MINUTES OF THE
SENATE Committee on Transportation
Seventy-First Session
February 22, 2001
The Senate Committee on Transportationwas called to order by Chairman William R. O'Donnell, at 1:37 p.m., on Thursday, February 22, 2001, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator William R. O'Donnell, Chairman
Senator Mark Amodei, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Maurice Washington
Senator Raymond C. Shaffer
Senator Terry Care
Senator Maggie Carlton
GUEST LEGISLATORS PRESENT:
Senator Raymond (Ray) D. Rawson, Clark County Senatorial District No. 6
Senator Joseph (Joe) Neal Jr., Clark County Senatorial District No. 4
STAFF MEMBERS PRESENT:
Donald O. Williams, Committee Policy Analyst
Alice Nevin, Committee Secretary
OTHERS PRESENT:
Joan Burtnett, Concerned Citizen
Judith Ruiz, President, Las Vegas Valley Humane Society
Madelaine Dayton, Nevada Society for the Prevention of Cruelty to Animals
Pete Bachstadt, Lobbyist, Carson/Eagle Valley Humane Society
Ed Wagner, Coalition for Nevada’s Wildlife
Janine Hansen, Lobbyist, Nevada Eagle Forum
Lynn Chapman, Lobbyist, Families for Freedom
Rick Elmore, Director, Nevada Bighorns Unlimited, and Member, Coalition for Nevada’s Wildlife
Dana Mathiesen, Administrator, Central Services and Records Division, Department of Motor Vehicles and Public Safety
Robert A. Ostrovsky, Lobbyist, The Hertz Corporation
Bernard Kaufman, Nevada Car Rental Association
Stephen M. Jarvis, City Manager, The Hertz Corporation
Mike Stergios, Manager, Thrifty Car Rental
Jim L. Werbeckes, Lobbyist, Farmers Insurance Group
Chairman O'Donnell opened the hearing on Senate Bill (S.B.) 54.
SENATE BILL 54: Provides for issuance of special license plates for support of rights of animals. (BDR 43-693)
Senator Raymond (Ray) D. Rawson, Clark County Senatorial District No. 6, introduced a constituent, Joan Burtnett, Concerned Citizen. Ms. Burtnett testified she had requested this legislation as a means to initiate a pet-friendly special license plate program in Nevada. Ms. Burtnett presented a packet of materials (Exhibit C. Original is on file in the Research Library.). She commented this bill would provide a means for nonprofit animal shelters to receive additional funding.
Chairman O'Donnell asked if S.B. 54 comported other special license plates as far as cost of the initial purchase and renewal rate. Ms. Burtnett answered yes.
Senator Rawson presented suggested amendments to the bill (Exhibit D), saying the proposed changes deleted all references to the People for Ethical Treatment of Animals (PETA). He continued, funds generated from the sale of the special license plates would be distributed to the counties. He stressed the funds would be in proportion to the number of plates sold within the county and would be used to support animal shelters or animal adoption programs approved by local government. Senator Rawson emphasized the intent of the bill was to provide a way for people to show their appreciation and support for animals. He explained pages 6 and 7 of Exhibit D contained an example [the New Jersey special interest license plate] which demonstrated how the special plate could be done.
In addition, Senator Rawson proposed a new approach to the production of special license plates. He suggested standardizing the license plate design, but including an area on the plate for imprinting a special interest slogan, insignia, emblem, or logo. He noted this would make it easier for law enforcement agencies to identify state of Nevada license plates.
Senator Carlton asked for an explanation of the distribution of funds generated by this license plate. Senator Rawson explained dollars from the sale of the special plates would be received by the Department of Motor Vehicles and Public Safety (DMV/PS) and apportioned out to counties on the basis of how many license plates were purchased in that county. Senator Carlton asked if the funds could support both state and local animal control centers, for example, the Clark County animal shelter. Senator Rawson replied funds could support animal shelters or animal adoption programs approved by local governments that operated with the county, but no state-run programs.
Chairman O'Donnell turned the meeting over to Vice Chairman Amodei. A list and description of current special license plates in Nevada was given to the committee (Exhibit E). Donald O. Williams, Committee Policy Analyst, Legislative Counsel Bureau, provided this material.
Judith Ruiz, President, Las Vegas Valley Humane Society, testified in support of S.B. 54.
