03/04/2014 01:30 PM Senate LABOR & COMMERCE

           SB 167-MULTIPLE VEHICLE INSURANCE POLICIES                                                                       
                                                                                                                                
2:29:43 PM                                                                                                                    
CHAIR  DUNLEAVY   reconvened  the   meeting  and   announced  the                                                               
consideration of SB  167. "An Act relating to  the maximum amount                                                               
of  uninsured and  underinsured coverage  payable under  multiple                                                               
motor vehicle  insurance policies issued  by the same  insurer in                                                               
the same household."                                                                                                            
                                                                                                                                
ASHTON  COMPTON, Staff,  Senator Charlie  Huggins, introduced  SB
   reading   the   following  sponsor   statement:   [Original                                                               
punctuation provided.]                                                                                                          
                                                                                                                                
     SB  167  corrects  an  unintended  loophole  in  Alaska                                                                    
     statutes    that   is    harmful   to    consumers   of                                                                    
     Uninsured/Underinsured Motorist ("U/UIM") insurance.                                                                       
                                                                                                                                
     Alaska, like  most states,  restricts the  combining or                                                                    
     "stacking"   of  multiple   U/UIM  coverages.   When  a                                                                    
     consumer insures  more than one  vehicle with  the same                                                                    
     insurer,  the  U/UIM  coverages  are  not  combined  or                                                                    
     "stacked."  Instead   the  coverage  available   in  an                                                                    
     accident  is the  highest coverage  on any  one of  the                                                                    
     vehicles.  That  limitation  makes  the  coverage  more                                                                    
     affordable,  allows more  consumer choice  and enhances                                                                    
     predictability.                                                                                                            
                                                                                                                                
     Our  Legislature  repeatedly  made it  clear  that  the                                                                    
     limitation  on stacking  applies regardless  of whether                                                                    
     the vehicles  are insured under one  policy, or through                                                                    
     separate policies from  the same insurer. Unfortunately                                                                    
     language adopted  in 1990 as  later applied  created an                                                                    
     unintended   loophole   that  does   not   consistently                                                                    
     accomplish the  stated purpose. Under the  language, if                                                                    
     the  consumer  insures   the  vehicles  under  separate                                                                    
     policies from  the same insurer, stacking  is precluded                                                                    
     only for the "named  insured" - ironically allowing all                                                                    
     the  other  coverages  to  be  stacked  for  all  other                                                                    
     persons.   There  is   no  logical   reason  for   this                                                                    
     discrepancy. It  needlessly forces the consumer  to pay                                                                    
     for "stackable" coverage that is not desired.                                                                              
                                                                                                                                
     With a simple  change in the statutory  language SB 167                                                                    
     corrects  this   inconsistency  and   accomplishes  the                                                                    
     following:                                                                                                                 
                                                                                                                                
     •  Consumers will  not be  forced to  pay for  coverage                                                                    
     they  do not  want or  need. Insurance  rates for  many                                                                    
     consumers will be positively influenced.                                                                                   
     • Consumer  choice and predictability will  be improved                                                                    
     because  consumers can  choose a  predictable level  of                                                                    
     coverage they deem appropriate.                                                                                            
     •  Consumers who  choose to  insure  their vehicles  in                                                                    
     separate policies  will have  the same options  as, and                                                                    
     be  treated the  same  as, consumers  who insure  their                                                                    
     vehicles under  a single policy,  which was  the stated                                                                    
     legislative intent in 1984 and 1990.                                                                                       
                                                                                                                                
2:32:07 PM                                                                                                                    
SHELDON WINTERS, Lobbyist, State  Farm Insurance, Juneau, Alaska,                                                               
stated that SB  167 is about enforcing  and consistently applying                                                               
the public policy  prohibiting stacking that was  adopted in 1984                                                               
and amended in 1990. He  explained that an unintended loophole in                                                               
the  1990 legislation  was that  it  provided protection  against                                                               
stacking for  multicar policies but  only partial  protection for                                                               
single car policies.  SB 167 corrects the  discrepancy that makes                                                               
consumers pay  more and  the Division  of Insurance  approved the                                                               
language.                                                                                                                       
                                                                                                                                
2:40:34 PM                                                                                                                    
KENTON BRINE,  Property Casualty Insurance  Association, Olympia,                                                               
Washington, voiced support  for the SB 167 and  offered to answer                                                               
questions.                                                                                                                      
                                                                                                                                
2:41:13 PM                                                                                                                    
CYNTHIA  LAMAR,  Horace  Mann Insurance,  Springfield,  Illinois,                                                               
voiced support for SB 167 and offered to answer questions.                                                                      
                                                                                                                                
SENATOR MICCICHE  thanked Ms.  Lamar for  her letter  and helping                                                               
the committee understand the bill.                                                                                              
                                                                                                                                
SENATOR OLSON asked if there was  a problem in Alaska that caused                                                               
this to come to the forefront.                                                                                                  
                                                                                                                                
MS. COMPTON replied both consumers and insurers were concerned.                                                                 
                                                                                                                                
2:42:55 PM                                                                                                                    
CHAIR DUNLEAVY  announced he would  hold SB 167 in  committee for                                                               
further consideration. Public testimony was open.