Legislature(1997 - 1998)

04/01/1998 03:22 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
CSSB 158(L&C) - INSURANCE CHANGES FOR DR. LIC REVOC.                           
                                                                               
Number 1855                                                                    
                                                                               
CHAIRMAN ROKEBERG announced the committee's next order of business             
was CSSB 158(L&C), "An Act relating to motor vehicle liability                 
insurance covering a person who has had the person's driver's                  
license revoked for possession or consumption of alcohol while                 
under 21 years of age."                                                        
                                                                               
RALPH BENNETT, Legislative Administrative Assistant to Senator                 
Robin Taylor, came forward to present SB 158.  Mr. Bennett read the            
sponsor statement:                                                             
                                                                               
     The "use it or lose it" provisions of current statute                     
     have had an unintended consequence.  Minors who lose                      
     their drivers licenses for minor consuming offenses often                 
     find themselves and their families with increased                         
     insurance premiums and occasionally a (policy)                            
     cancellation.                                                             
                                                                               
     Senate Bill 158 would correct this situation by                           
     prohibiting an insurer from raising rates and/or                          
     cancelling existing policies solely for suspension of a                   
     minor's drivers license as a result of minor consuming                    
     where not involving driving.                                              
                                                                               
     This narrowly focused version of SB 158 does not address                  
     other offenses such as DWI, using false ID, or possession                 
     of controlled substances.                                                 
                                                                               
MR. BENNETT read the January 1, 1998, sectional analysis prepared              
by Joe Ambrose, Legislative Assistant to Senator Taylor.  This                 
sectional analysis read:                                                       
                                                                               
     Section 1 adds language to the existing statute stating                   
     that AS 21.36.210(a)(2) does not apply to an                              
     administrative revocation as described in AS 21.89.027,                   
     the new section which begins on page 2 of the bill.                       
                                                                               
     AS 21.36.210(a) specifies why an insurer may cancel a                     
     policy: nonpayment of premium or suspension or revocation                 
     of a drivers license.                                                     
                                                                               
     Section 2 is the operative section of the bill and adds                   
     a new provision to state law.  (a) says an insurer may                    
     not refuse to issue or renew motor vehicle liability                      
     insurance, cancel an existing policy, deny a covered                      
     claim, or increase the premium only because of an                         
     administrative or court ordered suspension for minor                      
     consuming.  (b) says that (a) does not prevent an insurer                 
     from underwriting or rating a loss in the same manner as                  
     it would have had the suspension not occurred.                            
                                                                               
     Section 3 says the bill would apply to policies issued or                 
     renewed on or after the effective date.  This would mean                  
     that policies currently being charged a higher rate would                 
     have to be adjusted at the next renewal.                                  
                                                                               
MR. BENNETT stated the bill corrected unintended consequences of               
the "use or lose it" provision in current law.  It prohibited an               
increase or cancellation of insurance solely because of license                
suspension for minor consuming and did not include offenses                    
involving operation of a motor vehicle or other offenses such as               
driving while intoxicated (DWI), use of false identification (ID),             
or possession of controlled substances.  The legislation only                  
covered revocation or suspension by either administrative or court             
action for minor consuming.  Mr. Bennett stated, "Rate increases               
often affect parents' insurance, choice of dropping a kid from the             
policy, permanent revocation, or paying a higher premium."  He                 
indicated representatives from the Division of Motor Vehicles,                 
Department of Administration, and the Division of Insurance,                   
Department of Commerce and Economic Development, were present to               
answer questions.                                                              
                                                                               
Number 1995                                                                    
                                                                               
CHAIRMAN ROKEBERG said he had been given a possible committee                  
substitute and asked Mr. Bennett to explain.  Chairman Rokeberg                
indicated CSSB 158(L&C), Version L, labeled 0-LS0839\L, engrossed,             
was before the committee [the possible committee substitute was                
work draft Version P, labeled 0-LS0839\P, Ford, dated 4/1/98].                 
                                                                               
