Legislature(2007 - 2008)BELTZ 211

02/27/2007 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 84 BURNING CAPABILITY OF CIGARETTES TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
+= SB 68 MOTOR VEHICLE INSURANCE TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 27, 2007                                                                                        
                           1:32 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Johnny Ellis, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Bettye Davis                                                                                                            
Senator Con Bunde                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 84                                                                                                              
"An Act  relating to the  burning capability of  cigarettes being                                                               
sold  or offered  for sale,  or possessed  for sale;  relating to                                                               
compliance  certifications by  tobacco  product manufacturers,  a                                                               
directory  of  tobacco  product manufacturers,  the  affixing  of                                                               
stamps  to  cigarette packages,  and  cigarette  tax stamps;  and                                                               
providing for an effective date."                                                                                               
     HEARD AND HELD                                                                                                             
                                                                                                                                
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  84                                                                                                                  
SHORT TITLE: TESTING & PACKAGING OF CIGARETTES                                                                                  
SPONSOR(s): SENATOR(s) OLSON                                                                                                    
                                                                                                                                
02/14/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/14/07       (S)       L&C, JUD, FIN                                                                                          
02/27/07       (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                                                                               
02/08/07       (S)       Heard & Held                                                                                           
02/08/07       (S)       MINUTE(L&C)                                                                                            
02/27/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR DONNY OLSON                                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SB 84.                                                                                         
                                                                                                                                
DENISE LICCTOLI                                                                                                                 
Staff to Senator Olson                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 84 for the sponsor.                                                                       
                                                                                                                                
STEVE "RUSTY" BELANGER                                                                                                          
State Fire Marshal                                                                                                              
Division of Fire Prevention                                                                                                     
Department of Public Safety (DPS)                                                                                               
Anchorage AK                                                                                                                    
POSITION STATEMENT:  Supported SB 84.                                                                                         
                                                                                                                                
DOUG SCHRAGE, Fireman                                                                                                           
Anchorage Fire Department                                                                                                       
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supported SB 84.                                                                                          
                                                                                                                                
WARREN CUMMINGS                                                                                                                 
Alaska Fire Chiefs Association                                                                                                  
Fairbanks AK                                                                                                                    
POSITION STATEMENT:  Supported SB 84.                                                                                         
                                                                                                                                
JOANNA BALES, Manager                                                                                                           
Excise Audit Division                                                                                                           
Department of Revenue (DOR)                                                                                                     
Juneau AK                                                                                                                       
POSITION STATEMENT: Commented on SB 84.                                                                                       
                                                                                                                                
RAY BIZAL, Western Regional Manager                                                                                             
National Fire Protection Association (NFPA)                                                                                     
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 84.                                                                                          
                                                                                                                                
SENATOR HOLLIS FRENCH                                                                                                           
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor of SB 68.                                                                                         
                                                                                                                                
ALLISON BIASTOCK                                                                                                                
Staff to Senator French                                                                                                         
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Supported SB 68.                                                                                          
                                                                                                                                
DUANE BANNOCK, Director                                                                                                         
Division of Motor Vehicles (DMV)                                                                                                
Department of Administration (DOA)                                                                                              
Anchorage AK                                                                                                                    
POSITION STATEMENT: Commented on SB 68.                                                                                       
                                                                                                                                
KENTON BRINE, Manager                                                                                                           
Northwest Region                                                                                                                
Property Casualty Insurers Association of America                                                                               
No address provided                                                                                                             
POSITION STATEMENT: Opposed SB 68.                                                                                            
                                                                                                                                
LINDA HALL, Director                                                                                                            
Division of Insurance                                                                                                           
Department of Commerce, Community & Economic Development                                                                        
Juneau AK                                                                                                                       
POSITION STATEMENT: Neutral position on SB 68.                                                                                
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing                                                              
Committee meeting to order at 1:32:20 PM. Present at the call to                                                              
order were Senators Stevens, Bunde, Davis, and Ellis.                                                                           
                                                                                                                                