Chairman O’Donnell returned to the meeting and called Madelaine Dayton, to testify. Madelaine Dayton, Nevada Society for the Prevention of Cruelty to Animals (NSPCA), said she supported the bill and commented the funds would aid the local spay and neuter program.
Pete Bachstadt, Lobbyist, Carson/Eagle Valley Humane Society, presented a letter in support of the bill (Exhibit F). In addition, Mr. Bachstadt spoke in favor of the proposed amendments.
Ed Wagner, Coalition for Nevada’s Wildlife, submitted a letter (Exhibit G) in opposition of the bill.
Janine Hansen, Lobbyist, Nevada Eagle Forum, stated she opposed S.B. 54 but supported Senator Rawson’s proposed amendments. She presented materials (Exhibit H) for review.
Lynn Chapman, Lobbyist, Families for Freedom, testified against S.B. 54 but stated she would support the bill if amended.
Rick Elmore, Director, Nevada Bighorns Unlimited, and Member, Coalition for Nevada’s Wildlife, said the bill as amended would be acceptable.
Dana Mathiesen, Administrator, Central Services and Records Division, Department of Motor Vehicles and Public Safety, stated the bill had a fiscal note. She noted the sale of 250 license plates would not cover the cost of production of the special plates. Ms. Mathiesen recommended changing section 1, subsection 1, of S.B. 54 to require 283 applications; or change section 1, subsection 3, to increase the fee for the original issuance of the plate, from $35 to $40. Chairman O’Donnell said this would be discussed again in a subcommittee meeting.
Chairman O'Donnell closed the hearing on S.B. 54 and opened the hearing on Senate Bill (S.B.)102.
SENATE BILL 102: Limits amount short-term lessor of motor vehicles may charge lessee for waiver of damages and optional insurance. (BDR 43-741)
Senator Joseph (Joe) Neal Jr., Clark County Senatorial District No. 4, commented S.B. 102 is a measure designed to aid consumers and tourists who rent automobiles in this state. He said presently car rental agencies make a considerable amount of money in the process of insuring rental cars. He noted S.B. 102 would prevent a charge of more than $10 per a full or partial 24-hour rental period for the waiver of damages and optional insurance of rental automobiles.
Senator Neal related a personal experience on this subject. He explained he waived coverage of the optional insurance on a rental car. He was subsequently held responsible for additional costs above the amount his private insurance company paid to the car rental agency, following an accident with the rental car. He emphasized the purpose of this bill was to prevent the public from paying additional cumulative charges for insurance on a rental car.
Chairman O'Donnell summarized the short-term lessor may currently charge for a waiver of damage and optional insurance as a part of the rental contract. He said this bill limits the amount the short-term lessor may charge for this service.
Robert A. Ostrovsky, Lobbyist, The Hertz Corporation, stated S.B. 102 would help consumers but could halt the sale of rental insurance because it would be cost-prohibitive. He added the next bill to be heard requested the opposite of this bill by asking for an increase in rates for collision-waiver damage insurance.
Mr. Ostrovsky provided a customer brochure (Exhibit I) which included optional coverage costs. He noted when a customer purchased the loss damage waiver insurance, liability insurance and/or personal effects insurance, the risk was not underwritten as an insurance company would do. He stated private insurance companies determined rates commensurate with the consumer’s risk factor, but anyone could buy this product and there was no way to underwrite the risk. He said only 20 percent of customers buy this product and usually when the risk is high, such as in bad weather. He pointed out this problem is different from insurance on personal vehicles. Mr. Ostrovsky stressed this is an optional insurance which needs to be provided but, “You cannot get something for free which costs money.”
Senator Carlton clarified eligibility for car rental. She added those restrictions eliminate a portion of the risk factor. She asked if rates charged depended upon the kind of car, as is the case with personal car insurance. Mr. Ostrovsky answered there is a limit set by statute of $10. He stressed this rate has been in place since 1989 and is charged to all customers for any type of car, from a Ford Escort to a Lincoln Continental.
Bernard Kaufman, Nevada Car Rental Association, spoke against S.B. 102. He noted when the bill came about several years ago, the cost of purchasing cars was less; for example, dealer’s cost for a compact car was $9000 in 1990, as opposed to $14,000 today; a luxury car cost $25,000, as opposed to $40,000 today. Mr. Kaufman emphasized the cost of labor to repair rental cars has gone up but the coverage must be provided because tourists and foreign visitors ask for the coverage. Mr. Kaufman emphasized that he opposed limiting the amount which could be charged for the waiver of damages and optional insurance, in fact, he was in favor of increasing the fee because the cost to purchase insurance had increased.