Number 2010                                                                    
                                                                               
MR. BENNETT stated the new possible committee substitute was based             
on negotiations with the insurance industry [copies of Version P               
were distributed to the committee].  He said it was Senator                    
Taylor's belief they could come to an accommodation in the next day            
or two.  Mr. Bennet stated, "The industry is concerned about the               
situation that would arise where a person's license has been                   
revoked, either administratively or through a court proceeding, but            
they're driving anyway illegally."  Mr. Bennett indicated the                  
industry had legitimate concerns and he thought a "simple wording              
fix" would address that, but Senator Taylor did not wish to make               
this change until he had a chance to discuss it with the industry              
and the departments together.  Mr. Bennett said they would like to             
have the bill held over.                                                       
                                                                               
Number 2050                                                                    
                                                                               
CHAIRMAN ROKEBERG indicated he had brought up Version P so the                 
committee would be aware during the testimony.                                 
                                                                               
Number 2060                                                                    
                                                                               
MR. BENNETT said the possible committee substitute had been                    
developed that morning and was not necessarily finalized; he                   
indicated it might be changed with further negotiations the                    
following day.                                                                 
                                                                               
Number 2084                                                                    
                                                                               
REPRESENTATIVE RYAN asked if SB 158 had another House committee                
referral.                                                                      
                                                                               
Number 2088                                                                    
                                                                               
MR. BENNETT replied the House Judiciary Standing Committee.                    
                                                                               
Number 2096                                                                    
                                                                               
JOHN GEORGE, Lobbyist for National Association of Independent                  
Insurers (NAII), came forward to testify.  He stated he represented            
Allstate Insurance Company, GEICO, USAA (United Service Automobile             
Association) and other companies.  He reiterated the prior                     
testimony, commenting, "We're working, we're doing some fine                   
tuning, we're pretty close.  I think we all agree conceptually on              
what needs to be done, we're just not quite there yet.  So if it'd             
be your intent to hold it, I think we'll testify when we get                   
something that we actually ... can all agree on."                              
                                                                               
Number 2015                                                                    
                                                                               
CHAIRMAN ROKEBERG noted the committee might not take a lot of                  
testimony if the bill was brought up again.                                    
                                                                               
Number 2124                                                                    
                                                                               
MR. GEORGE said NAII was concerned about people who actually drove             
while they did not have licenses.  He said the statutory cites in              
the bill included some things he believed were violations while                
driving and he noted he thought the sponsor's intent was to only               
cover "while not driving."  Mr. George indicated a minor language              
change might be necessary and he thought his organization would be             
in support of the bill when the agreed-upon proposed committee                 
substitute was brought forward.                                                
                                                                               
Number 2148                                                                    
                                                                               
CHAIRMAN ROKEBERG referred to Section 2, subsection (b) of CSSB
158(L&C) [Version L].  He stated, "Notwithstanding the fact, you               
can't cancel the insurance or deny coverage or anything else.  You             
could still rate the insurance and increase the premium, is that               
correct?"                                                                      
Section 2 of CSSB 158(L&C) read:                                               
                                                                               
     *Sec. 2.  AS 21.89 is amended by adding a new section to                  
     read:                                                                     
          Sec. 21.89.027.  Motor vehicle insurance following                   
     driver's license revocation.  (a) Notwithstanding AS                      
     21.36.210, an insurer offering insurance in this state                    
     may not (1) refuse to issue or renew motor vehicle                        
     liability insurance coverage; (2) cancel an existing                      
     policy of motor vehicle liability insurance; (3) deny a                   
     covered claim; or (4) increase the premium on a motor                     
     vehicle liability insurance policy if the refusal,                        
     cancellation, denial, or increase results only from the                   
     fact that the person's driver's license was revoked under                 
     AS 28.15.183 or 28.15.185 for possession or consumption                   
     of alcohol in violation of AS 04.16.050 or a municipal                    
     ordinance with substantially similar elements.                            
          (b) The provisions of (a) of this section may not                    
     prevent an insurer from underwriting or rating for a loss                 
     experience in the same manner as it would for a person                    
     who has not had the person's driver's license revoked                     
     under AS 28.15.183 or 28.15.185.                                          
                                                                               
