MINUTES OF MEETING
ASSEMBLY COMMITTEE ON COMMERCE
Sixty-seventh Session
May 10, 1993
The Assembly Committee on Commerce was called to order by Chairman Gene T. Porter at 3:38 p.m., Monday, May 10, 1993, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Gene T. Porter, Chairman
Mr. Morse Arberry, Jr., Vice Chairman
Ms. Kathy M. Augustine
Mr. Rick C. Bennett
Mr. John Bonaventura
Mr. Val Z. Garner
Ms. Chris Giunchigliani
Mr. Dean A. Heller
Mr. David E. Humke
Ms. Erin Kenny
Mr. Richard Perkins
Mr. Scott Scherer
Ms. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Senator Bill R. O'Donnell, District 5; Senator Leonard V. Nevin, District 2; Representative Kelly G. Atkinson, State of Utah.
STAFF MEMBERS PRESENT:
Mr. Paul Mouritsen, Senior Staff Analyst, Legislative Counsel Bureau.
OTHERS PRESENT:
Mr. Ray Sparks, Chief, Registration Division, Department of Motor Vehicles and Public Safety; Mr. Barton Blackstock, Driver Control Bureau Chief, Drivers License Division, Department of Public Safety, State of Utah; Ms. Karen Kavanau, Director, Department of Data Processing; Mr. Sam Sorich, Assistant Vice President, National Association of Independent Insurers (NAII); Mr. Bob Crowell, Farmers Insurance; Mr. Bill Zideck, Executive Director, Nevada State Board of Accountancy; Mr. Todd Russell, independent counsel, Nevada State Board of Accountancy; Mr. Ben Graham, Nevada District Attorney's Association; Mr. Daryl E. Capurro, Nevada Franchised Auto Dealers Association; Mr. Kenny Grigg; Mr. Joseph C. Luke (See also Exhibit A attached hereto).
Chairman Porter called for a motion to suspend Rule 92 to permit the committee to hold a meeting on May 12, 1993.
ASSEMBLYMAN GIUNCHIGLIANI MOVED TO SUSPEND RULE 92.
ASSEMBLYMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Porter called for motions for committee introduction of the following bill draft requests:
BDR 54-1813Provides for regulation and certification of engineering geologists.
ASSEMBLYMAN AUGUSTINE MOVED FOR COMMITTEE INTRODUCTION OF
BDR 54-1813.
ASSEMBLYMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
BDR 15-1711Facilitates provisions of health insurance for employees of small employers.
ASSEMBLYMAN HUMKE MOVED FOR COMMITTEE INTRODUCTION OF
BDR 15-1711.
ASSEMBLYMAN BONAVENTURA SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
AB 507 Establishes system for verifying that owners of motor vehicles maintain mandatory proof of financial responsibility.
Senator Bill R. O'Donnell, District 5, testified. He explained the procedure to determine an individual was no longer covered by automobile insurance was as follows: when an individual was no longer covered by automobile insurance, his insurance company would notify the Department of Motor Vehicles (DMV); the DMV then sent the individual a letter requesting he provide the names of the company by which he was insured and his insurance agent; if the individual failed to respond, the DMV then sent the individual a certified letter requesting the same information; if the individual still failed to respond, the DMV rescinded his automobile registration; if the individual did respond, the DMV sent the information provided to the insurance company (the individual named) and advised the company it need not respond if the individual was covered by automobile insurance, but if the individual was not covered, the company was to so advise the DMV. Senator O'Donnell stated many insurance companies merely discarded the DMV's letters. He advised the identifying numbers provided the DMV by insurance companies were so inadequate the DMV had only a 50 percent chance of identifying which motorists did and which did not have insurance.
Senator O'Donnell advised the Senate Transportation committee passed a bill, SB 190, which dealt with the issue of uninsured motorists. He pointed out AB 507 suggested fines in amounts of $600 and $1,000. He stated under SB 507, a district court judge could impose a fine of $1,000 and suspend the fine on condition the individual subject to the fine provide proof of automobile insurance coverage each month, for 12 months.
Chairman Porter asked if SB 190 dealt only with fines. Senator O'Donnell responded it did. He advised SB 190 affected only (matters contained in) Section 14 of AB 507 which if passed by the legislature, would be in conflict with SB 190.
