Legislature(1993 - 1994)

04/06/1994 09:07 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 CHAIRMAN LEMAN brings up HB 402 (PROOF OF MOTOR VEHICLE INSURANCE)            
 as the next order of business before the Senate State Affairs                 
 Committee.  The chairman calls the first witness.                             
                                                                               
 Number 394                                                                    
                                                                               
 JOHN GEORGE, Representing the National Association of Independent             
 Insurers, states HB 402 would correct an unintentional equity.                
 Insurance companies insure specific vehicles.  If a person is                 
 determined to have driven without insurance, or a person has their            
 license suspended, that person is required to file a form SR22 with           
 the State of Alaska, which verifies that that person now has                  
 insurance on their vehicle.  Unfortunately, the SR22 form does not            
 list specific vehicles.  This means a person could have five                  
 vehicles, insure only one, and when an insurance company fills out            
 an SR22 for that driver, the courts interpret that as meaning that            
 person has insurance on all five vehicles.  If one of those                   
 vehicles was an 18 wheel truck, that person's policy would cover              
 that.  The insurance companies feel this is inequitable.  If a                
 person wants coverage on all the vehicles, that should be paid for.           
 If a person does not have an SR22, they are not covered for                   
 vehicles not on their policy.  So a person who is required to file            
 an SR22 actually has broader coverage under their insurance policy            
 than someone who has not broken the law.                                      
                                                                               
 Number 428                                                                    
                                                                               
 MR. GEORGE states a person can get a policy that covers the driver,           
 and not the vehicles they drive.  It may be appropriate for someone           
 who has a number of vehicles to get that type of a policy.                    
 However, if that person loans one of their vehicles to another                
 person, the borrower would not be covered while driving the                   
 borrowed vehicle.  Unless, of course, the borrower had a                      
 conventional policy.                                                          
                                                                               
 SENATOR DONLEY adds the borrower would not be covered if he also is           
 an SR22 driver.                                                               
                                                                               
 Number 449                                                                    
                                                                               
 MR. GEORGE states the standard auto insurance policy covers someone           
 when they are driving someone else's vehicle.                                 
                                                                               
 Number 458                                                                    
                                                                               
 SENATOR TAYLOR states, under a standard policy, if a person owned             
 eight vehicles, but only insured one, he would not be covered while           
 driving one of the seven uninsured vehicles.  However, if that                
 person borrowed a friend's car, that person would be covered.                 
                                                                               
 Number 464                                                                    
                                                                               
 MR. GEORGE responds that is correct.  However, the owner policy is            
 primary.  But if the owner is uninsured or underinsured, then the             
 borrower's insurance would kick in.                                           
                                                                               
 Number 469                                                                    
                                                                               
 SENATOR MILLER asks how many people in the state have SR22's.                 
                                                                               
 Number 474                                                                    
                                                                               
 JUANITA HENSLEY, Chief, Driver Services, Division of Motor                    
 Vehicles, Department of Public Safety says there are currently                
 26,000 persons who have revoked or suspended licenses.  Those                 
 drivers are required to have an SR22 policy at the time they                  
 reinstate their licenses.                                                     
                                                                               
 Number 479                                                                    
                                                                               
 SENATOR TAYLOR wants to ask the Division of Insurance if anyone is            
 keeping track of the claims made and the actual costs of SR22                 
 policies, or if the state is allowing the insurance industry to rip           
 SR22 drivers off as they choose.  He wonders if anyone has ever               
 looked at those policies to see if they reflect the actual cost of            
 insuring those drivers.                                                       
                                                                               
 Number 491                                                                    
                                                                               
 MS. HENSLEY responds that is something the Division of Motor                  
 Vehicles does not track.  She would like to clarify a statement               
 made earlier by Mr. George regarding a commercial vehicle being               
 covered by an SR22.  If that commercial vehicle is operating inter-           
 state, they are required to have a lower limit of liability                   
 insurance of 700,000$.  So their private SR22 would not cover a               
 commercial vehicle.                                                           
                                                                               
 Number 496                                                                    
                                                                               
 CHAIRMAN LEMAN asks if there are any further questions of Mr.                 
 George or Ms. Hensley.  Hearing none, the chairman invites Senator            
 Donley to present his testimony.                                              
                                                                               