Number 2162                                                                    
                                                                               
MR. GEORGE indicated he did not have a copy of Version L in front              
of him, but said, "It's my understanding ... that you could not                
increase the premium on the policy, cancel it, fail to renew, or               
deny a covered claim if the revocation was for -- the intent was               
non-driving related incident.  If you're at a party, the kid gets              
caught with a beer in his hand, his license is revoked, and they               
chose that because that's something [that's] really important to a             
kid, but it's not a driving incident, and ... we're willing to buy             
off on the fact that it's not driving so you don't rate their                  
insurance for that.  Except if he's driving after that, then we                
think ... we ought to be able to rate for that, and the way it was             
originally drafted, we think we might be precluded from canceling              
the policy if they've got this unlicensed kid driving the car while            
he's got an administrative revocation."  He commented that was                 
NAII's intent.  He noted they were finding these very small flaws              
that they were working on and he thought they would come up with a             
solution.                                                                      
                                                                               
Number 2204                                                                    
                                                                               
REPRESENTATIVE COWDERY gave the situation of four or five vehicles             
owned in a family and one member receiving a speeding citation.  He            
asked if the whole policy would be penalized for that.                         
                                                                               
Number 2225                                                                    
                                                                               
MR. GEORGE said he was not an insurance agent; he had a lot of                 
experience with regulating insurance.  He stated it was his                    
understanding they would be rated on one vehicle but could not                 
swear to that.                                                                 
                                                                               
Number 2235                                                                    
                                                                               
REPRESENTATIVE COWDERY said he did not believe that was the case.              
                                                                               
MR. GEORGE said he was willing to accept he was wrong.                         
                                                                               
Number 2244                                                                    
                                                                               
REPRESENTATIVE COWDERY indicated someone might own several vehicles            
for different uses, noting he and his wife had four vehicles, and              
if his wife received a ticket driving her car, the premiums on all             
four vehicles would increase.  He stated he did not think that was             
fair or equitable, noting he didn't know if they could work                    
something out with this bill.                                                  
                                                                               
Number 2266                                                                    
                                                                               
MR. GEORGE stated there was legislation passed into law the                    
previous year which required an insurance company to exclude a                 
named driver upon request by the insured.  He indicated this could             
be used to avoid paying the premium for a "wayward" child still                
living at home by excluding the child from the policy by name.  He             
indicated the child would not be covered if he or she drove the                
vehicle, and he thought Representative Cowdery could exclude his               
wife this way from three of the vehicles, noting Representative                
Cowdery would probably not want to do that.                                    
                                                                               
Number 2295                                                                    
                                                                               
CHAIRMAN ROKEBERG confirmed both the vehicle and the person were               
insured.  He confirmed a vehicle, a person, and the two together               
could be rated.                                                                
                                                                               
MR. GEORGE replied the coverage applied a number of different ways.            
If a person owned a vehicle, there was coverage for an accident                
with that vehicle no matter who was driving it if that person had              
the owner's permission.  If the owner of an insured vehicle was                
driving a car owned by someone without insurance, the owner of the             
insured vehicle would be covered while driving that non-insured                
vehicle.  He stated, "It covers you as a named person no matter                
whose car you're driving, and it covers your car no matter who is              
driving it."  He indicated there were other policies which worked              
differently, but this was the norm.  He stated, "You can buy a                 
policy that only covers you while driving the specified vehicle                
...."                                                                          
                                                                               
Number 2333                                                                    
                                                                               
REPRESENTATIVE RYAN asked if someone could exclude his wife even if            
she had not had a ticket.                                                      
                                                                               
MR. GEORGE said he believed so, but only theoretically.                        
                                                                               
Number 2345                                                                    
                                                                               
MICHAEL LESSMEIER, Lobbyist for State Farm Insurance Company, came             
forward to testify.  He said their primary concern was that the                
legislation, as written, included driving situations and Senator               
Taylor's focus had to do with non-driving situations.  Mr.                     
Lessmeier said the bill specifically referred to AS 28.15.183 and              
AS 28.15.185, noting AS 28.15.183 included someone who operated a              
vehicle after consuming alcohol in violation of AS 28.35.280.  He              
added that AS 28.15.185 would include someone who refused to take              
a breathalyser test after he or she was suspected of driving while             
under the influence.  Mr. Lessmeier said one of the difficulties,              
which he thought Senator Rick Halford had brought up on the floor,             
was insurance was not that complicated.  Mr. Lessmeier indicated               
insurers rated for risk and State Farm Insurance Company wanted to             
be able to do so.  He indicated they had been discussing language              
to narrow the bill so that what the insurers would be prevented                
from doing was rating for the person who had consumed alcohol in a             
non-driving offense.  Mr. Lessmeier indicated this was for a minor             
consuming in a non-driving situation, so the family would not be               
penalized and the minor would not be penalized later.  He mentioned            
they did have a concern that sometimes non-driving related behavior            
carried over into driving behavior.                                            
                                                                               