Senator O'Donnell stated he did not believe the $1 fee provided by Section 2 of AB 507 was necessary as there existed a reserve of $2.3 million allocated solely for insurance tracking.
Chairman Porter asked if there was presently $2.3 million "in the account" which DMV used to implement its current system of insurance tracking. Senator O'Donnell replied affirmatively.
Ms. Augustine asked if AB 507 would provide the DMV a computer system with which to automate its procedures. Senator O'Donnell responded if the legislature passed AB 507, the DMV had the option to "privatize it." Ms. Augustine stated, "Because there was a heavy fiscal note on doing that. Did you check that out?" Senator O'Donnell responded he had not but was certain any company which provided computer services for the DMV would pay for the computer.
Senator O'Donnell suggested one means to ensure insurance companies provided the DMV with information adequate to enable the DMV to track insurance coverage was to permit the DMV to withhold information needed by those companies to write their policies if the companies failed to provide the DMV with accurate information.
Senator O'Donnell contended the percentage of motorists not covered by automobile insurance could be as high as 25 percent.
Mr. Heller asked if Senator O'Donnell ascertained from the DMV the cost of implementing an insurance tracking system such as Senator O'Donnell wished implemented. Senator O'Donnell responded there was presently $2.3 million in reserve.
Mrs. Williams asked if Senator O'Donnell ascertained whether or not the DMV might need to use the $2.3 million dollar reserve for purposes other than insurance tracking. Senator O'Donnell replied he had, and the reserve was specifically allocated for insurance tracking.
Mr. Garner asked how Senator O'Donnell determined the percentage of motorists who were uninsured. Senator O'Donnell responded he believed there were surveys indicating Nevada had an uninsured motorist population of approximately 5.7 percent. Mr. Garner asked whose surveys those were. Senator O'Donnell responded he did not know. He stated of the 50 percent of motorists for whom the DMV was able to match information, 5 percent were uninsured.
Mr. Garner asked what percentage of motorists Senator O'Donnell contended were uninsured. Senator O'Donnell answered the percentage could be a high as 25 percent, but the actual percentage was unknown. Mr. Garner asked if that information was based on a survey. Senator O'Donnell responded the figure of 5 percent was based on a survey, but the figure of 25 percent was based on the fact the DMV could not match information received from insurance companies with motorists in 50 percent of the cases.
Ms. Giunchigliani asked if it was intended there be a request for proposal "if they did contract out." Senator O'Donnell answered, "Absolutely." He proposed if the DMV could "do the system better and cheaper", it should have authority to do so.
Ms. Giunchigliani referred to Senator O'Donnell's testimony concerning a suspended sentence and the requirement an individual report to the court, and asked if such an individual would be required to report once a month for one year. Senator O'Donnell replied affirmatively, but indicated such individual need not physically go before the court but merely provide evidence to the court (of automobile insurance coverage). Ms. Giunchigliani asked if such a requirement would have a time impact upon the court system. Senator O'Donnell advised the district court judges had testified in favor of that requirement.
Ms. Giunchigliani asked the definition of "for a private purpose" as contained in Section 1 of AB 507. Senator O'Donnell was unable to provide a definition.
Mr. Ray Sparks, Chief, Registration Division, Department of Motor Vehicles and Public Safety, testified. He reiterated testimony given by Senator O'Donnell regarding the DMV's procedure for determining uninsured motorists.
Mr. Sparks advised the $100 fee for reinstating a vehicle's registration was a source of revenue for the special account established for the insurance verification program.
He advised AB 507 would permit the DMV to contract with a vendor or contractor to provide the department with information regarding uninsured vehicles. He advised the contractor would accomplish that purpose by obtaining from those insurance companies which wrote liability insurance in Nevada a list of all such policies and from the DMV a list of all motor vehicles registered in Nevada, matching those two data bases and then advising the department of those vehicles registered in Nevada for which there were no insurance policies. He advised AB 507 accomplished several things, but said privatization of the insurance verification process was the most significant.
