HOUSE BILL REPORT

HB 2972

BYRepresentatives Wineberry, Chandler, Dellwo, R. Meyers, Baugher, Spanel, Beck, Crane, Dorn, Locke, Nutley, Anderson, P. King, Inslee, Winsley, Zellinsky, Wang, Phillips, Jones and Betrozoff

Creating a committee to study the costs of mandatory automobile liability insurance.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (14)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Baugher, Beck, Crane, Day, Inslee, P. King, Nutley, Schmidt, K. Wilson and Winsley.

House Staff:John Conniff (786-7119)

Rereferred House Committee on Appropriations

Majority Report:  Do pass. (17)

      Signed by Representatives Locke, Chair; Grant, Vice Chair; H. Sommers, Vice Chair; Belcher, Braddock, Brekke, Dorn, Ebersole, Hine, Inslee, Peery, Rust, Spanel, Sprenkle, Valle, Wang and Wineberry.

Minority Report:  Do not pass. (8)

      Signed by Representatives Silver, Ranking Republican Member; Youngsman, Assistant Ranking Republican Member; Bowman, Doty, Ferguson, May, McLean and Nealey.

House Staff:      Karl Herzog (786-7271)

AS REPORTED BY COMMITTEE ON APPROPRIATIONS FEBRUARY 5, 1990

BACKGROUND:

Last year, the Legislature adopted legislation requiring motorists to purchase automobile liability insurance.  The law became effective January 1, of this year. However, despite a recent survey by the AM Best Company ranking Washington state 31st among the 50 states in the price of automobile liability insurance, many people with good driving records cannot afford insurance.

Senior citizens living on small fixed incomes, the unemployed, working poor, and persons receiving public assistance have insufficient funds to buy insurance after paying for basic necessities such as food, shelter, and clothing. Moreover, many of these people live in areas without access to public transportation and need private transportation to commute to work or to run errands. As a result, they must either limit expenditures for basic necessities to purchase insurance or violate the mandatory insurance law.

SUMMARY:

The Insurance Commissioner is directed to establish a committee to study methods for making automobile liability insurance more affordable for persons with good driving records and to report the committee's recommendations to the Legislature no later than December 1, 1990.

The committee is to consider the creation of an insurance industry placement facility, a joint reinsurance association, and other mechanisms by which the insurance industry can be encouraged to make affordable auto insurance available to good drivers.  The committee may not study and recommend tort law reforms.

The committee is comprised of the commissioner; one member from each of the four caucuses of the Legislature appointed by the appropriate presiding officer of the Legislature; and representatives of urban, suburban, and rural drivers, senior citizens, the insurance industry, insurance agents, and brokers.  Members of the committee may be reimbursed for travel expenses.

Fifteen thousand dollars is appropriated for purposes of the study.  The committee will cease to exist January 15, 1991.

CHANGES PROPOSED BY COMMITTEE ON APPROPRIATIONS:  None.

Appropriation:    $15,000 to the Office of the Insurance Commissioner from the Insurance Commissioner Regulatory Account.

Fiscal Note:      Requested January 29, 1990.

House Committee ‑ Testified For:    (Financial Institutions & Insurance) Nancy Stephens, All Saints Community Services; Joy Squires; Dawn Orr; Kathy Morefield, Fair Budget Action Campaign; and Mary Shaffer.

(Appropriations) No one.

House Committee - Testified Against:      (Financial Institutions & Insurance) Basil Badley, American Insurance Association; Jean Leonard, State Farm Insurance and Washington Insurers; and Mike Kapphahn, Farmers Insurance Group.

(Appropriations) No one.

House Committee - Testimony For:    (Financial Institutions & Insurance) Compliance with the mandatory automobile insurance law is impossible for many people.  Given the choice between buying insurance and paying the rent or buying food, most people will choose food and shelter. Moreover, many people cannot comply with the law by finding alternative methods of transportation.  These alternatives often do not exist.  It is hoped that the proposed study will discover ways to bring the cost of automobile insurance within the reach of people with limited financial means.

(Appropriations) None.

House Committee - Testimony Against:      (Financial Institutions & Insurance) The problem encountered by the poor in paying for automobile insurance is one of the reasons the insurance industry opposed a mandatory auto insurance law.  In Washington, the Insurance Commissioner closely reviews auto insurance rates before the rates may be used by an insurance company.  This review ensures fair rates; but, auto insurance has a price.  Someone must pay that price.  A study will not change this fundamental fact.  Moreover, the provision prohibiting the study from including tort law reforms prevents the study of no-fault auto insurance which has proven to be an effective method of reducing auto insurance costs.

(Appropriations)  None.