SB 87-RENTAL CAR INSURANCE CHAIRMAN MACKIE announced SB 87 to be up for consideration. MR. CHARLIE MILLER, Republic Industries, said they, along with Hertz Rent-a-Car, asked for this bill to clarify existing code that sellers of insurance incidental to rental car transactions will be placed in the statute that requires unlimited licensure. Other groups that belong are the fraternal benefit society and bail bondsmen and several other products that are not considered traditional insurance products. This will clarify the jurisdiction of the Division of Insurance in terms of oversight, market conduct, records, retention, reporting, and all the aspects that are currently in statute. This would clarify for the industry their responsibilities and the Division's authority in regards to consumer issues and complaints. MR. MILLER said neither industry nor the Division could see problems with this bill. SENATOR KELLY moved to adopt the committee substitute to SB 87, version E3/17/99Ford. There were no objections and it was so ordered. MR. JOHN FERENCE, Deputy Director, Division of Insurance, said that generally their license laws are focused on practitioners who are involved in a variety of insurance activities with a substantial amount of economic activity. That standard of licensure is difficult for organizations such as rental car agencies which typically have a limited scope of insurance sales and are incidental parts of what the personnel do for a living. He supported SB 87 in its goal to make licensing more efficient for rental car agencies and the license process more appropriate to their business conditions. CHAIRMAN MACKIE asked if he knew of any controversy over the bill. MR. FERENCE said he didn't. SENATOR KELLY asked if the consumers, people who were going to rent the cars, had an opinion. MR. FERENCE answered that they weren't part of the negotiation process to the best of his knowledge. He believed the bill would have no material affect on a customer. SENATOR KELLY asked if rental car customers were required to purchase this insurance. MR. FERENCE replied that it's an option. SENATOR DONLEY added that wasn't exactly right. If you don't have a primary policy and they don't have any other source of coverage, the mandatory auto insurance law requires them to obtain this coverage. MR. FERENCE responded that the responsibility for providing insurance rests with the owner of the vehicle. In that context, the rental car company owning the vehicle would be charged with providing insurance that meets the minimum financial responsibility of the laws of this state. SENATOR DONLEY asked if he is renting a car and has an insurance policy on a car in Alaska and then decides to buy this coverage also, is this coverage primary or is it excess under existing law. MR. FERENCE replied that this coverage would most likely become primary. However, there are some aspects of it which might be excess over the rental company's coverage. SENATOR DONLEY asked if SB 87 would change that. MR. FERENCE answered that it wouldn't. SENATOR KELLY said his understanding was they had been doing this all along, but now it has become a question of whether or not they are doing it legally. He asked if there was anything added in the committee substitute or the bill that hasn't been traditional practice over the last few years. MR. FERENCE replied that the rental car owners are currently obliged to be licensed and he suspects there are a fair number of people who have been involved in selling insurance without licenses, but they have no documented history of that occurring. There has been some question about whether or not they needed to be licensed. This answers those questions and provides for it to occur. SENATOR KELLY wanted assurance there were no expansions of insurance coverage required under this bill that haven't been in the past. MR. FERENCE replied no. SENATOR KELLY moved to pass CSSB 87(L&C) out of committee with individual recommendations. CHAIRMAN MACKIE asked Senator Kelly to withdraw his motion, since there were two people who wanted to testify on SB 87. SENATOR KELLY withdrew his motion. MR. RICHARD MCEVILY, Hertz Corp. supported SB 87 saying that the insurance that's being offered is optional. If someone elects the option, it is primary insurance. MR. CONKLIN said consumers wanted to buy this insurance if they want to protect their assets in whatever state they are coming from while they are driving a car in Alaska. SENATOR KELLY moved to pass CSSB 87(L&C) from committee with individual recommendations. There were no objections and it was so ordered.