Chairman Porter asked if Mr. Sparks was in favor of an automated system such as provided by AB 507. Mr. Sparks said it was his opinion the program would identify a number of uninsured motorists, but he was not certain it would "uncover that many." He advised the department's study indicated the number of uninsured motorists was probably not excessive, and the cost to the state (of the program provided by AB 507) was estimated at 3/4 to $1 million. He suggested it must be decided whether the benefit to be derived was worth the expenditure.
Mr. Sparks stated in 1991, the DMV contracted with a company in Reno to conduct a statistically valid sampling of vehicles registered in Nevada to determine the rate of uninsured motorists. He advised study showed the rate of uninsured motorists to be 5.4 percent. He said a sampling could not be constructed to include unregistered vehicles. He suggested it might be reasonable to assume a higher rate of uninsured motorists in the group of motorists who had not registered their vehicles, as required by law, than in the group of motorists who had registered their vehicles.
Chairman Porter asked if Mr. Sparks took issue with Senator O'Donnell's testimony "that 50 percent of those people are then falling though the cracks under the current system." Mr. Sparks replied he did not. He explained the DMV matched information provided by insurance companies with vehicles based on Vehicle Identification Number(s) (VIN). He said some insurance companies did not "capture" complete VIN numbers and therefore, did not include complete VIN numbers in information they provided to the department, which prevented the department from being able to match those numbers to registered vehicles.
Mr. Porter asked if part of the problem was different insurance carriers provided information in different formats. Mr. Sparks replied some insurance carriers did not report information in the format the DMV needed.
Chairman Porter asked if he correctly understood that under AB 507, if the DMV privatized the program, one entity would gather information and provide that information to the DMV in a usable format. Mr. Sparks responded affirmatively.
Mr. Scherer asked what happened if an individual was not driving his vehicle, allowed his insurance to lapse and upon receiving an inquiry from the DMV, advised the DMV he was not carrying insurance because he was not driving his vehicle. Mr. Sparks responded the DMV would suspend such an individual's vehicle registration, and he would be required to go through the reinstatement process. Mr. Scherer asked if that was true even if the individual could prove he had not driven the vehicle. Mr. Sparks replied it was. He said there was a statutory requirement insurance be maintained during the time a vehicle was registered in Nevada. He advised if evidence was provided to the DMV that a vehicle had not been operated for 30 days, including the date about which the DMV inquired, the owner of the vehicle would not be required to furnish an SR-22 statement but would be required to pay a $100 fee for reinstatement of registration.
Mr. Bonaventura asked if it would be more cost effective for the DMV to administer the program (rather than privatize the program) and whether the DMV had done any financial studies regarding such administration. Mr. Sparks replied the cost for the state to administer the program had not been determined, and he did not know whether a private contractor could administer the program at a lower cost than could the state.
Ms. Giunchigliani asked whether AB 507 was necessary for the DMV to be able to establish a program. Mr. Sparks replied if a program such as contemplated under AB 507 was deemed desirable, legislation would be needed to require insurance companies to provide lists of their insurance policies to the state or its agent. He proposed simply making improvements to the existing insurance verification program could be accomplished without additional legislation.
Ms. Giunchigliani asked whether the DMV contacted insurance carriers and asked if an individual was insured or the insurance carriers notified the DMV. Mr. Sparks responded the process (of ascertaining whether or not a vehicle was insured) commenced when the DMV received notification from an insurance carrier of cancellation of an automobile insurance policy. He advised if the vehicle's owner, in response to an inquiry from the DMV, identified an insurance company (as his carrier), the DMV then requested verification from the insurance company.
Ms. Giunchigliani asked the amount of fine imposed if an individual's automobile insurance policy was canceled and he failed to provide proof of financial responsibility. Mr. Sparks responded, "$100."
Ms. Giunchigliani asked if AB 507 required insurance carriers to provide information to the DMV in a like manner. Mr. Sparks answered AB 507 required insurers to report VIN numbers to the DMV. He advised improvement was occurring with respect to insurance carriers providing full VIN numbers to the DMV.
Ms. Giunchigliani suggested the DMV had the potential to accomplish its program of insurance verification without the necessity of legislation. Mr. Sparks indicated Ms. Giunchigliani's suggestion was correct. He said a significant difference in the program contemplated under AB 507 (and the present program) was the program would provide a more positive check than that provided by the DMV relying on insurance companies to notify it of termination of insurance policies. He advised under AB 507, nearly every vehicle registered in Nevada would be matched against a list of all insured vehicles. Ms. Giunchigliani asked how often such a match would need to be made. Mr. Sparks replied once a month.
