Legislature(1999 - 2000)

04/21/1999 01:10 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 158 - NOTICE OF INS. CANCELLATION TO ELDERLY                                                                                 
CHAIRMAN KOTT announced that the next order of business is HB 158,                                                              
"An Act relating to the annual report of the director of the                                                                    
division of insurance and to notice of cancellation of personal                                                                 
CHAIRMAN KOTT indicated that the committee will take up CSHB
158(L&C), Version 1-LS0128\I.                                                                                                   
Number 0889                                                                                                                     
REPRESENTATIVE ROKEBERG, Sponsor of HB 158, explained that the bill                                                             
would permit the Division of Insurance [Department of Commerce and                                                              
Economic Development] to gather in-depth statistical information                                                                
regarding health insurance policies.  The bill would also provide                                                               
a mechanism by which to inform Alaskan seniors of a missed                                                                      
insurance payment.  Representative Rokeberg informed the committee                                                              
that one of his constituents, an over 80-year-old man, was in a                                                                 
substantial automobile accident and did not realize that he had not                                                             
paid his premium.                                                                                                               
REPRESENTATIVE ROKEBERG noted that the House Labor and Commerce                                                                 
Standing committee worked with the insurance industry in order to                                                               
develop a compromise bill.    The original bill required certified                                                              
mailings.  This bill covers personal insurance which includes                                                                   
property, casualty, automobile, and liability type insurance.                                                                   
Under HB 158, notification is provided to all insurers in Alaska                                                                
that a person 70 years old or older has the right to designate a                                                                
third party to receive notice of payment of premium and/or                                                                      
cancellation on three occasions per current statute.  The industry                                                              
is willing to send multiple notices for the three different                                                                     
statutory notification requirements.  This is believed to be of                                                                 
lesser cost to the insurance industry and would not create a                                                                    
mandate as would requiring certified return receipt mailings.  This                                                             
bill is supported by a number of senior groups around the state.                                                                
CHAIRMAN KOTT noted that the committee substitute  elevates the age                                                             
from 67 to 70.  He asked Representative Rokeberg why that was                                                                   
REPRESENTATIVE ROKEBERG informed the committee that testimony in                                                                
the House Labor and Commerce Standing Committee from the Division                                                               
of Motor Vehicles [Department of Administration] and senior groups                                                              
revealed that the condition of dementia increases with age and                                                                  
becomes particularly acute around the age of 70.  Therefore, rather                                                             
than using the new social security age of 67, the age was raised to                                                             
70 which would include some 16,000 people.                                                                                      
CHAIRMAN KOTT asked whether all of the personal insurance policies                                                              
addressed in the bill require a person to provide his age.                                                                      
REPRESENTATIVE ROKEBERG stated the industry believes that                                                                       
information would be available due to underwriting purposes.                                                                    
CHAIRMAN KOTT asked whether that applies to homeowner's insurance.                                                              
REPRESENTATIVE ROKEBERG noted that was discussed.  The testimony                                                                
indicated that the age information would be available and it would                                                              
not be a burden on the insurance industry.  If the insurance                                                                    
industry does not have this information, it will have to gather it.                                                             
CHAIRMAN KOTT inquired as to why the certification and registered                                                               
mail requirement was omitted.                                                                                                   
REPRESENTATIVE ROKEBERG explained that, currently, the insurance                                                                
industry mails by certification with a computer printout and                                                                    
delivers the mail to the U.S. Post Office.  That list is filed as                                                               
their proof of mailing for cancellation.  The insurance industry                                                                
felt that if an individual certified mail, return receipt requested                                                             
there would be fairly substantial fiscal note implications which                                                                
would be passed on to the consumers.  Representative Rokeberg did                                                               
not want to, in the process of protecting people, end up raising                                                                
their premiums.                                                                                                                 
Number 1255                                                                                                                     
REPRESENTATIVE GREEN asked whether there would be any litigation                                                                
caused later if a notice was sent to the designated recipient.                                                                  
REPRESENTATIVE ROKEBERG clarified that the notice would be sent to                                                              
both parties.  The insurance industry is mandated to inform an                                                                  
individual of the availability of this option in the regular                                                                    
REPRESENTATIVE GREEN asked, if the insurance company fails to                                                                   
notify the bill payer, would that alleviate the fact that the                                                                   
elderly are not covered because the payments were not made.                                                                     
REPRESENTATIVE ROKEBERG stated that the level of notification has                                                               
been increased.  The desire is to avoid a situation in which the                                                                
individual does not have coverage as was the case for                                                                           
Representative Rokeberg's constituent.  He acknowledged that some                                                               
coverages have grace periods.                                                                                                   
REPRESENTATIVE MURKOWSKI noted that there were discussions                                                                      
regarding grace periods in the House Labor and Commerce Standing                                                                
Committee.  She feels that if this is going to be done for personal                                                             
insurance, it should also be done for life and health insurance as                                                              
well.  She informed the committee that typically, life insurance                                                                
has an allowance for a grace period for reinstatement, which is not                                                             
the case for personal insurance policies.                                                                                       
CHAIRMAN KOTT pointed out that the committee packet includes a                                                                  
letter from the Alliance of American Insurers which indicates that                                                              
homeowner's policies do not make any reference to the age of the                                                                
insured.  He said, "Is that just a 'red herring' that they are                                                                  
throwing up or would they change there way of doing business and                                                                
require age to be recognized?"                                                                                                  
REPRESENTATIVE ROKEBERG deferred the question to Mr. George                                                                     
[lobbyist for the National Association of Independent Insurers].                                                                
REPRESENTATIVE KERTTULA indicated that there may be a language                                                                  
error in Section 2(1) of the committee substitute.                                                                              
REPRESENTATIVE ROKEBERG stated that the language was taken from                                                                 
existing law.                                                                                                                   
Number 1498                                                                                                                     
JOHN GEORGE, Lobbyist for the National Association of Independent                                                               
Insurers, informed the committee that it does not really matter                                                                 
whether the insurance company has the age of the individual in the                                                              
file.  This requires that everyone be offered a notice saying that                                                              
if a person is 70 years of age or older, that person may request to                                                             
be placed in the multiple notification program.  At some point,                                                                 
there would have to be a determination that the individual                                                                      
requesting this multiple notification is actually age 70 or older.                                                              
That information could be ascertained upon request of the program.                                                              
Mr. George noted that this would apply primarily to homeowner's                                                                 
insurance, fire insurance, and auto insurance.                                                                                  
REPRESENTATIVE MURKOWSKI asked whether it would be possible to                                                                  
request dual statements for individuals under the age of 70.                                                                    
MR. GEORGE noted that there are notices to lenders, however there                                                               
is no statutory requirement for an insurance company to offer that.                                                             
Mr. George assumed that some insurance companies would offer that                                                               
service if requested.  This legislation would require that the                                                                  
insurance company provide that notification if the individual is                                                                
over the age of 70.  Mr. George emphasized that insurance companies                                                             
are not in the business of canceling insurance, but rather                                                                      
insurance companies are in the business of writing insurance.                                                                   
Insurance companies would like to keep a policy in effect once it                                                               
is in effect.                                                                                                                   
CHAIRMAN KOTT closed the meeting to public testimony.                                                                           
Number 1643                                                                                                                     
CHAIRMAN KOTT moved to report HB 158 [CSHB 158(L&C), Version                                                                    
1-LS0128\I] out of committee with individual recommendations and                                                                
accompanying zero fiscal notes.  There being no objection, HB 158                                                               
was so moved from the House Judiciary Standing Committee.                                                                       

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