
each month.                                                                                                                     
SENATOR  FRENCH explained  that the  DMV could  make a  list each                                                               
month  of all  known registered  vehicles and  compare that  to a                                                               
list  of all  known  insurance policies.  The  lack of  insurance                                                               
could be communicated  to the uninsured motorists  with a warning                                                               
about losing their car registration  if they didn't get insurance                                                               
within the next 30 days.                                                                                                        
1:58:48 PM                                                                                                                    
DUANE BANNOCK,  Director, Division  of Motor  Vehicles, supported                                                               
Senator  French's  comments  and  said they  share  the  goal  of                                                               
reducing uninsured vehicles. He said  he would be happy to answer                                                               
2:00:00 PM                                                                                                                    
SENATOR BUNDE  agreed that he  wanted fewer uninsured  drivers on                                                               
the road  and asked  what the  violation rate  was of  people who                                                               
drive  with a  suspended license.  He asked  if that  information                                                               
could  somehow  be interfaced  with  an  uninsured driver's  data                                                               
MR.  BANNOCK  responded  that  he   would  attempt  to  get  that                                                               
information for him.                                                                                                            
2:02:27 PM                                                                                                                    
SENATOR BUNDE said  that safe highways have a cost  and using the                                                               
user  cost/user  pay  philosophy,  he asked  Mr.  Bannock  if  he                                                               
planned to increase drivers license  fees to pay for this program                                                               
or to make a request from the general fund.                                                                                     
MR.  BANNOCK replied  that  the department  is  not proposing  to                                                               
increase the cost of a driver's  license. He added that even with                                                               
the  DMV's hefty  fiscal note  for  SB 68,  it still  contributes                                                               
nearly five  times as much  to the general  fund as it  takes for                                                               
operating expenses.                                                                                                             
SENATOR  BUNDE  responded that  in  the  next  year or  so,  that                                                               
contribution might  become even more  significant and he  did not                                                               
look forward to a decrease in their contribution.                                                                               
2:03:36 PM                                                                                                                    
KENTON BRINE, Property Casualty  Insurers Association of American                                                               
(PCI), said that PCI's members  represent about 40 percent of the                                                               
auto  insurance  market  across  the  country.  While  he  shares                                                               
drivers' and  policy makers' frustration about  the percentage of                                                               
drivers  who  drive  without insurance  coverage,  he  said  that                                                               
insurers typically are  not in favor of  mandatory auto liability                                                               
insurance  laws even  though  nearly every  state  has one.  They                                                               
don't have a great deal  of effectiveness in deterring people who                                                               
are  determined  to  drive without  insurance,  he  stated.  When                                                               
states attempt  to enforce laws,  there is a spike  in compliance                                                               
for a  period of time and  then members gradually drift  back out                                                               
to where they were previous to that.                                                                                            
MR. BRINE said he had also  looked at the same Insurance Research                                                               
Council's  numbers as  Senator  French and  had  no quarrel  with                                                               
those,   but  what   insurers  have   seen   is  that   programs,                                                               
particularly the  electronic database  programs, have  not proven                                                               
themselves  to be  highly effective  ways of  either tracking  or                                                               
changing compliance  levels with uninsured motorists.  The reason                                                               
varies from  state to  state. In  some cases,  it's not  known if                                                               
they aren't  effective because of  the questionable  methods used                                                               
in determining their effectiveness.  Utah, as an example, changed                                                               
the  reporting requirements  on  insurers from  once  a month  to                                                               
twice a  month. The vendor that  was hired by Utah  to administer                                                               
the  database matching  program, called  Insure Write,  found its                                                               
uninsured  motorist  rate dropped  to  5  percent thanks  to  the                                                               
efforts  of this  program. But  the  Insurance Research  Council,                                                               
which uses  a comparison of  uninsured motorists  claim frequency                                                               
to  bodily  injury  claim  frequency   numbers  to  determine  an                                                               
estimate  of uninsured  motorists  pegged the  rate of  uninsured                                                               
drivers in  Utah to be  about 10 percent  - about double  of what                                                               
Insure Write claims was their success rate.                                                                                     
Further he  has found  through studies across  the board  that at                                                               
best people  are not sure that  these programs work and  at worst                                                               
they  are  fairly  sure  they  don't  work.  And  the  costs  for                                                               
instituting them  are borne by  consumers and  insurers. Frequent                                                               
small mistakes  are made, as  well, in things like  the recording                                                               
of a  vehicle identification  number (VIN)  or something  else in                                                               
the reporting to the state.                                                                                                     
Looking at  the broader issue  of uninsured motorists,  Mr. Brine                                                               
said it  might be useful to  consider what things can  be done in                                                               
the insurance  marketplace to make insurance  more attractive for                                                               
people  to buy.  He admitted  that  the reason  some people  just                                                               