Number 2429                                                                    
                                                                               
CHAIRMAN ROKEBERG asked if this was embodied in Version P, or if               
they were "still tuning on it."                                                
                                                                               
MR. LESSMEIER replied they were still tuning, noting he had seen               
Version P only shortly before the hearing.  He stated, "Basically              
it would involve inserting language saying, quote, "in a non-                  
driving related incident" in 'paragraph' 1 and I think that would              
take care of it.  We would insert that language after line 10,                 
"consumption of alcohol" and then we would insert the words, "in a             
non-driving related incident" ...."  Mr. Lessmeier confirmed he was            
referring to Version P, the work draft, stating, "It would be page             
2, line 10 ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE]                         
                                                                               
Page 2, line 10, in subsection (a), Version P, read:  "consumption             
of alcohol in violation of AS 04.16.050 or a municipal ordinance               
with".  With Mr. Lessmeier's suggested change the language would               
read:  "consumption of alcohol in a non-driving related incident in            
violation of AS 04.16.050 or a municipal ordinance with".                      
                                                                               
Section 2 in work draft Version P read:                                        
                                                                               
     *Sec. 2.  AS 21.89 is amended by adding a new section to                  
     read:                                                                     
          Sec. 21.89.027.  Motor vehicle insurance following                   
     driver's license revocation.  (a) Notwithstanding AS                      
     21.36.210, an insurer offering insurance in this state                    
     may not (1) refuse to issue or renew motor vehicle                        
     liability insurance coverage; (2) cancel an existing                      
     policy of motor vehicle liability insurance; (3) deny a                   
     covered claim; or (4) increase the premium on a motor                     
     vehicle liability insurance policy if the refusal,                        
     cancellation, denial, or increase results only from the                   
     fact that the person's driver's license was revoked under                 
     AS 28.15.183 or 28.15.185 for possession or consumption                   
     of alcohol in violation of AS 04.16.050 or a municipal                    
     ordinance with substantially similar elements.                            
          (b) The provisions of (a) of this section                            
               (1) may not prevent an insurer from                             
     underwriting or rating for a loss experience in the same                  
     manner as it would for a person who has not had the                       
     person's driver's licensed revoked under AS 28.15.183 or                  
     28.15.185; and                                                            
               (2) do not apply to a liability insurance                       
     policy covering a motor vehicle if the motor vehicle is                   
     operated by a person during a period of driver's license                  
     revocation imposed on the person under AS 28.15.183 or                    
     28.15.185 for possession or consumption of alcohol in                     
     violation of AS 04.16.050 or a municipal ordinance with                   
     substantially similar elements.                                           
                                                                               
[Note: subsection (a) of Section 2 was identical in both Version L             
and Version P, with identical line numbering.]                                 
                                                                               
TAPE 98-42, SIDE B                                                             
Number 0001                                                                    
                                                                               
MR. LESSMEIER continued, "... Juanita Hensley has some concerns                
with 'paragraph' 2, but that would address most of our concerns."              
                                                                               
Number 0040                                                                    
                                                                               
JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles            
(DMV), Department of Administration, came forward to testify.  She             
questioned whether they were discussing Version P or Version L.                
                                                                               
Number 0058                                                                    
                                                                               
CHAIRMAN ROKEBERG stated Version L, CSSB 158(L&C), was before the              
committee.  He indicated discussion of Version P would be allowed.             
                                                                               