            SB  84-TESTING & PACKAGING OF CIGARETTES                                                                        
                                                                                                                                
CHAIR ELLIS announced SB 84 to be up for consideration.                                                                         
                                                                                                                                
SENATOR DONNY OLSON,  sponsor of SB 84, invited his  staff to the                                                               
witness table. He said that children  are a major portion of burn                                                               
statistics  and   that  SB  84   mandates  that   only  fire-safe                                                               
cigarettes can be sold in  Alaska and establishes the testing and                                                               
certification  requirements.  He  said that  so-called  fire-safe                                                               
cigarettes are  reduced ignition propensity cigarettes.  They are                                                               
designed  to be  less  likely than  a  conventional cigarette  to                                                               
ignite soft furnishings  such as a couch or a  mattress. The bill                                                               
also  provides  for the  marking  of  cigarette packaging  in  an                                                               
approved  and easily  identifiable  manner to  indicate that  the                                                               
contents are fire-safe.                                                                                                         
                                                                                                                                
He  stated  that  cigarettes  are   the  leading  cause  of  home                                                               
fatalities  in Alaska  and  the U.S.  The  most common  materials                                                               
first  ignited   in  home  fires  are   mattresses  and  bedding,                                                               
upholstered furniture  and floor coverings. Often  cigarettes are                                                               
lit, then  forgotten by a  smoker; it  can smolder for  hours. He                                                               
said this  legislation was brought  to his attention by  the Fire                                                               
Chiefs and it is also supported by Phillip Morris.                                                                              
                                                                                                                                
CHAIR ELLIS  stated that a  committee substitute, version  M, was                                                               
before the committee.                                                                                                           
                                                                                                                                
1:37:06 PM                                                                                                                    
DENISE  LICCTOLI,  staff to  Senator  Olson,  sponsor of  SB  84,                                                               
explained  the differences  in the  CS are  predominantly wording                                                               
changes. The title has been shortened  to reflect a change at the                                                               
end  of  the   bill,  which  removed  some   sections  that  were                                                               
referenced in it.                                                                                                               
                                                                                                                                
CHAIR  ELLIS said  he  supported  that and  asked  for the  major                                                               
changes to be explained first.                                                                                                  
                                                                                                                                
1:37:56 PM                                                                                                                    
MS.  LICCTOLI said  that Sec.  18.74.065 was  added to  allow the                                                               
fire marshal to perform testing  under the terms of this chapter.                                                               
The preferences given to the  package markings are standards that                                                               
are already  being used in  the State  of New York.  New language                                                               
was added  on page  6, lines  6 - 9,  saying "FSC"  meaning "fire                                                               
standards  compliant"  would be  accepted  as  a marking  on  the                                                               
cigarettes.                                                                                                                     
                                                                                                                                
She said  the next substantial  change was on  page 9, lines  9 -                                                               
12, where language now says the  state fire marshal shall use the                                                               
standards  of  New  York  as  persuasive  authority  rather  than                                                               
requiring the implementation as done in New York.                                                                               
                                                                                                                                
CHAIR  ELLIS said  he  knew  the industry  was  worried about  50                                                               
different standards in  50 different states and asked  if the New                                                               
York standards were more regular.                                                                                               
                                                                                                                                
MS. LICCTOLI answered yes; the  tobacco industry's concern from a                                                               
business  perspective is  that  each  state has  its  own way  of                                                               
dealing with  this law - and  that would mean different  types of                                                               
cigarettes. However,  because there is currently  no federal law,                                                               
most states that  have adopted this measure have  adopted the New                                                               
York law. So consistency is there.                                                                                              
                                                                                                                                