In response to Chairman O'Donnell’s question, Mr. Kaufman said if the customer waived the coverage, and there was an accident involving the rental car, the car rental agency would contact the person’s insurance company for reimbursement. He continued, while there was no deductible on the $10 charge for the optional insurance, if the customer used his own insurance, he would be required to pay the difference to complete the cost of the car repair. Chairman O’Donnell asked if most car rental agencies did their own repairs and Mr. Kaufman said his agency sent work out to local companies because it was important to get the work done as reliably and quickly as possible.
Chairman O'Donnell asked if Mr. Kaufman had a deductible on his car rental insurance and he said no. He clarified if the customer waived the insurance, and had an accident, he would be required to pay the deductible to the rental agency to complete the cost of the repairs. Chairman O'Donnell asked if the customer could be disenfranchised by the rental agency taking the car to a specific garage. Mr. Kaufman clarified body shops usually go along with the insurance company’s estimate of the damage.
Stephen M. Jarvis, City Manager, The Hertz Corporation, said large corporations get lower rates from body shops, have estimators on staff, and pass on parts discounts received from manufacturers to the customer. He noted only very large collisions, or total losses, bring out insurance company estimators. In most cases, insurance companies accept in-house estimates.
Mike Stergios, General Manager, Thrifty Car Rental, said as a franchise, locally owned and operated, local body shops gave guaranteed rates which were usually less than retail. He stressed the customer may actually pay less than the average person would pay for repairs on their own personal car. He continued perhaps Senator Neal paid the deductible, loss-of-use time and administrative fees, which agencies are allowed to charge. He remarked S.B. 102 would force car rental agencies to cease this type of coverage. Mr. Stergios noted, in answer to Senator Carlton’s earlier question, his company did rent to persons between the ages of 21 and 25, for an additional fee, because of the higher risk.
Chairman O'Donnell asked about the profit made in a year and Mr. Stergios replied in a good year, profit could be two to three percent. He added the profit from insurance depended on the number of losses there were in any given year. He said last year six cars were lost; cars were both stolen and totaled. He commented when the customer rented the car with coverage, and did not violate the contract, his company had no insurance covering the loss. Mr. Stergios stressed small agencies cannot afford to pay for collision damage insurance to an insurance carrier.
Chairman O'Donnell asked for actuarial data. Mr. Stergious said aggregate costs of damages outweighed collections last year in his agency. Mr. Jarvis agreed with this statement and added the figure $3600 ($10 per day for 360 days) assumed the car was rented 360 days a year which was not a realistic figure. He acknowledged his agency did not collect as much as it spent. Mr. Kaufman agreed with Mr. Stergios and Mr. Jarvis. Mr. Jarvis stated this bill would penalize the customer because it would force rental rates to increase. Mr. Stergios stressed rental rates are less now than they were 20 years ago; however, car costs have quadrupled.
Senator Amodei reviewed estimate and repair procedures for damaged rental cars and concluded it varied with different companies. He asked for an explanation of loss-of-use charges and other possible charges when the optional coverage is waived. Mr. Stergious answered administrative fees or loss-of-use charges can come into play if the customer waived insurance, because insurance companies normally refuse to pay these charges. He explained loss-of-use time was counted as 8 hours in a day and the administrative fee was based on the amount of damage to the vehicle.
Chairman O'Donnell clarified that the law does not allow companies to sell a deductible coverage and insurance companies cover all but the deductible amounts. He suggested since there is currently no provision in the law to allow rental agencies to collect the differential cost, perhaps a deductible coverage was needed to address this problem.
Senator Carlton reviewed coverage under the current law: personal effects coverage at $4.95; loss damage waiver at $10; collision damage waiver at $10, totaling $24.95 for the three types of coverage. In response to a question from Senator Carlton, Mr. Kaufman answered under S.B. 102, $10 was the maximum that could be charged for all types of coverage.
Chairman O'Donnell closed the hearing on S.B. 102 and opened the hearing on Senate Bill 118.
