Legislature(2013 - 2014)BELTZ 105 (TSBldg)
03/21/2013 01:30 PM Senate LABOR & COMMERCE
Audio | Topic |
---|---|
Start | |
HB26 | |
SB65 | |
SB55 | |
SB52 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
*+ | SB 65 | TELECONFERENCED | |
+= | HB 26 | TELECONFERENCED | |
+= | SB 55 | TELECONFERENCED | |
+= | SB 52 | TELECONFERENCED | |
SB 55-INSURER'S USE OF CREDIT SCORES 2:01:27 PM CHAIR DUNLEAVY announced the consideration of SB 55. "An Act relating to actions by insurers based on credit history or insurance score." He noted that this was the second hearing. 2:01:46 PM At ease 2:02:35 PM CHAIR DUNLEAVY reconvened the meeting and opened public testimony. 2:02:49 PM MICHAEL DUNSMORE, representing himself, Anchorage, AK, testified in opposition to SB 55. He said that the basic concept of allowing credit scores to be used to determine insurance rates is flawed. He heard testimony that an insurance company could impose a higher rate if a person has a poor credit score and lower the rate if a person has a good credit score. However, he has a hard time believing that an insurance company would voluntarily give a lower rate than was offered initially, because that is not a good business model. He offered his belief that it would be a poor decision to allow insurance agencies to base their billings on a credit score that is inherently not transparent and that the legislature can't review. This would not benefit the people of Alaska, but it would give insurance companies another arbitrary reason to deny coverage or increase rates. In particular, the concept of this bill has the potential to hurt low-income people. They are more likely to have other concerns than paying attention to their credit scores and are more likely to have difficulty paying their bills. This bill would make it possible for insurance to penalize them more and provide higher costs for their insurance coverage. He asked the committee not to pass SB 55. 2:07:43 PM DANIEL LYNCH, representing himself, Soldotna, AK, said he was testifying in support of common sense and against SB 55. He said credit ratings should have zero influence on insurance rates. Insurance worthiness would be better judged by high school and college grades, height, weight, or physical health, not credit scores from an independent corporate business that is known to have up to 40 percent inaccurate information. He pointed out that people are constitutionally entitled to a right of privacy. Therefore, it is a violation of a person's privacy for a private credit rating organization to use the person's credit information if the person doesn't voluntarily provide it. A person's driving record, the value of their car, home construction methods, renter's belongings and distances from fire suppression or flood plains is information that can be obtained without privacy violations. Noting that some legislators have stated that accessing a person's credit score is already allowed when the initial policy is written, he said two wrongs don't make a right and the initial policy procedure should be voided. MR. LYNCH said he has a commercial driver's license and has driven in Alaska for 20 years with no DUIs, moose collisions, accidents, or tickets, yet his premiums have increased with each bill. He imagined that his credit score is nonexistent or skewed since he has no loans, credit cards, payment plans, or subscriptions to credit agencies. He said that most young people are just beginning to establish credit, but one layoff slip, late payment, or health problem increases their insurance rates and that isn't right. He urged the committee to get back to the basics and protect the consumer, not the corporations. 2:11:49 PM GEORGE PIERCE, representing himself, Kasilof, AK, testified in opposition to SB 55, because an insurance company accessing his credit score is an invasion of his privacy. 2:12:57 PM KENTON BRINE, Northwest Regional Manager and Assistant Vice President, Property Casualty Insurers Association of America (PCI), Olympia, WA, said PCI is a national trade association of property casualty insurance companies. Many of these companies write policies in Alaska and they represent about 35 percent of the home and auto insurance in this marketplace. He offered to answer questions. SENATOR MICCICHE asked if it was his position that the bill would not raise people's insurance rates. MR. BRINE relayed that federal antitrust laws forbid him from predicting rates in a marketplace, but PCI has testified previously that credit-based insurance scores benefit consumers. Credit is an accurate predictor and studies show it either improves the insured's risk or does no harm. He referenced the testimony today and clarified that credit scoring is already allowed for insurance companies. The bill simply allows the practice to continue when a