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Minutes for HB2104 - Committee on Insurance

Short Title

Motor vehicle liability insurance; amending uninsured motorist coverage provision requirements and increasing the minimum policy limit for bodily injury.

Minutes Content for Tue, Feb 14, 2017

Chairman Vickrey opened the hearing, continued for the opponents of HB 2104

Christine Peterson testified they opposed the bill. She said she represented Enterprise and the company had 500 employees operating in Kansas. She said she previously submitted written testimony in 2014 opposing the bill and was involved in studies on the proposed increase in minimum coverage requirements. She believed higher minimums led to higher premiums and that would make coverage not affordable to policyholders carrying only the minimums. She provided a chart that showed states' minimums (Attachment 1).

Laurie Ann Brown testified as an opponent to the bill because an increase in the limits would raise policy premiums (Attachment 2).

Brad Smoot testified in opposition to the bill. He said this was a long-standing issue since 2014. He said the State of Kansas had worked hard to make sure as many people as possible carried liability insurance. He explained the problem was there were still 9-13% uninsured drivers in Kansas, simply because people couldn't afford or believed they couldn't afford insurance. He said the bill raised costs for the people least likely to afford it. He encouraged the members to keep Kansas in the middle with other states' requirements. In summary, he said the raised minimums and offsets were designed to move money to defendants.(Attachment 3).

Chris Conrade, Conrade Insurance Group, Inc., provided a written supplement to his earlier testimony on February 7, 2017, in support of the bill. (Attachment 4)

Chairperson Vickrey opened the meeting for questions.

Representative Cox said the minimums had not increased and asked whether the premiums had increased since 1981.

Mr. Smoot responded he wasn't sure.

Representative Cox asked if Smoot was opposed to stacking.

Mr. Smoot answered "yes" because stacking would increase the cost to the rate payer.

Representative Cox asked whether he opposed a policyowner having higher underinsured coverage. 

Mr. Smoot explained that underinsured motorist coverage was meant to protect policyowners and their assets.

Cox commented that policyowners were forced to pay for underinsured coverage but not benefiting if they were not at fault in an accident.

Representative Finney asked if people without a license could get a insurance since she had learned 294,000 people did not have licenses and were part of the uninsured driver group. She wondered if the insurance industry had looked at that.

Mr. Smoot answered his companies hadn't looked at it.

Representative Corbet said it was an individual's choice to have more insurance and acknowledged it was better people drive with insurance, even minimum, than to have no insurance.

Representative Hodge asked if paralysis were involved, would each person in an accident receive $25,000. He also asked about variables such as assets a defendant owned, or costs that would be absorbed by others.

Mr. Smoot responded that usually drivers carrying the minimum didn't have many assets to attach and that overage costs were often borne by hospitals, families and the state.

Representative Hodge asked if the chart showed which states allowed stacking.

Mr. Smoot said he did not have that information readily available.

Mr. Hodge asked if Mr. Smoot would be surprised that, according to prior testimony, increased minimums would only raise the premium by $3.

Mr. Smoot said they have other estimates that disputed the $3 figure. He repeated that Kansas was in the middle concerning minimums.

Representative Smith commented that according to the testimony heard today the rate would be closer to a 12-15% increase.

Representative Neighbor asked how much the property damage minimum went up last year.

Mr. Smoot answered it went from $10,000 to $25,000.

Representative Neighbor asked him to confirm the minimums had not increased on bodily injury since 1981.

Mr. Smoot affirmed they had not.

Representative Neighbor asked whether medical costs had increased.

Mr. Smoot confirmed both the costs and the frequency of use had gone up.

Representative Neighbor asked what the dollar amount of increase would be if the rates were raised 13-26%.

Mr. Smoot said he didn't know, each company set their own amount. He could get that rate information from the Insurance Department.

Representative Neighbor asked who was responsible for checking insurance when vehicle registrations were renewed.

Mr. Smoot answered county treasurers had access to information on-line to verify coverage. He acknowledged there were persons who let their insurance lapse but the state made every effort to insure all drivers had insurance.

Representative Parker commented no matter where the limits were set, there will be costs incurred over that minimum.

Mr. Smoot affirmed the comment.

Representative Parker asked if Mr. Smoot would recommend limits be lowered.

Mr. Smoot responded Kansas was in the middle of minimums.

Representative Parker asked at what future point could Mr. Smoot justify an increase.  

Mr. Smoot said he couldn't know. He explained most people had other insurance to cover medical costs.The current minimum limits allowed lower-income persons to purchase insurance.

Representative Parker asked if his position would be the same in 10-30 years.

Mr. Smoot answered what he recommended was to compare Kansas to other states. In future years, the legislature could revisit it.

Representative Parker commented a state must be willing to make the first move.

Mr. Smoot replied that Kansas did move on the property coverage increase last year.

Representative Hodge commented that an accident victim could realize more money if he was hit by an uninsured motorist because the victim could tap into his own policy. He asked Mr. Smoot to comment on it.

Mr. Smoot replied that was true but said if a policy was stacked like proposed in the bill, the innocent insured could tap into his own policy.

Chairperson Vickrey closed the hearing on HB 2104.