Ms. Giunchigliani asked if a motor vehicle owner who chose not to operate his vehicle must first cancel his vehicle registration. Mr. Sparks replied that was correct. Ms. Giunchigliani asked if such a vehicle owner was given any rebate on his vehicle registration fee. Mr. Sparks answered, "No."
Ms. Giunchigliani referred to an incident in which an individual did not respond to an inquiry from the DMV because his young brother had received the DMV's inquiry and not forwarded it to him. She said the individual was fined $100, and there was no statutory provision by which the fine could be waived. She asked if such a "problem" still existed. Mr. Sparks replied it did.
Ms. Giunchigliani asked if the difference AB 507 would provide in the insurance verification program was that of a positive match rather than a negative match. Mr. Sparks answered a positive match was one of the most significant differences AB 507 would provide.
Discussions ensued among committee members.
Representative Kelly G. Atkinson, State of Utah, testified. He stated he sponsored a bill similar to AB 507 which was passed by the Utah legislature but vetoed by the governor of Utah.
He advised there were two procedures which could be utilized under the provisions of AB 507. He said one procedure was an "on demand" procedure, which he described, utilizing a chart entitled "On Demand Procedure" contained in a packet of information (Exhibit C).
He advised AB 507 was the only legislation of its kind in the United States which would require creation of a data base containing information regarding all insured motor vehicles.
Mr. Atkinson advised under the "on demand" procedure, the DMV would be able to ascertain immediately whether or not a vehicle was insured. He said, "...that has to come up three consecutive months, because sometimes there's a lag time when you write insurance."
He described the second procedure which could be used under the provisions of AB 507, utilizing a chart entitled "Law Enforcement Procedure" contained in Exhibit C.
He spoke concerning the need for AB 507. He advised information provided by the DMV in Utah reflected 12.7 percent of automobile accidents in Utah involved uninsured motorists. He said it was believed one in every five Utah motorists was uninsured. He referred to earlier testimony indicating a 4.5 percent uninsured motorist rate based on a written survey by the DMV while 20.2 percent of individuals contacted by telephone, in a follow-up of the survey, were uninsured.
He explained why the insurance industry opposed AB 507. He advised in Utah, uninsured motorist coverage represented a $30 million industry. He contended insurance companies who did not insure against uninsured motorists would have to lower their premiums if AB 507 was passed by the legislature.
Mr. Atkinson said citizens of Utah were outraged by the governor's veto of the Utah bill similar to AB 507.
He advised he believed AB 507 was a good piece of legislation and one which was needed.
Chairman Porter asked if Utah had an insurance premium tax. Mr. Atkinson replied Utah did not.
Mr. Barton Blackstock, Driver Control Bureau Chief, Drivers License Division, Department of Public Safety, State of Utah, testified. He advised he was Chairman of the International Financial Responsibility Committee for the American Association of Motor Vehicle Administrators and also chairman of a financial responsibility committee for the western states for the same association. He stated he had broad, nationwide experience with programs concerned with uninsured motorists and specific experience with the pilot program in Utah. He said the pilot program developed in Utah worked, and he believed it to be the only system in the United States which did work.
Mr. Blackstock indicated in most states, an uninsured motorist was "caught" only after he was involved in an accident. He said the system utilized by Nevada and other states which relied on exception reports did not work. He contended the program provided by AB 507 worked differently from and was better than programs of compulsory insurance or programs which relied on exception reports. He said if the program contemplated by AB 507 went into effect, it would provide the ability to identify an uninsured motorist before he harmed someone. He stated in the decade or more during which he had been involved in attempting to identify uninsured motorists, the program provided by AB 507 was the best he had seen.
Mr. Scherer asked, "Sir, do you know if there is more than one company that offers this kind of service?" Mr. Blackstock replied he had been contacted by five or six companies which said they could provide the service.