1:41:52 PM                                                                                                                    
Sections 2,  3, 4, and 5  were eliminated from the  original bill                                                               
because they regarded  tobacco tax laws that  are not appropriate                                                               
to  reference   in  talking  about  the   burning  propensity  of                                                               
cigarettes.                                                                                                                     
                                                                                                                                
1:42:43 PM                                                                                                                    
SENATOR BUNDE noted there was no  fiscal note from the state fire                                                               
marshal.                                                                                                                        
                                                                                                                                
MS. LICCTOLI said  the fire marshal was on line  to testify if he                                                               
wanted to ask him that question.                                                                                                
                                                                                                                                
CHAIR ELLIS said the committee would come back to him.                                                                          
                                                                                                                                
SENATOR STEVENS asked  if the sponsor statement  is applicable to                                                               
the CS.                                                                                                                         
                                                                                                                                
SENATOR OLSON replied that it applies to version M as well.                                                                     
                                                                                                                                
1:43:56 PM                                                                                                                    
SENATOR  BUNDE  asked  if  this  bill would  raise  the  cost  of                                                               
cigarettes in Alaska since they are special manufacture.                                                                        
                                                                                                                                
MS.  LICCTOLI replied  that other  states have  found that  their                                                               
price doesn't go up.                                                                                                            
                                                                                                                                
CHAIR ELLIS asked if "self-extinguishing"  was an accurate way to                                                               
characterize these cigarettes.                                                                                                  
                                                                                                                                
MS. LICCTOLI replied that another  name used is reduced cigarette                                                               
propensity (RCP),  which means  they tend not  to burn  when left                                                               
unattended.                                                                                                                     
                                                                                                                                
SENATOR  OLSON  said he  has  also  heard them  called  fire-safe                                                               
cigarettes.  The  Coalition  for   Fire  Safe  Cigarettes  has  a                                                               
comparison of  the ones proposed  in this legislation  to regular                                                               
cigarettes.                                                                                                                     
                                                                                                                                
SENATOR STEVENS asked if this had worked in other states.                                                                       
                                                                                                                                
SENATOR OLSON  replied that those  facts exist, but he  would let                                                               
the fire marshal present them.                                                                                                  
                                                                                                                                
CHAIR ELLIS noted that people can testify on either version.                                                                    
                                                                                                                                
1:47:30 PM                                                                                                                    
STEVE "RUSTY" BELANGER, State  Fire Marshal, Anchorage, supported                                                               
SB  84.  In reference  to  the  fiscal  note,  he said  that  254                                                               
different brands  of cigarettes  are recognized  by the  state of                                                               
Alaska and the  bill requires the manufacturer  of each cigarette                                                               
to pay a $250 fee, which comes to about $263,000.                                                                               
                                                                                                                                
MR.  BELANGER  said  because  the legislation  is  so  recent  in                                                               
several other states the statistics  were being tabulated as they                                                               
spoke. However, New York is seeing good results.                                                                                
                                                                                                                                
1:51:23 PM                                                                                                                    
SENATOR  BUNDE said  it sounded  like  the fiscal  note would  be                                                               
positive, but he  wanted to know how much the  testing would cost                                                               
the fire  marshal and  he thought  the DOR might  want to  have a                                                               
fiscal note regarding bootlegging.                                                                                              
                                                                                                                                
1:52:17 PM                                                                                                                    
DOUG  SCHRAGE, Anchorage  fireman, said  that cigarettes  are the                                                               
major  cause  of  structural fires,  both  fatal  and  non-fatal.                                                               
Frequently it's  not the smoker  who gets killed or  injured, but                                                               
rather innocent children.                                                                                                       
                                                                                                                                
