Legislature(1993 - 1994)
03/08/1994 08:00 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 402 - PROOF OF MOTOR VEHICLE INSURANCE CHAIRMAN VEZEY opened discussion on HB 402. The sponsor of HB 402 is the House Labor & Commerce Committee. Number 383 REPRESENTATIVE BILL HUDSON, CHAIRMAN, HOUSE LABOR & COMMERCE COMMITTEE, addressed HB 402. He stated HB 402 deals with proof of financial responsibility filings for SR-22 drivers. SR-22 filings are, in many instances, needed for those who have been convicted of driving while intoxicated or reckless driving. He thought HB 402 would provide insurance companies the necessary information that would ultimately lead to lowered premiums. All drivers would begin to be treated with some equity. He noted HB 402 essentially provides that insurance companies be informed as to what vehicles they are insuring. Presently, drivers can get insurance for inexpensive cars, drive and wreck expensive cars, and the insurance companies are being asked to pay the cost for the higher cost vehicle. HB 402 would provide a clear definition for the insurance companies as to what they are insuring. CHAIRMAN VEZEY moved to the Fairbanks teleconference site. Number 431 DENNIS BROWN, ALASKA INDEPENDENT INSURANCE AGENTS & BROKERS, testified in favor of HB 402. Presently, an offender of a crime such as driving while intoxicated must provide, to continue driving, verification of coverage by the means of an SR-22. The insurance carrier affirms that the liability coverage has been in place, and if the policy is cancelled for any reason, the Department of Financial Responsibility will be so notified. A standard family auto policy has to list their private passenger automobiles by make, year, value, etc... This policy is very specific and it does include an allowance for driving other vehicles, which meet specific requirements. MR. BROWN felt an underwriter needs to list specific vehicles on policies to give them some idea of the uses, age, and potentiality of loss. An underwriter for SR-22 relating to private passenger automobiles comes into problems when an SR-22 driver is found driving commercial heavy equipment or heavy trucks, substantially raising the rate of coverage required. The SR-22 filing requirement does not provide specific interpretation of what the driver can drive, therefore, a driver could drive a Ford Taurus or an International tractor or trailer. MR. BROWN stated HB 402 amends SR-22 statutes only to cover those autos listed in the policy, that meet the definition of a private passenger automobile. He emphasized the policies that fit these automobiles should be listed. Carriers have been getting reluctant to write SR-22 coverage in Alaska. CHAIRMAN VEZEY asked MR. BROWN to explain what an SR-22 is. MR. BROWN explained an SR-22 is a verification of coverage. For example, if an indicted driving while intoxicated offender wanted to regain his/her license, an insurance policy must be secured that the insurance carrier is willing to submit an SR-22 to the Department of Financial Responsibility that verifies the insurance is in effect. CHAIRMAN VEZEY asked if commercial vehicles had to be listed individually under current laws. MR. BROWN said yes, and most commercial auto policies require there be a listing of commercial vehicles. Number 509 CHAIRMAN VEZEY introduced HOWARD JAEGER as the next individual to testify in Juneau. Number 514 HOWARD JAEGER, SHATTUCK & GRUMMETT INSURANCE, MEMBER INDEPENDENT INSURANCE AGENTS & BROKERS OF ALASKA, testified in favor of HB 402. He pointed out, presently in the preferred auto program, the preferred driver has to specify which vehicles they want insured. If they buy another vehicle they have 30 days to notify the insurance carrier in order for coverage to apply to it. After 30 days, coverage would not apply to that car. The 1989 bill addressing SR-22 filings was broadened to include all motor vehicles owned by that person, not specifying the 30 day notice period. With HB 402, coverage would apply to all vehicles which the insured has notified the insurance company that they own. Number 534 REPRESENTATIVE SANDERS asked if HB 402 would affect the premiums an individual would pay for an SR-22 policy. Number 537 MR. JAEGER said yes. Currently, only one car has to be notified and insured with an agency, but the person could then drive other vehicles, without notifying the carrier. If the person then wrecked, the carrier would have to pay the claim even if they have not collected a premium