Ms. Karen Kavanau, Director, Department of Data Processing, testified. She said the department neither supported nor opposed AB 507, but said AB 507 as written would fragment and duplicate certain responsibilities regarding state information systems. She said it would fragment the responsibilities of contracting for databases and setting regulations. She advised in Sections 7 and 8 of AB 507, the DMV was designated as the contractor, but NRS 242, which regulated the Department of Data Processing (DDP), mandated DDP to be the contractor on behalf of its clients. She advised DDP set standards for all information systems, including standards for contracts. She contended AB 507 would allow DMV to operate outside the standards set by DDP.
She pointed out Section 13 of AB 507 authorized the Director of DMV to set regulations for the proposed database, and stated NRS 242 authorized DDP to adopt appropriate regulations.
Ms. Kavanau explained DMV was exempt from using DDP's services under NRS 242.131 but was not exempt from statewide standards. She said without modification, AB 507 would grant DMV exemptions which would create "the very duplication and fragmentation that we're all working very hard to eliminate."
She proposed three amendments to AB 507 as follows: in Section 7, line 5, the word "department" be changed to "Department of Data Processing"; in Section 8, the words "The department" be changed to "The Department of Data Processing"; and Section 13 be eliminated.
Chairman Porter asked if the proposed amendments would alter the substance of AB 507. Ms. Kavanau replied they would not.
Mr. Bonaventura asked Mr. Sparks what statistics he had concerning uninsured motorists who did not register their vehicles in Nevada and individuals residing in Nevada who had "registered license plates from out of state..." Mr. Sparks advised the program provided by AB 507 would not identify an individual who had not registered his vehicle in Nevada. He said the DMV had no statistics regarding the number of uninsured vehicles improperly registered in Nevada.
Mr. Bonaventura asked if Mr. Sparks knew of any states which had determined what percentage of improperly registered vehicles were uninsured. Mr. Sparks said some states had analyzed the increase in the number of registered vehicles which occurred when those states reissued license plates. He explained when a new, distinctive license plate was required, improperly registered vehicles were more easily identified, and some states had experienced a 10 percent increase in registered vehicles (when they reissued license plates). Mr. Sparks contended one would suspect a substantial number of the vehicles in that 10 percent were uninsured.
Mrs. Williams commented it would be difficult to draw an analogy between Nevada and any other state because Nevada had 20 million visitors a year in the southern part of the state alone. She suggested a pro-active program such as provided by AB 507 would provide a better determination of uninsured motorists than an attempt to check the license plate of every vehicle. Mr. Sparks responded enforcing vehicle registration was complicated by the large number of tourists who drove in Nevada.
Mr. Arberry asked if Mr. Sparks could comment on the $1 fee which Senator O'Donnell had suggested should be deleted from AB 507. Mr. Sparks replied he believed the $1 fee was necessary. He explained the reserve in the insurance verification account to which Senator O'Donnell had referred, was built up over a number of years. He stated if there were no additional revenues with which to pay for the program proposed by AB 507, the reserve might be dissipated in two years. Mr. Arberry asked how much revenue the $1 fee would generate. Mr. Sparks replied the $1 fee would generate a revenue of approximately $l.1 million.
Mr. Sam Sorich, Assistant Vice President, National Association of Independent Insurers (NAII), testified. He advised NAII was a national trade association with approximately 550 members. He stated NAII member companies were responsible for approximately 32 percent of the private-passenger, automobile insurance premiums in Nevada.
He declared NAII was opposed to AB 507 based on experience with enhanced enforcement laws in other states. He contended no enforcement law had delivered on its promise of eliminating uninsured drivers. He said such laws increased costs for state and local governments, insurance companies and insurance consumers. He described the results of such a law in Arizona.
Colloquy between Chairman Porter and Mr. Sorich.
Chairman Porter asked Mr. Sorich to suggest an alternative to AB 507 which would require motorists to purchase automobile insurance. Mr. Sorich suggested bolstering the DMV's current procedures for enforcing existing law.
Chairman Porter asked if insurance companies were concerned about furnishing their proprietary information to the DMV or a private company. Mr. Sorich replied they were concerned.
Further colloquy between Chairman Porter and Mr. Sorich.
Chairman Porter reiterated his request of Mr. Sorich for suggestions. Mr. Sorich suggested ensuring the DMV had resources to make the existing enforcement system work as fully as possible and reducing insurance premiums to make automobile insurance more affordable. Mr. Porter stated he had already attempted Mr. Sorich's concept and the insurance industry had defeated that attempt.
