Legislature(1997 - 1998)
03/02/1998 01:35 PM Senate JUD
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* first hearing in first committee of referral
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SENATE JUDICIARY COMMITTEE
March 2, 1998
1:35 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Mike Miller
Senator Sean Parnell
MEMBERS ABSENT
Senator Drue Pearce, Vice-Chairman
Senator Johnny Ellis
COMMITTEE CALENDAR
SENATE BILL NO. 307
"An Act relating to conditions for filling vacancies in the office
of United States senator; and providing for an effective date."
- MOVED SB 307 OUT OF COMMITTEE
CS FOR SENATE BILL NO. 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."
- MOVED CSSB 158(L&C) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 307 - No previous action to report.
CSSB 158 - See Labor and Commerce minutes dated 2/5/98.
WITNESS REGISTER
Mr. Bill Stoltze
Staff to Senator Rick Halford
State Capitol
Juneau, Ak 99801-1182
POSITION STATEMENT: Presented SB 307
Mr. Ralph Bennett
Staff to Senator Robin Taylor
State Capitol
Juneau, Ak 99801-1182
POSITION STATEMENT: Presented CSSB 158(L&C)
Ms. Marianne Burke
Division of Insurance
State Office Building
9th Floor
Juneau, Ak 99801
POSITION STATEMENT: Supported SB 158
Mr. John George
National Association of Independent Insurers
3228 Fritz Cove Rd.
Juneau, Ak 99801
POSITION STATEMENT: Commented on SB 158
Mr. Michael Lessmeier
State Farm Insurance
1 Sealaska Plaza Suite 303
Juneau, Ak 99801
POSITION STATEMENT: Commented on SB 158
Ms. Juanita Hensley
Division of Motor Vehicles
PO Box 110200
Juneau, Ak 99811
POSITION STATEMENT: Supported SB 158
ACTION NARRATIVE
TAPE 98-12, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:33 and brought up SB 307 as the first order of business.
SB 307 - U.S. SENATE VACANCIES
MR. BILL STOLTZE, staff to Senator Rick Halford, said SB 307
changes the conditions of an appointment to the State Senate and
requires that any appointee be of the same political party as the
his or her predecessor.
SENATOR PARNELL asked why this bill is limited to the Senate and
MR. STOLTZE said House holds elections to determine who will fill
a seat and federal law prohibits appointments to the House.
CHAIRMAN TAYLOR asked for further testimony, hearing none, SENATOR
PARNELL moved SB 307 out of committee with individual
recommendations. Without objection, it was so ordered.
SB 158 - INSURANCE CHANGES FOR DR. LIC REVOC.
MR. RALPH BENNETT, staff to Senator Robin Taylor, presented SB 158.
MR. BENNETT said the bill is aimed at removing an abuse that has
been found to the "use it - lose it provision" in state law. He
said this an unintended consequence has resulted in minors, who
lose their licence due to a minor consuming charge totally
unrelated to driving, finding themselves and their families with
increased insurance premiums or even canceled policies. SB 158
would correct this situation by prohibiting an insurance company
from raising rates or canceling policies soley for the suspension
of a minor's driving licence due to minor consumption where driving
was not involved. Mr. BENNET said this is a narrowly focused bill
and does not address other offenses like DWI, use of false
identification or possession of controlled substances.
MS. MARIANNE BURKE, Director of the Division of Insurance,
testified that this is a real problem and her division has received
numerous phone calls regarding it. She said this bill will clarify
the intent of the original bill. She agreed with the sponsor that
as the statute exists, there is nothing to prohibit premium
increases or cancellations in cases where minors lose their
licences for drinking unrelated to driving.
CHAIRMAN TAYLOR asked MS. BURKE if the department supports the
legislation and she said that was correct.
MR. JOHN GEORGE, representing the National Association of
Independent Insurers, commented that SB 158 as amended was much
more palatable than the bill in it's original form. He said the
association would reserve the right to underwrite based on things
that may not be perceived as relating directly to driving an
automobile. Qualities like responsibility, maturity and tendency to
drink may be useful factors for an insurance company to consider.
MR. GEORGE said also that there exists another provision that
allows parents to exclude a problematic driver, He advises this is
not a good idea and may expose the person to a high degree of risk
if that driver drives anyway under any circumstances. He said it
is, however, an out for people who do not want to pay higher
premiums.
MR. MIKE LESSMEIER, representing State Farm, echoed the comments of
MR. GEORGE and said also that insurance companies want to be able
to consider this information, since sometimes, tendencies in a
person's behavior may transmit into an assessment factor for
driving. He agrees the bill has been narrowed and allows his
company to essentially do what they have been doing. He believed
that people should be underwritten based on the available
information in order to prevent one sector of the driving public
from subsidizing another.
MS. JUANITA HENSLEY, Director of the Division of Motor Vehicles,
supported the legislation. She recalled the debate in 1994 when the
"use it - lose it" law was passed about the high risk insurance
requirements and indicated that is why the bill included a
provision saying this high risk insurance could not be a condition
of reinstatement of a driver's licence. She has had numerous
complaints over the last few years regarding this. Knowing the
legislative background on this issue, MS. HENSLEY approached
several insurance companies who advised her they could charge the
high risk rates because they were not prohibited in Title 22.
SENATOR PARNELL disclosed that, in his law practice, he represents
a national insurance company in some collection matters and asked
to be allowed to abstain from voting. There was objection from
SENATOR MILLER.
SENATOR PARNELL commented that underwriting is all about risk
assessment and is commonly used by different types of insurance
companies. He believes that minor consumption does say something
about the risk that individual might pose. For that reason, he is
less willing to say that a company can not increase a premium for
a person that they have determined to be a higher risk. SENATOR
PARNELL added he wants the company to be free to assess risk.
CHAIRMAN TAYLOR noted he was the first one to introduce a "use it -
lose it" law but, being a minority member, was unable to make
progress with it. Later, another legislator advocated for the bill.
He said at the time, the reason behind going after a driver's
licence was that driving is a privilege kids look forward to and it
may have a significant impact on their drinking habits. CHAIRMAN
TAYLOR said none of the legislators who worked on the bill thought
it would provide an excuse for insurance companies to increase
family insurance rates. He mentioned that it took a few years after
the passage of that bill before the insurance companies caught on
that they could increase premiums in this back door manner.
CHAIRMAN TAYLOR asked what type of increases have been seen.
MARIANNE BURKE said she is unable to define them but can say they
are industry-wide and she has seen this used as a reason for
cancellation of policies.
SENATOR PARNELL asked if the discussion was about raising premiums
on families where kids are still driving and CHAIRMAN TAYLOR
clarified they were talking about raising premiums on families
where kids are not supposed to drive and may not even have the
right to apply for a licence. He said the bill has really been
narrowed down.
CHAIRMAN TAYLOR expressed concern that the bill might have been
narrowed too much. He said he was told by insurance brokers that
anyone in his household is covered under his insurance policy as
long as he grants them permission to drive his car. He wondered why
he needed to purchase additional insurance for his kids or put them
under his homeowner policy. CHAIRMAN TAYLOR said he was told they
would be covered under his liability provision but not if they had
stolen the car. CHAIRMAN TAYLOR said these kids can't get a
licence, and could never get insurance, yet their family still has
to pay the penalty.
CHAIRMAN TAYLOR agreed with MR. LESSMEIER that certain tendencies
may reflect in a person's conduct and stated he does not have a
problem with that individual paying a higher premium, but does not
feel the family should be punished.
SENATOR MILLER moved CSSB 158(L&C) out of committee. Without
objection, it was so ordered and with no further business, the
committee was adjourned.
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