MS. HENSLEY noted she had worked with the legislative bodies when              
the "use it, lose it" law was passed in 1994 and amendments were               
made in 1996.  She stated the testimony through the process and the            
legislative intent at that time had been to make a license                     
revocation for "use it, lose it" a remedial action, not to                     
penalize.  She stated, "It was discussed that we would not require             
SR-22, high risk insurance, or place these individuals in a high               
risk bracket and we put it even into Title AS 28.15 at the time of             
a license reinstatement we would not require the SR-22 because ...             
a lot of these were non-driving violations and why (indisc.) SR-22             
certificate of insurance high risk if they were non-driving                    
violations?  The problem was is that it did not get transferred                
into Title 21 dealing with the Division of Insurance requirements,             
and that's basically what this bill does.  [It] comes back and                 
restates what was stated ... under the 'use it, lose it' law in                
1994 and 1996, to place it in the Division of Insurance statutes.              
It's already in Title 28, the motor vehicle laws, that we would not            
require it.  We've had several parents over the last few years call            
and complain about the high risk insurance that their insurance                
companies are charging them because their minor was picked up, as              
Mr. Lessmeier said, out behind the ... barn ... and they weren't               
driving."                                                                      
                                                                               
Number 0235                                                                    
                                                                               
MS. HENSLEY continued, "They could be at a party in possession of              
alcohol or something and have their license revoked if they were               
cited for minor consuming or minor in possession of alcohol."  She             
said it had become somewhat punitive in nature as opposed to being             
remedial.  She noted it was punitive to the parents, not                       
necessarily to the minor.  Ms. Hensley mentioned an individual in              
Petersburg, whose name she could research in her records, who                  
experienced an increase in insurance premiums from $900 every six              
months to $3,600 every six months when the person's 16 1/2 year old            
teenager was charged with minor consuming in a non-driving                     
situation.  She commented that was an example of some of the                   
complaints she had been receiving and indicated she had also heard             
from legislators calling on behalf of constituents with complaints             
of that nature.  Ms. Hensley said this bill had been introduced to             
try to remedy that situation.  She stated a parent had to give                 
consent for a driver's license for someone under 18 and when                   
parents signed that consent the parents were also signing consent              
to be financially responsible, to have insurance or have a means of            
paying for damages that child incurred.                                        
                                                                               
Number 0386                                                                    
                                                                               
CHAIRMAN ROKEBERG asked Ms. Hensley for the Title 28 provisions she            
had referred to which had not been put in Title 21 regarding SR-22,            
et cetera.  He commented he would ask Ms. Burke about Title 21.                
                                                                               
Number 0457                                                                    
                                                                               
MS. HENSLEY stated it was under AS 28.15.183(e), which read, "(e)              
Notwithstanding the provisions of AS 28.20.240 and 28.20.250, the              
department may not require proof of financial responsibility before            
restoring a driver's license, permit, or privilege that is revoked             
under this section.".  She said AS 28.15.185(d) contained the same             
language; it read, "(d) Notwithstanding the provisions of AS                   
28.20.240 and 28.20.250, upon conviction of an offense specified in            
(a) of this section, the department may not require proof of                   
financial responsibility before restoring or issuing the person's              
driver's license.".  Ms. Hensley said that change had been made in             
1995.                                                                          
                                                                               
Number 0522                                                                    
                                                                               
CHAIRMAN ROKEBERG asked whether that was merely the proof of having            
insurance or if it was more than that.                                         
                                                                               
Number 0527                                                                    
                                                                               
MS. HENSLEY replied, "It's proof of financial responsibility for               
the future which is ... certificate of SR-22."                                 
                                                                               
CHAIRMAN ROKEBERG asked what made an SR-22, questioning if that was            
in the statute as citing.                                                      
                                                                               
MS. HENSLEY responded that AS 28.20.240 or AS 28.20.250 was                    
certificate of insurance and she indicated it required the                     
insurance industry to notify the DMV within ten days of                        
cancellation, and the DMV had to take action on the driver's                   
license if the person canceled that insurance policy during the                
three-year period the person was required to carry SR-22.                      
AS 28.20.240 and AS 28.20. 250 read:                                           
                                                                               