Mr. Bob Crowell, Farmers Insurance, testified. He advised AB 507 required mandatory privatization of the insurance verification program. He suggested Section 8 of AB 507 be amended to provide either the DMV or the DDP "may contract with an agent." Mr. Crowell also recommended increasing the computer interface between insurance companies and the DMV, but without requiring every insurance company to divulge its entire client base.
Chairman Porter pointed out AB 507 contained a confidentiality provision with regard to sharing of proprietary information. Discussions ensued between Chairman Porter and Mr. Crowell regarding insurance companies' concerns about divulging their client bases and provisions of AB 507 for safeguarding such information.
Mr. Crowell advised SB 190 and SB 193, passed by the Assembly Committee on Transportation, conflicted with the purpose of AB 507.
Mr. Scherer asked Mr. Crowell to be more specific regarding insurance companies' concerns about sharing information. Mr. Crowell responded "everybody" competed for "everybody else's customers," and the concern was that a company's client base would be divulged for other than a lawful governmental purpose. Mr. Scherer asked if prohibiting any private vendor (contracted with to provide the database) from selling insurance in Nevada would alleviate some of the concern. Mr. Crowell indicated such a prohibition would help but might not entirely resolve the concern.
Mr. Scherer asked if Mr. Crowell was familiar with the data concerning Arizona (discussed by Mr. Sorich). Mr. Crowell said he was somewhat familiar with the data. Mr. Scherer asked if Mr. Crowell was familiar with the data concerning a $44 million decrease in registration fees (in Arizona). Mr. Crowell replied a newspaper article said registration fees in Arizona had decreased by $44 million as a result of the law (similar to AB 507); he indicated he did not know whether or not the information in the article was correct.
Discussions ensued among committee members and Mr. Crowell regarding the possibility of information provided by insurance companies regarding their client bases being divulged.
Chairman Porter closed the hearing on AB 507.
ASSEMBLY BILL 384Makes certain changes to requirements for certification as certified public accountant.
Mr. Bill Zideck, Executive Director, Nevada State Board of Accountancy, testified. He said AB 384 related solely to the CPA licensing examination. He stated the Uniform CPA Examination was given nationwide and was conducted by the State Board of Accountancy. He advised Nevada had between 400 and 500 candidates for the examination yearly. He explained AB 384 would change the examination, which had remained unchanged for 30 years, and would permit Nevada to continue giving the CPA examination. He declared it was critical to Nevada that the legislature pass AB 384.
Mr. Todd Russell, independent counsel for the Nevada State Board of Accountancy, testified. He said, "All we're doing is bringing the statute in conformance so that we can have an exam in 1994 in the state of Nevada, Mr. Chairman."
Chairman Porter suspended the hearing on AB 384.
SB 249 Repeals provisions which ban certain outdoor advertising by hotel, inn, motel or motor court.
Mr. Ben Graham, Nevada District Attorney's Association, testified. He explained AB 249 would repeal portions of NRS Chapter 641 found to be unconstitutional.
Chairman Porter closed the hearing on SB 249.
Prior to the hearing on SB 249, a document entitled "Official Opinions of the Attorney General" (Exhibit D) was submitted to Chairman Porter for inclusion in the record of the meeting.
ASSEMBLYMAN HUMKE MOVED DO PASS SB 249.
ASSEMBLYMAN PERKINS SECONDED THE MOTION.
MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT; Assemblymen Arberry, Heller and Scherer were absent when the vote was taken.
Chairman Porter assigned SB 249 to Assemblyman Humke for a floor statement.
SB 30Revises provisions relating to payment by insurer for repair of motor vehicle covered by policy of insurance.
Mr. Daryl E. Capurro, Nevada Franchised Auto Dealers Association, and Mr. Kenny Grigg introduced themselves. Mr. Capurro then testified. He advised several years earlier problems were experienced with untimely insurance payments and with insurance checks which were made out to individuals (rather than the automobile body shops). He said the problems were believed solved when the legislature passed a bill which provided payments must be made within 30 days and checks must be made payable either jointly to an automobile body shop and a claimant or to the automobile body shop alone. He indicated because of a problem with wording of that bill, some insurance companies took the position the law did not apply to them because they did not authorize the work. He pointed out the change provided in Section 1, line 6, of SB 30 specified the insured as the one who authorized work to be performed and the insurer as the one who provided payment.