for the other vehicles. Number 546 REPRESENTATIVE SANDERS inquired if all of the cars insured under the one driver would be at the higher SR-22 rate. Number 548 MR. JAEGER said no, only the first car would be higher. The additional cars would have to be added to the SR-22 policy though. He stated if a person had a speeding ticket and an accident the agency would only charge the surcharge on the one car. Number 555 REPRESENTATIVE SANDERS commented with the new .08 alcohol limit there will be a lot of very responsible Alaskans paying SR-22 insurance. He stated if HB 402 would make these people pay extra premiums on all their other vehicles then he would not be in favor of it. Number 562 MR. JAEGER explained individuals with SR-22 would not be able to stay in a preferred market; therefore, they would have to pay the extra premiums. SR-22 individuals would go into a substandard market, which is automatically a surcharge market on all of their cars. In terms of their driving record, the agency would charge the surcharge on their first vehicle for the DWI and the others would act as second cars on which there would not be surcharge. CHAIRMAN VEZEY clarified HB 402 would also lower the cost of an SR-22 policy for a one vehicle owner, because as it is now, multiple vehicle owners were being lumped together with single vehicle owners. Number 573 MR. JAEGER said yes, multiple vehicle owners could be mixed together with single vehicle owners without the companies knowing it. Number 575 CHAIRMAN VEZEY said the company's exposure is currently very high and they are not very willing to write SR-22 policies. He felt the competition may not be very stiff. Number 578 MR. JAEGER replied the competition is not very stiff now, but HB 402 may help encourage other companies to come into the state and offer SR-22 insurance. Number 580 REPRESENTATIVE OLBERG wondered why the old language of June 6, 1989, was not used in HB 402 which states, "applicable to all owned vehicles insured by the consignatary." He asked why the language in HB 402 is more preferable. Number 586 MR. JAEGER responded the drafters were trying to say the same thing in different language by stating, "designated by description or appropriate reference, the motor vehicle that it covers." The old law stated, "applicable to all owned vehicles insured by the insurance company." He felt HB 402 could read as it used to. Number 593 REPRESENTATIVE KOTT believed the language in HB 402 was legally the correct language of today. He asked how many SR-22's were in the state. MR. JAEGER did not know. REPRESENTATIVE SANDERS wanted to clarify the answer to his previous question. He asked if a person, who owns three cars, were to receive a DWI he/she would only have to pay that higher premium on one car, not all three. MR. JAEGER confirmed REPRESENTATIVE SANDERS. Number 607 CHAIRMAN VEZEY introduced JOHN GEORGE as the next individual to testify. JOHN GEORGE, NATIONAL ASSOCIATION OF INDEPENDENT INSURERS (NAII), testified in favor HB 402. The reason people have to have an SR-22 filing is because they have run afoul of the law; caught driving without insurance, driving while intoxicated, or involved in a serious accident. The state wants to ensure, with an SR-22, that these people are now in compliance and have automobile insurance. MR. GEORGE pointed out SR-22 is a requirement of the state. Current laws require insurance companies to verify, if an individual is driving a car, that he/she is insured. Therefore, if an individual owns ten cars and only has insured one of them with the company, but gets in a wreck in one of the other cars, the insurance company still has to pay the client's claim. He clarified HB 402 would allow the insurance companies to pay claims on any car they insure, and only the cars described on the form. Number 641 REPRESENTATIVE OLBERG asked why cars were insured, instead of drivers. Number 642 MR. GEORGE responded drivers can be insured, but not many companies offer that type of owner's policy. A problem arises when an insured driver lends his/her uninsured car to another individual. The car would only then be insured if the other driver had liability insurance. CHAIRMAN VEZEY asked the pleasure of the committee. Number 655 REPRESENTATIVE BETTYE DAVIS moved to pass HB 402 from committee with individual recommendations. Number 662 CHAIRMAN VEZEY asked the committee secretary to call the roll, and HB 402 passed unanimously from the House State Affairs Committee with individual recommendations.