     Sec. 28.20.240. Proof required when driving privilege is                  
     restricted. Whenever under a law of this state the                        
     license of a person is suspended, revoked, limited under                  
     AS 28.15.201, or canceled for any reason, the department                  
     may not issue to that person a new or renewal of license                  
     until permitted to do so under the motor vehicle laws of                  
     this state.  A period of suspension, revocation, or                       
     cancellation continues until proof of financial                           
     responsibility for the future is provided.  Upon                          
     expiration of a period of limitation, the license remains                 
     revoked until proof of financial responsibility for the                   
     future is provided.                                                       
                                                                               
     Sec. 28.20.250. Action in respect to unlicensed person.                   
     (a) If a person does not have a license, but by final                     
     order or judgement is convicted of, or forfeits bail or                   
     collateral deposited to secure an appearance for trial                    
     for an offense requiring the suspension or revocation of                  
     license, or for driving a motor vehicle upon the highways                 
     without being licensed to do so, or for driving an                        
     unregistered vehicle upon the highways, a license may not                 
     be issued to the person unless the person gives and                       
     thereafter maintains proof of financial responsibility                    
     for the future.                                                           
          (b) Whenever the department suspends or revokes a                    
     nonresident's operating privilege for conviction or                       
     forfeiture of bail, the privilege remains suspended or                    
     revoked unless the person has previously given or                         
     immediately give proof of financial responsibility for                    
     the future.                                                               
                                                                               
CHAIRMAN ROKEBERG stated, "So the certificate of insurance under               
those particular statutory provisions is the SR-22?"  He confirmed             
AS 28.20.240 and AS 28.20.250 were the SR-22.                                  
                                                                               
MS. HENSLEY said that was correct.                                             
                                                                               
Number 0597                                                                    
                                                                               
REPRESENTATIVE HUDSON confirmed Ms. Hensley had a copy of Version              
P and asked if Mr. Lessmeier's conceptual amendment on page 2, line            
10, created problems for her.                                                  
                                                                               
MS. HENSLEY replied she would have no problem with that for non-               
driving violations.  She said her objection to Version P was                   
subsection (2), under subsection (b), on page 2, lines 16 through              
20.  Version P, lines 16 through 20, read:                                     
                                                                               
               (2) do not apply to a liability insurance                       
     policy covering a motor vehicle if the motor vehicle is                   
     operated by a person during a period of driver's license                  
     revocation imposed on the person under AS 28.15.183 or                    
     28.15.185 for possession or consumption of alcohol in                     
     violation of AS 04.16.050 or a municipal ordinance with                   
     substantially similar elements.                                           
                                                                               
MS. HENSLEY said if the insurance company denied a claim because               
the minor's license had been revoked under AS 28.15.183 or AS                  
28.15.185, indicating she believed this subsection allowed that,               
then, whoever had signed consent for that driver's license would be            
financially responsible to the victim if that minor was involved in            
an automobile accident.  She commented, "That's a real concern that            
I have.  It - it kind of creates an area ... where I look it as                
being ... it's going to encourage more parents to - to fall victim             
under - under this provisions than what I think was intended                   
several years ago under the legislation."                                      
                                                                               
REPRESENTATIVE HUDSON asked if it would be possible to have the                
prime sponsor's representative speak to that.                                  
                                                                               
Number 0788                                                                    
                                                                               
MR. BENNET indicated they would conceptually return to Version L               
and delete lines 16 through 20 which was subsection (2) under (b)              
of Version P.  He said on page 2, line 10, the words "in a non-                
driving situation", would be inserted after "alcohol".  Mr. Bennett            
said their discussion would begin from that point.  He noted he did            
not believe subsection (2) under (b) would be required after that              
change and thought he was in agreement with Ms. Hensley on that.               
                                                                               
Number 0854                                                                    
                                                                               
CHAIRMAN ROKEBERG asked Ms. Henley if her department supported the             
legislation with that exception.                                               
                                                                               
MS. HENSLEY indicated the changes Mr. Bennet mentioned would put               
the legislation almost back to Version L and her department would              
have no problem.  She said she believed the Division of Insurance              
had one more language change to Version L.  On page 2, line 13,                
after "rating", deleting the words "for a" and inserting "based                
upon".  Subsection (b) of Section 2 would then read, "(b) The                  
provisions of (a) of this section may not prevent an insurer from              
underwriting or rating based upon loss experience in the same                  
manner as it would for a person who has not had the person's                   
driver's license revoked under AS 28.15.183 or 28.15.185.".                    
                                                                               
