04/12/1994 01:40 PM Senate L&C

 SENATOR KELLY announced  HB 403  (AUTOMOTIVE LIABILITY INSURANCE              
 COVERAGE) to be up for consideration.                                         
                                                                               
 ROYCE WELLER, Legislative Aide to Representative Hudson, said the             
 best way to insure Alaska consumers competitive auto insurance                
 premiums is to have a market place which encourages competition.              
 HB 403 does this by not mandating unreasonable insurance coverages.           
 Current law requires all insurance companies offering auto                    
 liability coverage to have coverage up to 1 million dollars per               
 person for bodily injury or death and 2 million dollars per                   
 accident for more than one person.                                            
                                                                               
 No other state mandates a company to offer such an uninsured or               
 underinsured motorist higher than the driver selects for himself.             
 No other state mandates even the minimum levels of coverage we have           
 here in Alaska.                                                               
                                                                               
 HB 403 has the support of the Division of Insurance and the Alaska            
 Independent Insurance Agents and Brokers and has a $0 fiscal note,            
 Mr. Weller said.                                                              
                                                                               
 SENATOR DONLEY said the position of the Division was neutral, but             
 they had formerly supported it.  He said this is the kind of                  
 insurance coverage that protects us from underinsured or uninsured            
 motorists if they hit us.                                                     
                                                                               
 He explained that the insurance industry strongly opposes mandatory           
 auto insurance, but 80 - 85% of Alaskans support mandatory auto               
 insurance.  About 11% of Alaskan drivers are uninsured presently.             
 This is a good figure compared to other states.  People should have           
 the choice to protect themselves from that small percentage.  The             
 problem is that some less preferred companies that do a smaller               
 amount of the market, who specifically deal with high risk drivers,           
 have difficulty in getting reinsurance for this type of coverage.             
                                                                               
 The provisions of this bill would apply just to the people who are            
 in the assigned risk pools now and would allow them more insurance            
 companies to do business in the Alaska market just like they do in            
 other places.                                                                 
                                                                               
 SENATOR DONLEY said he thought the average motorist is probably               
 underinsured against uninsured and underinsured drivers.                      
                                                                               
 Number 425                                                                    
 SENATOR RIEGER asked why the insurance industry was against                   
 mandatory liability insurance.  SENATOR DONELY explained that when            
 you have mandatory auto insurance, a lot of people who are lousy              
 risks are forced to get insurance and that tends to make it more              
 difficult for everybody.                                                      
                                                                               
 JOHN GEORGE, National Association of Independent Insurers, agreed             
 with Senator Donley.  He said as in other states there is an                  
 assigned risk market where someone who can't buy insurance in the             
 voluntary market can be assured of finding insurance coverage.  The           
 problem that insurance companies face in Alaska is that they were             
 either unable or unwilling to buy reinsurance specifically for                
 Alaska, because of the limit.  Also, it just seems like if you buy            
 a certain amount to cover another driver if you hit him, you should           
 be able to get the same amount of coverage for yourself if he hits            
 you.                                                                          
                                                                               
 Number 511                                                                    
                                                                               
 HOWARD JAEGER, Alaska Independent Agents and Brokers, said they are           
 not the companies, but are the retailers of the products the                  
 insurance companies make available to them.  They are in support of           
 this bill which does not preclude insurers from buying the higher             
 limits.  The problem is that Alaska has the highest mandatory auto            
 liability limits in the nation which has an impact on cost to the             
 consumer.  This bill would encourage more competition, Mr. Jaeger,            
 stated.                                                                       
                                                                               
  TAPE 94-27, SIDE B                                                           
  Number 580                                                                   
                                                                               
 MICHAEL LESSMEIER, State Farm Insurance, said 11% for uninsureds is           
 a very good number nation wide.  One of the difficulties with                 
 mandatary insurance is that no matter what form you adopt, there              
 are certain categories of people you cannot force to buy insurance            
 no matter what you do.                                                        
                                                                               
 Philosophically, they would prefer that the mandated offer be equal           
 to the amount of liability coverage a person chooses to purchase,             
 he said.                                                                      
                                                                               
 SENATOR KELLY asked if the Division would support a revision that             
 would remove the mandatory higher limits to a neutral position.               
                                                                               
 DAVID WALSH, Director, Division of Insurance, said the                        
 Administration has not taken a formal position on the bill.                   
                                                                               
 SENATOR DONLEY said he would support other consumer options and               
 deletion of the requirement in the present law that at each renewal           
 they would have to make this offer.  Even if we do make this                  
 change, there is no guarantee that new companies will come to                 
 Alaska.  There have been no words to that effect.                             
 Number 502                                                                    
                                                                               
 CHARLES MCGEE, Anchorage, said his I.D. number is 0334797 and he              
 would like to have his drivers license back.  SENATOR KELLY thanked           
 him for his comments.                                                         
                                                                               
 MR. JAEGER said it's important to remember we are not talking about           
 every accident, only the one where the other driver is at fault.              
                                                                               
 SENATOR LINCOLN noted that the references to underinsured and                 
 uninsured drivers was inconsistent.                                           
                                                                               
 SENATOR KELLY said they would hold the bill to work on the                    
 questions and bring it up at another time.