Chairman Porter asked, "And both of them have to agree, right?" Mr. Capurro responded, "Yes."
He explained problems sometimes arose when cost to repair a vehicle greatly exceeded an insured's equity in the vehicle, and the insured collected an insurance check for the cost of repairs but did not pay for those repairs. He suggested this situation left the holder of the lien on the vehicle and the automobile body shop which repaired the vehicle in the position of determining which would accept the loss. He suggested the provision of SB 30 commencing on line 14 of page 1 would resolve that problem.
Mr. Capurro advised the association supported SB 30, and there was no opposition presented during the Senate's committee's hearing on the bill.
Senator Leonard V. Nevin, District 2, testified. He advised if a body shop ordered parts with which to repair a vehicle, and the repairs were either canceled or not paid for, the body shop suffered a loss.
Mr. Scherer asked Mr. Capurro if Sections 2 and 3 of SB 30 required an automobile be repaired by a licensed body shop. Mr. Capurro replied affirmatively.
Mr. Scherer asked if an insured would have more difficulty asserting his rights, in a dispute with a body shop over the amount of it's bill, if a check (issued by an insurance company) was made out to both the insured and the body shop. Mr. Capurro replied the insured would not. He said the insured must acknowledge by his signature that repairs were satisfactorily completed.
Ms. Augustine asked if it was not correct that most insurance companies presently issued checks made payable to an insured "or" a body shop. Mr. Capurro responded most insurance companies presently issued checks jointly payable to an insured and a body shop or payable only to the body shop. Ms. Augustine asked if it would not be better if insurance companies issued checks payable either to an insured "or" a particular body shop, suggesting an insured might change his decision to have his vehicle repaired at a particular body shop. Mr. Capurro explained if an individual arranged with a body shop for repair of his vehicle, the body shop incurred costs for any parts it ordered to effect those repairs even if the individual did not proceed to have the repairs done by that body shop.
Extensive discussions ensued.
Chairman Porter closed the hearing on SB 30.
ASSEMBLYMAN BENNETT MOVED TO AMEND SB 30 BY DELETING THE CHANGE CONTAINED IN LINES 7 AND 8 ON PAGE 1 AND DO PASS.
ASSEMBLYMAN HELLER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT; Assemblyman Arberry was absent when the vote was taken.
Chairman Porter reopened the hearing on AB 384.
Mr. Joseph C. Luke testified concerning certain proposed amendments to AB 384.
Chairman Porter advised Mr. Luke the amendments Mr. Luke proposed did not pertain to the subject matter of AB 384 and that posted notice must be given of all matters to be heard by the committee. Chairman Porter proposed a bill addressing Mr. Luke's concerns be drafted and set for hearing on a date convenient to Mr. Luke's schedule. Mr. Luke concurred with Chairman Porter's proposal.
Chairman Porter closed the hearing on AB 384.
ASSEMBLYMAN HUMKE MOVED DO PASS AB 384.
ASSEMBLYMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY BY ALL THOSE PRESENT; Assemblyman Arberry was absent when the vote was taken.
AB 507 Establishes system for verifying that owners of motor vehicles maintain mandatory proof of financial responsibility.
ASSEMBLYMAN WILLIAMS MOVED TO AMEND AB 507, IN LINE 8 OF SECTION 8, BY CHANGING THE WORD "DEPARTMENT" TO THE WORDS "DEPARTMENT OF DATA PROCESSING" AND THE WORDS "SHALL CONTRACT" TO THE WORDS "MAY CONTRACT" AND BY DELETING SECTION 13 AND DO PASS.
ASSEMBLYMAN HUMKE SECONDED THE MOTION.
Discussions by committee members.
MOTION CARRIED UNANIMOUSLY.
There being no further business before the committee, Chairman Porter adjourned the meeting.
RESPECTFULLY SUBMITTED,
_______________________
SARA J. KAUFMAN
Committee Secretary
??
Assembly Committee on Commerce
May 10, 1993
Page: 1