 Number 498                                                                    
                                                                               
 SENATOR DONLEY states HB 402 will create an especially dangerous              
 situation.  The only people required to show proof of insurance up            
 front, are those drivers who have exhibited some reason for that              
 requirement: drunk drivers, dangerous drivers, persons who have               
 been caught driving previously without insurance.  When mandatory             
 auto insurance was reinstated in 1989, the decision was made to               
 require dangerous drivers to show proof of insurance for all the              
 vehicles they owned.                                                          
                                                                               
 SENATOR DONLEY states he was the prime sponsor of the legislation             
 that was passed in 1989, and he remembers specifically discussing             
 this very point.  The representation that it was a mistake or                 
 inadvertent that dangerous drivers be covered for all the vehicles            
 they own, even though they actually insure just one vehicle, is               
 completely false.  That was the subject of intense discussion and             
 debate, and a vote on this very issue in committee.  Senator Donley           
 states he remembers it very well; he remembers, at the beginning of           
 the discussion, being torn about which side was best.  He was                 
 convinced by the debate that the way the law stands now, is the               
 right thing to do.                                                            
                                                                               
 Number 545                                                                    
                                                                               
 SENATOR DONLEY states HB 402 is simply making it easier for                   
 dangerous and drunk drivers.  Under HB 402, if an SR22 driver                 
 injures a person while driving a vehicle not covered by his policy,           
 the state and social service agencies will end up footing the bill            
 for the accident.                                                             
                                                                               
 SENATOR DONLEY believes the proponents of HB 402 twist the facts to           
 support the bill.                                                             
 SENATOR DONLEY states automatic coverage of all vehicles an SR22              
 driver owns are reflected in the high rates paid by SR22 drivers.             
                                                                               
 He also states it is not entirely true that SR22 drivers are not              
 required to disclose all vehicles under their ownership.  While it            
 is true that SR22 drivers are covered, even when not disclosing all           
 vehicles under their ownership, non-disclosure is clearly grounds             
 for termination of coverage by the insurance company.                         
                                                                               
 SENATOR DONLEY restates the only people he thinks will benefit from           
 HB 402, if their rates are structured properly, are the dangerous           
 drivers.                                                                      
                                                                               
 Number 591                                                                    
                                                                               
 SENATOR DONLEY states a much better option than HB 402 would be to            
 require dangerous drivers to show proof of insurance for every                
 vehicle they own.  Make the policies vehicle specific, and make               
 dangerous drivers insure every vehicle registered to them.                    
                                                                               
 TAPE 94-23, SIDE B                                                            
 Number 593                                                                    
                                                                               
 SENATOR DONLEY continues his analysis of alternatives to HB 402.              
 He thinks that, at a minimum, the penalties for dangerous drivers             
 who do not carry insurance on their vehicles be increased.  HB 402            
 will increase the risk to citizens of the state; it will make the             
 problem worse than it is.                                                     
                                                                               
 SENATOR DONLEY's last point is that the Division of Insurance no              
 longer supports HB 402.  The division is, at a minimum, neutral on            
 HB 402.  The division originally supported HB 402, but they have              
 now withdrawn their support of the bill.                                      
                                                                               
 Number 496                                                                    
                                                                               
 CHAIRMAN LEMAN asks if there are any questions of Senator Donley,             
 or if anyone else wishes to testify on the bill.  Hearing none, the           
 chairman asks the pleasure of the committee.                                  
                                                                               
 Number 578                                                                    
                                                                               
 SENATOR MILLER makes a motion to discharge HB 402 from the Senate             
 State Affairs Committee with individual recommendations.                      
                                                                               
 Number 573                                                                    
                                                                               
 SENATOR TAYLOR objects to the motion to discharge HB 402 from the             
 State Affairs Committee.                                                      
                                                                               
 CHAIRMAN LEMAN notes the objection and asks if there is any                   
 discussion regarding the objection.  Hearing none, the chairman               
 asks for a roll-call vote on whether to discharge the bill.                   
                                                                               
 The motion fails, with Chairman Leman and Senator Miller voting in            
 favor of the motion, and Senators Taylor, Ellis, and Duncan voting            
 against the motion.                                                           

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