Number 0934                                                                    
                                                                               
MARIANNE BURKE, Director, Division of Insurance, Department of                 
Commerce and Economic Development, came forward to testify.  She               
indicated the minor "wordsmithing" Ms. Henley had addressed would              
clarify an earlier question as to whether or not an insurance                  
company could rate on bases other than license cancellation for                
non-driving related incidence.  She said, for example, if the                  
teenager who had lost his or her driver's license had also been in             
a number of accidents, that would be legitimate rating basis, and              
it would have nothing to do with the fact that the teenager's                  
license had been canceled for the non-driving incidence.  Ms. Burke            
stated, "By adding the 'based upon' it clarifies that you can use              
those legitimate bases you had before, and you can't hide behind               
the fact that it was non-driving related violation.  I'd like to               
just add to the earlier testimony that this is a very important fix            
that is needed."  She said the division had received numerous                  
complaints about nonrenewal of the policy.  She noted there had not            
been any complaints about increased premiums.  Miss Burke informed             
the committee there were only two reasons an insurance company                 
could "nonrenew" a personal automobile policy:  nonpayment of                  
premiums or cancellation of driver's license.  She said the                    
insurance companies were canceling or nonrenewing policies because             
of the provisions of the "use it and lose it," and so the division             
felt it was important to correct this.  Ms. Burke noted the                    
Division of Insurance was in agreement with the proposed changes to            
Version L discussed earlier, and felt they would make for a                    
stronger, clearer bill.                                                        
                                                                               
Number 1079                                                                    
                                                                               
REPRESENTATIVE RYAN stated, "A lot has been said about how to cure             
a problem, but I haven't heard much said about the opportunism of              
these insurance companies taking advantage of a little crack to                
reap huge amounts of money.  Why is always that people have a                  
tendency not to discuss those things?  I think some criticism is               
due.  If a young person has a revocation for drinking behind the               
barn and four cars' premiums are knocked up by $3,600, I think it's            
highway robbery, and I think perhaps we should consider a windfall             
profit tax on that kind of activity.  (Indisc.) put it back into               
maintaining the roads perhaps.  ... A buck's a buck, but when you              
take advantage (indisc.) situation like that, it leaves a bad taste            
in people's mouth."                                                            
                                                                               
CHAIRMAN ROKEBERG stated he appreciated Representative Ryan's                  
comments and understood his level of frustration, recommending he              
file legislation if he had a possible solution.                                
                                                                               
Number 1145                                                                    
                                                                               
REPRESENTATIVE HUDSON asked if the chairman wished to entertain an             
amendment.                                                                     
                                                                               
Number 1148                                                                    
                                                                               
CHAIRMAN ROKEBERG indicated the committee would wait for another               
proposed committee substitute from the sponsor.  He confirmed with             
Ms. Burke that under current state law, an insurer could only                  
cancel a policy for nonpayment or revocation of license.                       
                                                                               
MS. BURKE said that was correct.                                               
                                                                               
CHAIRMAN ROKEBERG stated, "So they ... can't get out but they can              
rate you up and charge you highway robbery, to quote some other                
members of this committee."                                                    
                                                                               
MS. BURKE replied that was only if it was approved.  She suggested             
the person whose premium increased to $3,600 should file a                     
complaint with the Division of Insurance, noting the division would            
certainly like to know.  She said, "The complaints we have received            
is they refuse to renew and use as a basis the fact that the                   
license has been revoked."                                                     
                                                                               
CHAIRMAN ROKEBERG indicated he would like Ms. Burke to speak to the            
rating and the division's grievance procedure.                                 
                                                                               
MS. BURKE responded the division would encourage the person to                 
obtain the one-page form, if he or she had that premium notice or              
letter, and send the division a copy.  Ms. Burke said the division             
would investigate it; it was their job and they did it all the                 
time.                                                                          
                                                                               
CHAIRMAN ROKEBERG asked what the statutory authority would be for              
the division's investigation.                                                  
                                                                               