SENATE BILL 118: Revises certain provisions governing fees charged by short-term lessors of passenger cars. (BDR 43-708)
Chairman O'Donnell asked if the testimony just heard could suffice as testimony for this bill. Mr. Kaufman said S.B. 118 contained another issue in addition to the request to increase fees for the short-term lessor of a passenger car. He explained there was a request in the bill under section 2, subsection 1, paragraph (f), for an additional fee of $5 per full or partial 24-hour period for certain additional authorized drivers, in addition to the short-term lessee and one other authorized driver.
Chairman O'Donnell asked if the car rental industry had any oversight from the insurance commissioner [Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry]. Mr. Kaufman answered no because the rates are statutorily fixed in the law.
Senator Carlton clarified the words “additional driver” in the bill included the spouse. Mr. Kaufman replied it included immediate family and sometimes children if they were on the same insurance policy. He noted this could vary with different agencies.
Mr. Stergious stated this bill contained requests for increases that were needed for the agencies to stay in business. Chairman O'Donnell emphasized actuarial numbers were needed to make certain these were valid requests. Chairman O’Donnell suggested the answer might be to work with the insurance commissioner on actuarial numbers. Chairman O’Donnell said:
We are willing to help . . . but when we stick these hard-coated numbers in the law, we essentially put a non-depreciable schedule in the law and over a period of time the value of that purchasing power of the dollar goes down . . . We are committed to fix it but how to fix it is to be determined by this committee. Maybe, by your input, we can come to some kind of resolve on this issue.
Robert A. Ostrovsky, Lobbyist, The Hertz Corporation, reiterated the current fee is set in the law. He remarked the insurance commissioner said this matter was not insurance and therefore not regulated by that office; Ms. Molasky-Arman said her office had never set rates for this product because it was not underwritten and did not spread the risk. Mr. Ostrovsky called attention to the fact that at least one supervisor is licensed at each car rental location to make sure the customer has a qualified person available to answer any insurance questions.
Answering Senator Carlton’s question, Mr. Ostrovsky stated the Nevada Revised Statutes (NRS) 482.31515 defines an authorized driver as the short-term lessee of a passenger car and the spouse of the short-term lessee, if the person is a licensed driver and satisfies any minimum age requirement of the short-term lessor. He noted the intent was to retain that language in the law.
Mr. Ostrovsky pointed out every Nevada driver is mandated to carry automobile insurance; car rental customers are people who may not have other insurance, already had a risk, or are customers who mistreat cars. He voiced car rental agencies suffer more damage than is commonly known. Senator Washington commented if this legislation passed and was turned over to the insurance commissioner, when the actuaries are known, there could be a matrix of coverage based on a whole myriad of things.
Mr. Kaufman said rental companies pay for insurance on all rental cars and it is not related to the charges discussed under this bill. He summarized the request is to increase the amount for a waiver of damages from $10 to up to $15, in order to help agencies recoup their costs. He stressed it is still an option for the customer to buy this coverage for the rental car. Senator Washington reiterated the short-term car lessors are not trying to make money here, just recoup costs.
Jim L. Werbeckes, Lobbyist, Farmers Insurance Group, spoke in opposition to S.B. 118. He noted the verbiage in section 2, subsection 1, paragraph (f), does not adequately reflect the intent of the bill. He said he was opposed to the $5 increase. Chairman O'Donnell asked Mr. Werbeckes if his agency would oppose a co-payment type of coverage and Mr. Werbeckes said it would probably be a good thing. Chairman O'Donnell asked if Mr. Werbeckes would work as an advisor to an appointed subcommittee on this matter. Mr. Werbeckes said yes.
Chairman O'Donnell closed the hearing on S.B. 118 and appointed Senator Carlton, Senator Washington, and Senator Amodei to a subcommittee on S.B. 56, with Senator Amodei acting as chairman.
Chairman O'Donnell announced that a bill had been requested regarding land that the Nevada Department of Transportation (NDOT) had the ability to condemn. He said the bill would allow the person whose land had been taken to have the first right of refusal to pay the bid price to get the land back. He noted an amendment would probably surface in this committee and could be tacked on another bill.
There being no further business, Chairman O'Donnell adjourned the meeting at 3:15 p.m.
RESPECTFULLY SUBMITTED:
Alice Nevin,
Committee Secretary
APPROVED BY:
Senator William R. O'Donnell, Chairman
DATE: