HB 158 - NOTICE OF INS. CANCELLATION TO ELDERLY CHAIRMAN KOTT announced that the next order of business is HB 158, "An Act relating to the annual report of the director of the division of insurance and to notice of cancellation of personal insurance." CHAIRMAN KOTT indicated that the committee will take up CSHB 158(L&C), Version 1-LS0128\I. Number 0889 REPRESENTATIVE ROKEBERG, Sponsor of HB 158, explained that the bill would permit the Division of Insurance [Department of Commerce and Economic Development] to gather in-depth statistical information regarding health insurance policies. The bill would also provide a mechanism by which to inform Alaskan seniors of a missed insurance payment. Representative Rokeberg informed the committee that one of his constituents, an over 80-year-old man, was in a substantial automobile accident and did not realize that he had not paid his premium. REPRESENTATIVE ROKEBERG noted that the House Labor and Commerce Standing committee worked with the insurance industry in order to develop a compromise bill. The original bill required certified mailings. This bill covers personal insurance which includes property, casualty, automobile, and liability type insurance. Under HB 158, notification is provided to all insurers in Alaska that a person 70 years old or older has the right to designate a third party to receive notice of payment of premium and/or cancellation on three occasions per current statute. The industry is willing to send multiple notices for the three different statutory notification requirements. This is believed to be of lesser cost to the insurance industry and would not create a mandate as would requiring certified return receipt mailings. This bill is supported by a number of senior groups around the state. CHAIRMAN KOTT noted that the committee substitute elevates the age from 67 to 70. He asked Representative Rokeberg why that was changed. REPRESENTATIVE ROKEBERG informed the committee that testimony in the House Labor and Commerce Standing Committee from the Division of Motor Vehicles [Department of Administration] and senior groups revealed that the condition of dementia increases with age and becomes particularly acute around the age of 70. Therefore, rather than using the new social security age of 67, the age was raised to 70 which would include some 16,000 people. CHAIRMAN KOTT asked whether all of the personal insurance policies addressed in the bill require a person to provide his age. REPRESENTATIVE ROKEBERG stated the industry believes that information would be available due to underwriting purposes. CHAIRMAN KOTT asked whether that applies to homeowner's insurance. REPRESENTATIVE ROKEBERG noted that was discussed. The testimony indicated that the age information would be available and it would not be a burden on the insurance industry. If the insurance industry does not have this information, it will have to gather it. CHAIRMAN KOTT inquired as to why the certification and registered mail requirement was omitted. REPRESENTATIVE ROKEBERG explained that, currently, the insurance industry mails by certification with a computer printout and delivers the mail to the U.S. Post Office. That list is filed as their proof of mailing for cancellation. The insurance industry felt that if an individual certified mail, return receipt requested there would be fairly substantial fiscal note implications which would be passed on to the consumers. Representative Rokeberg did not want to, in the process of protecting people, end up raising their premiums. Number 1255 REPRESENTATIVE GREEN asked whether there would be any litigation caused later if a notice was sent to the designated recipient. REPRESENTATIVE ROKEBERG clarified that the notice would be sent to both parties. The insurance industry is mandated to inform an individual of the availability of this option in the regular notification. REPRESENTATIVE GREEN asked, if the insurance company fails to notify the bill payer, would that alleviate the fact that the elderly are not covered because the payments were not made. REPRESENTATIVE ROKEBERG stated that the level of notification has been increased. The desire is to avoid a situation in which the individual does not have coverage as was the case for Representative Rokeberg's constituent. He acknowledged that some coverages have grace periods. REPRESENTATIVE MURKOWSKI noted that there were discussions regarding grace periods in the House Labor and Commerce Standing Committee. She feels that if this is going to be done for personal insurance, it should also be done for life and health insurance as well. She informed the committee that typically, life insurance has an allowance for a grace period for reinstatement, which is not the case for personal insurance policies. CHAIRMAN KOTT pointed out that the committee packet includes a letter from the Alliance of American Insurers which indicates that homeowner's policies do not make any reference to the age of the insured. He said, "Is that just a 'red herring' that they are throwing up or would they change there way of doing business and require age to be recognized?" REPRESENTATIVE ROKEBERG deferred the question to Mr. George [lobbyist for the National Association of Independent Insurers]. REPRESENTATIVE KERTTULA indicated that there may be a language error in Section 2(1) of the committee substitute. REPRESENTATIVE ROKEBERG stated that the language was taken from existing law. Number 1498 JOHN GEORGE, Lobbyist for the National Association of Independent Insurers, informed the committee that it does not really matter whether the insurance company has the age of the individual in the file. This requires that everyone be offered a notice saying that if a person is 70 years of age or older, that person may request to be placed in the multiple notification program. At some point, there would have to be a determination that the individual requesting this multiple notification is actually age 70 or older. That information could be ascertained upon request of the program. Mr. George noted that this would apply primarily to homeowner's insurance, fire insurance, and auto insurance. REPRESENTATIVE MURKOWSKI asked whether it would be possible to request dual statements for individuals under the age of 70. MR. GEORGE noted that there are notices to lenders, however there is no statutory requirement for an insurance company to offer that. Mr. George assumed that some insurance companies would offer that service if requested. This legislation would require that the insurance company provide that notification if the individual is over the age of 70. Mr. George emphasized that insurance companies are not in the business of canceling insurance, but rather insurance companies are in the business of writing insurance. Insurance companies would like to keep a policy in effect once it is in effect. CHAIRMAN KOTT closed the meeting to public testimony. Number 1643 CHAIRMAN KOTT moved to report HB 158 [CSHB 158(L&C), Version 1-LS0128\I] out of committee with individual recommendations and accompanying zero fiscal notes. There being no objection, HB 158 was so moved from the House Judiciary Standing Committee.