1:53:06 PM                                                                                                                    
WARREN CUMMINGS, Alaska Fire  Chiefs Association, Fairbanks, said                                                               
he preferred the term  "self-extinguishing cigarettes" instead of                                                               
the   "Coalition  for   Fire-safe  Cigarettes."   He  said   this                                                               
legislation is about saving lives  and cigarettes are the leading                                                               
cause of home fire fatalities in  the United States - killing 700                                                               
to 900 people,  smokers and non-smokers alike per  year. In 2003,                                                               
smoking material  structure fires  killed 760 people  and injured                                                               
1,520 others in  the US; in Alaska 5 people  died. One-quarter of                                                               
the  victims of  smoking  material fire  fatalities  are not  the                                                               
smokers whose  cigarette started the  fire, 34 percent  are their                                                               
children, 25  percent are  neighbors or  friends, 14  percent are                                                               
the spouses or partners and 13 percent are the parents.                                                                         
                                                                                                                                
Research from  the mid-1980s predicted that  fire-safe cigarettes                                                               
would  eliminate  3  out  of  4  cigarette  fire-related  deaths.                                                               
Research from  New York  shows that  fatalities declined  by one-                                                               
third in not quite a half-year.                                                                                                 
                                                                                                                                
1:55:36 PM                                                                                                                    
MR. CUMMINGS said  this bill also has penalties  for selling non-                                                               
self-extinguishing cigarettes, which  are pretty substantial. So,                                                               
he reasoned there would be added  revenue to the state if regular                                                               
cigarettes  get  bootlegged. He  closed  saying  the Alaska  Fire                                                               
Chiefs support the committee substitute for this bill.                                                                          
                                                                                                                                
1:56:18 PM                                                                                                                    
SENATOR  BUNDE said  he  heard that  unattended  cooking was  the                                                               
leading cause of housing fire fatalities.                                                                                       
                                                                                                                                
MR. CUMMINGS  responded that  there are  more cooking  fires, but                                                               
they don't result in fatalities.                                                                                                
                                                                                                                                
CHAIR ELLIS said he hoped  the Department of Revenue could answer                                                               
Senator Bunde's question about fiscal notes.                                                                                    
                                                                                                                                
1:57:06 PM                                                                                                                    
JOANNA BALES, Excise Audit Manager,  Department of Revenue (DOR),                                                               
said she  is the program manager  of the state cigarette  tax and                                                               
asked if the CS removes the DOR from the bill.                                                                                  
                                                                                                                                
MS.  LICCTOLI replied  that it  removes the  department from  the                                                               
tobacco tax  section, but  it does not  remove the  Department of                                                               
Revenue from the bill.                                                                                                          
                                                                                                                                
CHAIR ELLIS said he would hold the bill in committee.                                                                           
                                                                                                                                
1:58:14 PM                                                                                                                    
SENATOR BUNDE said he was  concerned about bootlegging of regular                                                               
cigarettes to  avoid the tax  and asked  if this would  cause the                                                               
DOR additional challenges.                                                                                                      
                                                                                                                                
MS. BALES replied  that under this bill, the  department would be                                                               
trading one job for another.  Currently a directory of cigarettes                                                               
that  are approved  for sale  in the  state is  maintained. Those                                                               
cigarettes have  to meet all  the state and  federal requirements                                                               
before they  can be  sold. So,  this would  be a  new requirement                                                               
that would  be added  to the  other requirements  for cigarettes.                                                               
Experience has shown that people  try to bring in cigarettes that                                                               
aren't  on the  approved  directory anyway  - sometimes  ordering                                                               
them over  the Internet. The department's  challenges wouldn't be                                                               
any different  and its fiscal  note wouldn't be either.  She said                                                               
it's important to have this  kind of legislation and the majority                                                               
of  people who  buy cigarettes  buy  the ones  that come  through                                                               
legal channels.                                                                                                                 
                                                                                                                                
She  noted that  the  state of  New York  put  out a  preliminary                                                               
report in 2005  about the fire-safe cigarettes it  required to be                                                               
sold since August of 2000. It  talks about all the issues brought                                                               
up in committee. It found that  consumers don't want to smoke the                                                               
old cigarettes versus the fire-safe ones.                                                                                       
                                                                                                                                
