SB 95 INSURANCE AGAINST UNINSURED DRIVERS  Number 481 DON KOCH, Division of Insurance, clarified CSSB 95(JUD), Version O, addresses the Tumbleson issue, discussed at the previous meeting. SENATOR ELLIS moved to adopt CSSB 95(JUD). SENATOR GREEN objected. MR. KOCH explained Version O. It addresses the Tumbleson issue by restating that uninsured and underinsured motorist coverage is excess and either one can be triggered by a shortfall in the funds needed to cover a particular loss. Number 454 SENATOR TAYLOR discussed Mr. Lessmeier's projection that State Farm Insurance would have to double the cost of premiums under this interpretation, even though State Farm paid claims according to this interpretation in the past. SENATOR TAYLOR asked why the Division of Insurance would allow an insurance carrier to double rates when the premise upon which claims are paid has not changed. MR. KOCH replied the cost of this coverage has increased over time, but that cost is borne by those who voluntarily purchase the coverage, since purchase of the insurance is optional. He was unsure of the basis State Farm uses to settle claims since that information would not be made available to the Division unless a complaint was filed, or unless an examination was conducted. The Division's actuarial section is taking a hard look at the basis for rate increases. SENATOR TAYLOR stated there was some confusion in the testimony and statements made. He reiterated he could not find any justification for a projected rate increase when the interpretation for claims payments used by the carrier in the past was confirmed by a court. MR. KOCH commented the two don't necessarily relate, and the reasons for additional costs are independent of the court decision. If the carrier was settling on the basis of excess, they may have had an adverse experience with that approach that would suggest the need for higher rates. Number 394 SENATOR ADAMS maintained objection to the motion. He asked if the Division supports Sections 4 and 6 (the repealer sections). MR. KOCH answered he was not specifically aware of the statute sections being repealed. SENATOR TAYLOR clarified Section 6 makes the bill retroactive to 1990 so that the intent of the 1990 law is restated. He added most carriers have been operating under that interpretation, therefore it should not affect them. MR. KOCH agreed. Number 370 SENATOR GREEN asked if other lawsuits were pending or might be revisited due to the retroactive clause. SENATOR TAYLOR noted to his knowledge, there have only been two cases. SENATOR GREEN requested the bill be held until Friday for further review of Sections 4 and 6. She expressed concern that rate increases will discourage people from buying the insurance. MR. KOCH noted the rates are based on the experience, and if State Farm has had an experience that suggests the need for a rate increase, it will file an application for review by Division actuaries who will determine the validity. The rate level is determined by the loss history. SENATOR TAYLOR commented the bill was introduced at the request of the industry to restructure the high mandatory offer of uninsured/underinsured coverage because of reinsurance difficulties. MR. KOCH explained the bill passed in 1990 required the insurance industry to offer coverage in the amount of $1,000,000/$2,000,000. CSSB 95(JUD) changes the amount to $1,000,000/$1,000,000 to compromise with the industry. Number 285 SENATOR TAYLOR commented he had been receiving a lot of support for this measure from insurance agents statewide until the second court decision created controversy over the triggering mechanism. The legislation originated because carriers could not limit the amount of the coverage, and rates had to be determined accordingly. Those rates were higher than necessary and prevented carriers from competing in the field. He repeated the bill would be heard on Friday, April 28.