policy renews. He highlighted that studies show that a significant number of Alaska policyholders are receiving rate increases because insurance companies have to strip out the credit at renewal and rerate the policyholder after two years. That is causing rates to go up in Alaska today, but that would end if insurers were allowed to use a policyholder's credit at renewal. SENATOR MICCICHE said he understands some of the opposition. He related an experience two constituents had when they renewed their vehicle insurance policy and observed that the rate increase appeared to be somewhat arbitrary. He asked what would keep some other, potentially arbitrary, factor from being used to set insurance rates in the future. MR. BRINE disagreed with the characterization that rates are set arbitrarily because the models are sophisticated and preapproved by the insurance department. He said he couldn't speculate about what occurred with the policyholders Senator Micciche mentioned, but some rating factors must have been unfavorable or factors that were not related specifically to those people might have caused rates to increase within a tier. He reiterated that one of the benefits of credit scoring is that it is a highly accurate predictor of loss, although it may not make intrinsic sense to some people. He said that other rating factors that might interfere with a person's ability to get lower cost insurance fall to a lower level of rating criteria and credit tends to replace it in those circumstances. He stated his belief that it would be an overall benefit to consumers in Alaska to pass this legislation. It would make Alaska more competitive and attract more insurance companies to the state. 2:20:17 PM SENATOR MICCICHE said his concern is for those consumers that find the process somewhat of a mystery and don't realize that there is a correlation between their credit scores and ranking. CHAIR DUNLEAVY asked Mr. Kolb if the administration had a position on the bill. MR. KOLB offered his belief that the bill would be beneficial to consumers in Alaska and offer opportunities for insurance companies to be more competitive in their pricing, because credit scores or the use of an insurance score does have a statistical correlation to future risk. CHAIR DUNLEAVY closed public testimony and solicited a motion. 2:22:01 PM SENATOR MICCICHE moved to report SB 55, 28-LS0404\N, from committee with individual recommendations and attached zero fiscal note(s). 2:22:30 PM SENATOR ELLIS stated that a number of his constituents have had problems with credit ratings, credit scores, and inaccurate information, so he wasn't a big supporter of the bill. However, he would not object to moving the bill from committee. CHAIR DUNLEAVY found no further comments or objection and announced that SB 55 moved from the Senate Labor and Commerce Standing Committee.
Document Name | Date/Time | Subjects |
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SB52_Amendments_3-18-13.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 52 |
CS_SB52_VersionN.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 52 |
SB52_CS_Sectional_Analysis_VersionN.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 52 |
SB52_Mar 19 Memo re Amendments.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 52 |
SB52_markup Version N.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 52 |
SB65_Bill_VersionU.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB 65 Sectional Analysis AMENDED.docx |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_Sponsor_Statement.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_Key_Terms_for_Trust_Bill.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_FiscalNore_DOL_CIV.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_FiscalNote-DCCED-DOI-03-15-13.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_FiscalNote-DOA-DRB-3-15-13.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_FiscalNote-DOR-TRS-03-16-13.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_FiscalNote-LAW-CIV-03-19-13.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_ABA Letter of Support for.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB 65 Support Letter.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
HB026 text.pdf |
SL&C 3/21/2013 1:30:00 PM |
HB 26 |
HB 26 Sponsor Statement.pdf |
SL&C 3/21/2013 1:30:00 PM |
HB 26 |
HB 26 Full Audit CPA Board.pdf |
SL&C 3/21/2013 1:30:00 PM |
HB 26 |
HB 26 Summery Audit of CPA Board.pdf |
SL&C 3/21/2013 1:30:00 PM |
HB 26 |
HB026-DCCED Fiscal note.pdf |
SL&C 3/21/2013 1:30:00 PM |
HB 26 |
SB65_Support_AK Trust Laws from Joe Beedle.PDF |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB65_support_AKUSA.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 65 |
SB052_Fiscal Note_DCCED-DOI-03-19-13.pdf |
SL&C 3/21/2013 1:30:00 PM |
SB 52 |