SENATOR  BUNDE asked  if the  packets would  be stamped  like the                                                               
current tax stamp and he asked who would stamp them.                                                                            
                                                                                                                                
MS. BALES  replied that  the packets would  still come  through a                                                               
distributor  who  would  stamp   them.  This  bill  requires  all                                                               
retailers  in the  state to  get pictures  of what  the packaging                                                               
will look like so they know  they are stamping product that is in                                                               
compliance with the law.                                                                                                        
                                                                                                                                
2:02:39 PM                                                                                                                    
RAY  BIZAL, Western  Regional Manager,  National Fire  Protection                                                               
Association (NFPA),  supported SB 84.  He said that six  states -                                                               
New  York, Massachusetts,  Vermont, New  Hampshire, Illinois  and                                                               
California -  have already  passed similar  laws. One  quarter of                                                               
the  U.S. population  is  protected by  this law  and  as is  the                                                               
entire nation of  Canada. Statistics are available  for the first                                                               
six  months in  New  York and  indicate that  there  has been  no                                                               
reduction in  cigarette tax revenue  as a  result of the  law and                                                               
further the  New York  Office of Fire  Prevention reports  a one-                                                               
third reduction in cigarette-related  fire fatalities and an even                                                               
higher  reduction in  the number  of cigarette-related  fires. He                                                               
said 22 other legislatures are considering this issue this year.                                                                
                                                                                                                                
2:06:11 PM                                                                                                                    
SENATOR STEVENS moved to adopt the  CS to SB 84, version M. There                                                               
were no objections and it was so ordered.                                                                                       
                                                                                                                                
CHAIR ELLIS said he would hold the bill until Thursday.                                                                         
                                                                                                                                
                 SB  68-MOTOR VEHICLE INSURANCE                                                                             
                                                                                                                                
CHAIR ELLIS announced  SB 68 to be up for  consideration and that                                                               
there was a new CS, version L.                                                                                                  
                                                                                                                                
SENATOR FRENCH,  sponsor of SB  68, said he wanted  to streamline                                                               
the bill  and make  it more cost  effective, but  the fundamental                                                               
goal of  trying to  reduce uninsured  drivers remains.  It allows                                                               
for the Department  of Motor Vehicles (DMV) to check  at the time                                                               
of registration to  see if a vehicle is insured  - a missing link                                                               
right now.  Another goal is to  take uninsured cars off  the road                                                               
until  insurance is  purchased.  It also  seeks  to increase  the                                                               
penalty for driving uninsured.                                                                                                  
                                                                                                                                
2:10:50 PM                                                                                                                    
ALLISON  BIASTOCK, staff  to Senator  French, explained  that the                                                               
original  bill had  reporting deadlines  for insurance  companies                                                               
directly to  the DMV.  The CS leaves  the implementation  of that                                                               
program to the executive branch.  "We believe the department will                                                               
work with  all the parties involved  and the industry to  come up                                                               
with  a method  that works  for everybody."  Additionally the  CS                                                               
requires  proof of  insurance  at the  time  of registration  and                                                               
renewal.  The  CS  keeps  the provision  on  impoundment  of  the                                                               
vehicle if it's not insured.                                                                                                    
                                                                                                                                
2:12:36 PM                                                                                                                    
MS. BIASTOCK went through the  bill section by section. The first                                                               
section requires the motor vehicle  liability insurers to provide                                                               
information  to the  commissioner of  the DMV.  Section 2  allows                                                               
municipalities to impound vehicles  for failure to have mandatory                                                               
insurance. Section  3 requires proof of  mandatory insurance when                                                               
a  person  applies  for vehicle  registration  [a  new  section].                                                               
Section 4  requires proof  of insurance  when renewing  a vehicle                                                               
registration every two years.                                                                                                   
                                                                                                                                
