Legislature(2003 - 2004)

03/12/2003 04:03 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 120-SERVICE CONTRACT SALES ARE NOT INSURANCE                                                                               
Number 0041                                                                                                                     
CHAIR ANDERSON announced  that the first order  of business would                                                               
be HOUSE BILL  NO. 120, "An Act excluding  service contracts from                                                               
regulation as insurance; and providing for an effective date."                                                                  
Number 0054                                                                                                                     
RYNNIEVA  MOSS,  Staff  to Representative  Jack  Coghill,  Alaska                                                               
State Legislature,  sponsor of HB  120, explained that  this bill                                                               
was  held over  from  the  March 5  meeting  because of  concerns                                                               
expressed by  Representatives Rokeberg,  Lynn, and  Senator Ralph                                                               
Seekins  [about  businesses  selling  home  warranties  and  auto                                                               
service contracts without an  insurance license].  Representative                                                               
Rokeberg's suggested revision  was sent to the  bill drafter Mike                                                               
Ford, Legislative Legal and Research  Services.  Ms. Moss relayed                                                               
Mr.  Ford's opinion  that the  language in  [Version 23-LS0537\D]                                                               
removed  those   types  of   service  contracts   from  insurance                                                               
regulation  and that  additional changes  were unnecessary.   She                                                               
distributed a  proposed amendment  by the Division  of Insurance,                                                               
Department  of Community  and Economic  Development, which  set a                                                               
maximum  value  on the  purchase  price  of items  whose  service                                                               
contracts would  be exempted from  the insurance code.   She said                                                               
the  concerns  of  the  Division   of  Insurance  might  best  be                                                               
addressed in separate legislation.   Ms. Moss said Representative                                                               
Coghill wants  to pass  a bill that  legalizes the  activities of                                                               
many honest businessmen.                                                                                                        
Number 0181                                                                                                                     
REPRESENTATIVE  ROKEBERG  summarized   the  testimony  from  last                                                               
week's meeting.   He said  that there are special  provisions for                                                               
automobile  service contracts  in current  law.   Home warranties                                                               
that  are  sold  by  realtors and  homebuilders  fall  under  the                                                               
purview of  the insurance law.   He asked if that  was Ms. Moss's                                                               
understanding of the current law.                                                                                               
MS. MOSS  replied that  Mr. Ford  said that the  use of  the word                                                               
"property' in [Version D] of  the bill would probably cover those                                                               
concerns [by removing home warranties  and auto service contracts                                                               
from oversight by the Division of Insurance].                                                                                   
REPRESENTATIVE ROKEBERG asked  to make clear for  the record that                                                               
automobiles  and  home  warranties  would be  excluded  from  the                                                               
purview of insurance under HB 120.                                                                                              
MS.  MOSS replied  that  Mr. Ford  had said  yes,  they would  be                                                               
Number 0266                                                                                                                     
REPRESENTATIVE LYNN  questioned what  had changed since  the last                                                               
hearing in  which the committee  was told that realtors  who sold                                                               
home warranties were violating the insurance law.                                                                               
MS. MOSS  replied that  the bill  drafter and  the administration                                                               
interpret the current law differently.                                                                                          
REPRESENTATIVE LYNN asked which agency  is going to interpret the                                                               
law if he sells someone a home warranty.                                                                                        
MS.  MOSS  said   that  is  one  reason   for  this  legislation;                                                               
Representative Coghill  does not  want the  law interpreted  on a                                                               
case-by-case basis.  She said  he believes that service contracts                                                               
should be excluded from the insurance title.                                                                                    
Number 0326                                                                                                                     
REPRESENTATIVE ROKEBERG suggested getting  a letter from Mr. Ford                                                               
that states that  the sellers of auto service  contracts and home                                                               
warranties are covered  by this bill and thereby  exempt from the                                                               
insurance  statute.   He  added  that Mr.  Ford  should be  asked                                                               
whether any amendments to HB 120 are necessary.                                                                                 
Number 0365                                                                                                                     
STAN   RIDGEWAY,   Deputy   Director,  Division   of   Insurance,                                                               
Department of  Community and Economic Development,  addressed the                                                               
questions  raised  by  Representatives  Rokeberg and  Lynn.    He                                                               
agreed  that   HB  120  does  exempt   homeowner  warranties  and                                                               
automobile service  contracts.   He said  when he  testified last                                                               
week, he made  a misstatement when he said the  division does not                                                               
regulate service  contracts at this  time.  He explained  that he                                                               
should have said  that the division does not  regulate the aspect                                                               