won't  buy liability  insurance  coverage is  because some  might                                                               
feel they don't have adequate assets to protect.                                                                                
MR.  BRINE  said that  some  states  have considered  creating  a                                                               
policy with lower limits; litigation  costs could be examined and                                                               
the rate quote process could be  speeded up by allowing access to                                                               
a web database of driver  records for insurance companies. Alaska                                                               
is  currently one  of four  states  in the  country that  doesn't                                                               
allow insurers to  look at driver records in an  online real time                                                               
web based format.                                                                                                               
He also mentioned that in California,  which has a very high rate                                                               
of  uninsured drivers,  the voters  passed  an initiative  saying                                                               
that  uninsured motorists  involved  in an  accident that  wasn't                                                               
their  fault  can't  collect noneconomic  damages.  He  concluded                                                               
saying that he would be pleased  to work with the committee about                                                               
experiences across the country with  these programs, but today he                                                               
was opposed to section 5 of SB 68.                                                                                              
2:12:15 PM                                                                                                                    
SENATOR  BUNDE  asked  if  Alaska's  underinsured  and  uninsured                                                               
coverage would protect his assets if  were in an accident with an                                                               
uninsured person.                                                                                                               
MR. BRINE replied yes.                                                                                                          
SENATOR BUNDE  asked if  uninsured people who  are involved  in a                                                               
disproportionate  number of  accidents  belong in  a higher  risk                                                               
pool. What would it do to his rates, for instance?                                                                              
MR.  BRINE replied  that the  idea  behind insurance  is to  pool                                                               
people with people  of similar risks and not  pooling higher risk                                                               
people in  with the lowest  risk people  in order to  balance out                                                               
the cost.                                                                                                                       
2:15:43 PM                                                                                                                    
SENATOR  BUNDE said  Utah went  to  twice a  month reporting  and                                                               
asked what impact that would have on rates.                                                                                     
MR. BRINE said he didn't have  the chance to investigate what the                                                               
costs are  because the law was  passed so fast, but  he has heard                                                               
that  it is  costly because  it is  computer based  and a  lot of                                                               
reformatting has  to be done.  The initiation is costly  as well.                                                               
However, he  agreed with Senator  Bunde that "gaming  the system"                                                               
is very real and no matter  what, people who are determined to do                                                               
so, will be  able to get some proof of  insurance that isn't real                                                               
or purchase insurance, hold it  long enough to have the reporting                                                               
go  through and  cancel it.  He added  that the  effectiveness of                                                               
electronic database  programs is  also questionable and  it's not                                                               
known how accurate the database would be from month to month.                                                                   
2:18:13 PM                                                                                                                    
STEVE FLASHER, Anchorage Insurance Agent,  said on the surface SB                                                               
68  sounds great,  but  he has  some concerns  -  like would  the                                                               
vendor  be  able  to  sell the  information  to  other  insurance                                                               
companies  or what  if  a  name is  misspelled  on the  insurance                                                               
policy  or the  VIN number,  which is  17 numbers,  is wrong.  He                                                               
deals with  credit unions and  banks on correcting those  all the                                                               
time. Another  issue is timeliness  of reporting.  Ultimately, he                                                               
said, all the costs will be  passed on to the insurance companies                                                               
that will  raise the rates  of their current carriers.  He didn't                                                               
think this program  would be very successful and  said he thought                                                               
the reason  there is such a  high number of uninsured  drivers is                                                               
basically because the  cost of insurance is so high  and all this                                                               
does is add to that cost.                                                                                                       
Lastly,  he said  SB 68  just adds  another layer  of bureaucracy                                                               
when it  already takes his office  two or three days  to obtain a                                                               
customer's  motor vehicle  report (MVR)  information. That  slows                                                               
the  whole process  of being  able  to accurately  quote and  put                                                               
policies into force.                                                                                                            
2:23:08 PM                                                                                                                    
SENATOR FRENCH commented that he  continues to work with industry                                                               
and the  division to bring costs  down and make the  program more                                                               
CHAIR ELLIS said the bill will be brought up again and set it                                                                   
        SB  59-BROADCASTING PROMOTING CHARITABLE GAMING                                                                     
CHAIR ELLIS announced SB 59 to be back before the committee and                                                                 
asked if there was any committee discussion. There was none.                                                                    
2:24:32 PM                                                                                                                    
SENATOR STEVENS moved to pass SB 59 with the attached fiscal and                                                                
individual recommendations. There were no objections and SB 59                                                                  
moved out of committee.                                                                                                         
There being no further business to come before the committee,                                                                   
Chair Ellis adjourned the meeting at 2:27:36 PM.                                                                              

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