She said the  difference between this CS and the  last version is                                                               
that in  the prior bill, the  DMV would get information  from the                                                               
created  database. It  would compare  that  list to  the list  of                                                               
insured vehicles  to discover who wasn't  insured. The department                                                               
would  then send  out  letters to  the  uninsured vehicle  owners                                                               
requiring them to comply with  the insurance laws within 30 days.                                                               
However,  the DMV  pointed out  that  would be  a very  difficult                                                               
task. So that  portion has been removed. Now  the verification of                                                               
insurance   is  going   to  happen   at  points   of  contact   -                                                               
registration, renewal  of registration and  if you were  going to                                                               
be  pulled over  and  have  your plates  run  for  one reason  or                                                               
another.                                                                                                                        
                                                                                                                                
SENATOR BUNDE noted that renewal can be done by mail.                                                                           
                                                                                                                                
MS.  BIASTOCK agreed  and  added that  it can  be  done over  the                                                               
Internet or at  an organization like Jiffy Lube,  as well. That's                                                               
where the electronic verification comes in to play.                                                                             
                                                                                                                                
SENATOR  BUNDE  asked  if  the  DMV  would  need  access  to  the                                                               
insurance  companies'  database  to  verify  that  a  person  has                                                               
vehicle insurance.                                                                                                              
                                                                                                                                
MS. BIASTOCK replied that was the major change.                                                                                 
                                                                                                                                
2:15:57 PM                                                                                                                    
CHAIR ELLIS began taking public testimony.                                                                                      
                                                                                                                                
DUANE  BANNOCK,  Director,  Division  of  Motor  Vehicles  (DMV),                                                               
Department  of  Administration  (DOA),  informed  them  that  the                                                               
department  had  reviewed  the  CS.  He  explained  the  way  the                                                               
division verifies  insurance today is by  someone certifying that                                                               
he has insurance  when he signs the  application for registration                                                               
or  its renewal.  Often the  division is  lead to  believe people                                                               
have insurance when in fact  they don't. This proposal will allow                                                               
them to  have electronic access  to every insurance  company that                                                               
is authorized  to do business  in Alaska for  online verification                                                               
that a  policy is  in place.  He didn't  use the  word "database"                                                               
because  he  is not  considering  warehousing  all the  insurance                                                               
policies,  but rather  just  creating a  conduit  to access  that                                                               
information from the insurance companies.                                                                                       
                                                                                                                                
He said  that two things  will happen as  a result of  this bill.                                                               
One is that staff  will get a better grip of  when a vehicle does                                                               
not  have insurance  and  they will  be  able to  say  no to  the                                                               
registration. Second, they will spend  less time with the current                                                               
labor-intensive  process of  attempting  to  verify an  insurance                                                               
policy.                                                                                                                         
                                                                                                                                
Regarding Senator Bunde's question  about registering by mail, he                                                               
stated when the information is  entered into the computer is when                                                               
the electronic signal  will be sent to the  insurance company for                                                               
verification.  With  a  positive   match,  the  transaction  will                                                               
continue to  be processed and  the registration will  be received                                                               
in  the mail  three to  four days  later. If  they are  unable to                                                               
electronically  verify  an  insurance policy,  then  the  process                                                               
would come to a "screeching halt."                                                                                              
                                                                                                                                
2:20:03 PM                                                                                                                    
SENATOR  BUNDE asked  if  it would  be correct  to  assume if  he                                                               
bought a  used car today,  got insurance and registered  it, that                                                               
he could  cancel the insurance  tomorrow -  the same as  with the                                                               
mail-in renewal.                                                                                                                
                                                                                                                                
MR. BANNOCK replied, "That is  an accurate assessment." It is his                                                               
professional  opinion  that  the   majority  of  those  scofflaws                                                               
probably did  not have  insurance, but  rather told  the division                                                               
they did.                                                                                                                       
                                                                                                                                