MS. BURKE replied, "Unfair business practices and the fact that                
they were using a rate that was not approved."                                 
                                                                               
CHAIRMAN ROKEBERG asked her to explain the meaning of "a rate that             
was not approved."                                                             
                                                                               
Number 1255                                                                    
                                                                               
MS. BURKE said the rates used by insurance companies had to go                 
through an approval process by the division.  She stated, "There               
are, however, underwriting criteria that they can apply.  So, if               
they used a rate that was approved by us -- first of all, it                   
wouldn't go from 900 [dollars] to 3,600 [dollars] every six months,            
we would not approve such a rate.  However, if they ... had                    
something that had been approved and it was more reasonable, but               
used unfair underwriting practices, we would be able to get them               
under ... provisions in [AS] 21.36, which are the unfair trade                 
practices.  We encourage people to let us know anytime something               
like this happens.  That's our job and ... I take it very                      
seriously."                                                                    
                                                                               
Number 1311                                                                    
                                                                               
REPRESENTATIVE COWDERY noted the division approved all rates and               
asked if all the rates from various companies were similar or if               
there was a large fluctuation in prices for the same coverage.                 
                                                                               
Number 1327                                                                    
                                                                               
MS. BURKE said they were basically the same, noting it was very                
difficult to find two policies that were exactly the same.  She                
commented everyone had their own marketing "bells and whistles."               
She noted, however, the division kept and closely monitored the                
statistics on the different portions of the auto insurance.  She               
commented there were medical, liability, comprehensive, "UM (ph)               
UIM (ph)" portions.                                                            
                                                                               
Number 1375                                                                    
                                                                               
REPRESENTATIVE SANDERS complimented Ms. Burke for her courage on               
saying she approved the outrageous rates the insurance companies               
charged for insurance.                                                         
                                                                               
Number 1393                                                                    
                                                                               
MS. HENSLEY of the DMV noted she had one additional comment.  She              
stated, "If a minor ... is caught driving a motor vehicle with any             
alcohol level ... Alaska's a zero tolerance state for anyone under             
the age of 21.  They are cited for drunk driving, and so that would            
go on their driving record as a drunk driving offense.  And that's             
under [AS] 28.35.280 and 28.35.285 and 28.35.290.  ... So it will              
be noted on the driving record if they were actually driving [as]              
an offense, and that is something that could be rated that's                   
separate from the revocation of the ... driver's license."                     
                                                                               
CHAIRMAN ROKEBERG said, "Just the consumption of alcohol ... they              
don't have to reach the one point zero, is that correct?"                      
                                                                               
Number 1435                                                                    
                                                                               
MS. HENSLEY repeated that Alaska had a zero tolerance for anyone               
under the age of 21, so any level or odor of alcohol was considered            
drunk driving for someone under 21 years of age.                               
                                                                               
CHAIRMAN ROKEBERG added, "And subject to all the ... penalties for             
a DWI."                                                                        
                                                                               
MS. HENSLEY noted a person in this situation would be subject to a             
lesser penalty; it was an infraction as opposed to a class A                   
misdemeanor.  She said the offense was punishable with a $1,000                
fine, mandatory treatment and community work service.                          
                                                                               
CHAIRMAN ROKEBERG asked if that had been part of the "lose it or               
use it" legislation.                                                           
                                                                               
MS. HENSLEY replied it was separate.  She indicated it had been                
passed in 1996 because the federal ISTEA [Intermodal Surface                   
Transportation Efficiency Act] legislation required the state to               
have a zero tolerance law for anyone under the age of 21.                      
                                                                               
Number 1500                                                                    
                                                                               
MR. BENNETT returned to the witness stand and assured the committee            
he would not come back before it without a bill in final form for              
the committee's consideration.  He stated he thought Senator Taylor            
would give that same guarantee if he were present.  He thanked the             
departments and industry for their assistance.                                 
                                                                               
Number 1518                                                                    
                                                                               
CHAIRMAN ROKEBERG commented the bill would have the support of the             
Administration and the industry, indicating this met with the                  
committee's approval.  He stated SB 158 would be held.                         

Document Name Date/Time Subjects