2:21:01 PM                                                                                                                    
SENATOR BUNDE commented  that this law would  result in scofflaws                                                               
having insurance for two weeks longer  than they do now. He asked                                                               
if  he bought  a new  car and  the insurance  company provided  a                                                               
binder so  he could drive  off the lot,  would that get  put into                                                               
the  insurance   database  so  the  registration   process  could                                                               
continue.                                                                                                                       
                                                                                                                                
2:21:36 PM                                                                                                                    
MR.  BANNOCK replied  that in  his opinion,  when car  dealership                                                               
processes the transaction,  it's not done for  several days until                                                               
the actual  transaction is  recorded into his  name. But  he also                                                               
thought   the  insurance   company  would   update  its   records                                                               
immediately.                                                                                                                    
                                                                                                                                
He  related that  the Alaska  DMV intends  to model  its business                                                               
practices  after a  couple of  states that  have created  a work-                                                               
around for  that scenario - even  if he hadn't yet  contacted his                                                               
insurance company to add the new  vehicle. If he had a verifiable                                                               
policy  in force,  the DMV  would continue  to honor  it in  that                                                               
instance.                                                                                                                       
                                                                                                                                
2:22:31 PM                                                                                                                    
SENATOR  BUNDE  asked  what  the experience  has  been  in  other                                                               
states.                                                                                                                         
                                                                                                                                
MS.  BIASTOCK   added  that  this  process   is  relatively  new.                                                               
California  started contacting  drivers without  insurance within                                                               
the year. Texas and Florida  have an on-line verification system.                                                               
Other  states have  programs in  place  that take  a sampling  of                                                               
vehicles and  run a check  on those and  notify the driver  if he                                                               
isn't insured.                                                                                                                  
                                                                                                                                
2:23:27 PM                                                                                                                    
SENATOR  STEVENS  commented that  this  sounds  like it  has  the                                                               
potential  to be  more user-friendly  to the  general public  and                                                               
asked if consumers  would need to carry proof  of insurance cards                                                               
in their  automobiles if the  department has immediate  access to                                                               
insurance information.                                                                                                          
                                                                                                                                
MR. BANNOCK  opined that  he didn't think  the coupons  should be                                                               
done  away  with.  They  facilitate  getting  information  at  an                                                               
accident.                                                                                                                       
                                                                                                                                
SENATOR STEVENS didn't agree. He  thought this was an opportunity                                                               
to be  more user-friendly  to the  public and  allow them  to not                                                               
have to carry a coupon.                                                                                                         
                                                                                                                                
KENTON  BRINE,  Northwest  Regional  Manager,  Property  Casualty                                                               
Insurers  Association of  America,  said  his company  represents                                                               
roughly 40 percent of the  auto insurance market place across the                                                               
United  States. He  had a  number of  concerns with  the original                                                               
bill, mostly  with the effectiveness  and cost of  using database                                                               
programs to identify  uninsured motorists and he  still held that                                                               
opinion about the CS.                                                                                                           
                                                                                                                                
He repeated  that these programs  are in place in  various shapes                                                               
in  some  other  states,  but  their  effectiveness  shows  mixed                                                               
results.  A  study  from  the  Motor  Vehicle  Administrators  of                                                               
America  on  statistics  from  1989   to  1999  gathered  by  the                                                               
Insurance  Research Council  showed that  of the  18 states  with                                                               
reporting programs in place for five  years or more, 12 showed an                                                               
increase  in  uninsured  motorists,   while  only  6  experienced                                                               
improvement. He  supposed that some  of that  has to do  with how                                                               
successes or failures are reported,  the accuracy of the reported                                                               
data and difficulty in tracking VIN numbers.                                                                                    
                                                                                                                                
With regards  to the  CS, he  said that  while the  amendment was                                                               
well-intended  that a  program could  be worked  out, he  was not                                                               
aware of a state using a  live link to verify insurance coverage.                                                               
He said  insurers have been  interested in the  reverse situation                                                               
where  they have  on-line access  in real  time to  motor vehicle                                                               
driver abstracts  for rating purposes.  So he thought  that could                                                               
be provided  in reverse, but  he didn't want  to say for  sure it                                                               
could be done.  He was a little troubled with  language that says                                                               
trust us and we'll work the  details out later. He was opposed to                                                               
this bill, but  offered to work with the  department to structure                                                               
language to clarify what kind of program it intends to develop.                                                                 
                                                                                                                                
2:30:34 PM                                                                                                                    
SENATOR BUNDE  asked if he said  other states had not  had enough                                                               
experience  with these  kinds  of programs  to  get an  actuarial                                                               
feeling for how this might impact insurance rates.                                                                              
MR. BRINE  replied that  start up costs  for these  programs have                                                               
run from  $1 million to  $5 million.  The programs from  state to                                                               
state  aren't consistent  with each  other and  neither is  their                                                               
reporting  system  to  their  legislature.  "The  improvement  is                                                               
always temporary at best as people figure out a way around it."                                                                 
                                                                                                                                
SENATOR BUNDE asked if the fiscal  note would be passed on to the                                                               
customers.                                                                                                                      
                                                                                                                                
MR. BRINE answered that he  thought companies would pass the cost                                                               
on to the customer.                                                                                                             
                                                                                                                                
2:34:14 PM                                                                                                                    
CHAIR  ELLIS asked  if others  had  comments or  rebuttal to  his                                                               
testimony.                                                                                                                      
                                                                                                                                
MR. BANNOCK commented that he  was very familiar with Mr. Brine's                                                               
comments, including the department's  ability to get good quality                                                               
real time information back to  insurance companies, an issue that                                                               
is  on  its  short-range  project  list. As  to  the  concept  of                                                               
mandatory  insurance, that  is the  law in  Alaska and  this bill                                                               
doesn't  address  whether that  is  good  or bad  public  policy.                                                               
Finally, he said this law  replaces a paper-driven certify-driven                                                               
process  policy with  an  electronic  process. Clearly,  however,                                                               
some people will continue to manipulate the system.                                                                             
                                                                                                                                
MS. BIASTOCK concluded saying this  bill tried to update with the                                                               
use of technology.                                                                                                              
                                                                                                                                
2:37:54 PM                                                                                                                    
LINDA HALL,  Director, Division of  Insurance, had  Sarah McNair-                                                               
Grove, Division Actuary,  with her. She said she had  not taken a                                                               
position on  this bill  because it did  not affect  her division.                                                               
She worked  with Senator French regarding  not duplicating things                                                               
insurance companies have to do.                                                                                                 
                                                                                                                                
MS. GROVE declined to comment.                                                                                                  
                                                                                                                                
SENATOR BUNDE  noted that she has  always said that Alaska  has a                                                               
small  pool of  insurers and  he  was concerned  that putting  an                                                               
added burden on them might help  them decide to not write here at                                                               
all.                                                                                                                            
                                                                                                                                
MS. HALL  said that is her  concern. One of her  goals has always                                                               
been  to walk  the  fine line  between  insurance protection  for                                                               
consumers and having choices for insurance.                                                                                     
                                                                                                                                
CHAIR ELLIS  recapped that he didn't  want to adopt the  CS right                                                               
now. He  might want another  one drafted that would  include more                                                               
changes.                                                                                                                        
                                                                                                                                
2:42:39 PM                                                                                                                    
SENATOR  BUNDE  asked  if  the committee  could  get  input  from                                                               
automobile  dealerships as  to how  they would  fit in  with this                                                               
mix.                                                                                                                            
                                                                                                                                
CHAIR ELLIS agreed and announced that  SB 68 would be held. There                                                               
being  no  further business  to  come  before the  committee,  he                                                               
adjourned the meeting at 2:43:45 PM.                                                                                          
                                                                                                                                
                                                                                                                                

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