of a  service contract that  requires someone to have  a license.                                                               
This is  because the only  way the  division knows if  someone is                                                               
selling insurance  without a license  is when a customer  files a                                                               
complaint against the seller.  He  said that most of the auto and                                                               
homeowner contracts sold are above board.                                                                                       
Number 0455                                                                                                                     
MR.  RIDGEWAY  explained that  the  division  has rate  and  form                                                               
filings from  all the companies  that sell home  owner warranties                                                               
and auto  contracts; they all pay  premium taxes to the  State of                                                               
Alaska.  Some  24 insurance companies sell  home owner warranties                                                               
(which  are listed  as "other  than auto  type" warranties),  and                                                               
another   34  insurance   companies  sell   mechanical  breakdown                                                               
insurance,  for  example,  covering problems  with  home  heating                                                               
systems.   The  division  lists 45  companies  that sell  vehicle                                                               
service contracts,  and 17 companies sell  contracts specifically                                                               
related to  autos.  He  said that's 62 insurance  companies (with                                                               
some duplication between  the two lists) that pay  premium tax on                                                               
auto-related products.   He said if these  products were exempted                                                               
from  the  insurance  code,  HB  120  would  have  a  significant                                                               
financial  impact because  the Division  of Insurance  would lose                                                               
these  premium  taxes.   Mr.  Ridgeway  said he  also  researched                                                               
automobile  companies  that  have  licenses  to  sell  automobile                                                               
insurance, a type of credit insurance.   He has a 10-page list of                                                               
new and used auto dealers  that have filed for insurance licenses                                                               
to sell credit and/or property insurance.   He said some of those                                                               
auto dealers have an appropriate license and some do not.                                                                       
Number 0584                                                                                                                     
MR.  RIDGEWAY explained  that after  the  legislature passed  the                                                               
Omnibus  Insurance  Bill  last year,  the  division  changed  the                                                               
licensing process and  added a limited lines  license that covers                                                               
credit  insurance.   He suggested  that  the division  add a  new                                                               
limited  lines  license  that  would  cover  service  warranties,                                                               
assuring  that these  were regulated  by the  state.   This would                                                               
allow people  selling service contracts  to register for  a small                                                               
Number 0610                                                                                                                     
MR. RIDGEWAY  described the division's  proposed amendment  to HB
120, which read:                                                                                                                
     (e) This  title does  not apply  to a  service contract                                                                    
     offered, issued for delivery,  delivered, or renewed in                                                                    
     this state  where the tangible property  has a purchase                                                                  
     price  of $8,000.00  or less,  exclusive of  sales tax.                                                                  
     In   this   subsection,   "tangible   property"   means                                                                  
     household  consumer goods;  "service contract"  means a                                                                  
     contract  or  agreement  to  provide  for  the  repair,                                                                    
     replacement,   or  maintenance   of  property   over  a                                                                    
     definite period of time in  exchange for a fixed amount                                                                    
     of money.                                                                                                                  
MR.  RIDGEWAY explained  that the  division's proposed  amendment                                                               
would classify  tangible property  that has  a purchase  price of                                                               
$8,000 or  less, exclusive of sales  tax, and would define  it as                                                               
household consumer  goods.  This  amendment would  exempt service                                                               
contracts  on household  consumer goods  but would  leave service                                                               
contracts for  homes, autos, ambulance  services, and  many other                                                               
products currently  interpreted as  insurance under  the Division                                                               
of Insurance.                                                                                                                   
Number 0669                                                                                                                     
REPRESENTATIVE  LYNN   asked  Mr.  Ridgeway  about   a  realtor's                                                               
liability for a customer's complaint about a home warranty.                                                                     
MR. RIDGEWAY  replied that  normally the  dispute is  between the                                                               
company settling the claim and  the customer, not necessarily the                                                               
seller  of the  insurance.    Under the  current  law, a  realtor                                                               
should  have a  license to  sell that  product; under  HB 120,  a                                                               
realtor would be  exempt from having to have a  license to sell a                                                               
home warranty.                                                                                                                  
Number 0766                                                                                                                     
MR. RIDGEWAY, answering a question  from Chair Anderson, said the                                                               
department prepared  an indeterminate  fiscal note with  the hope                                                               
that the committee would accept  the division's amendment.  If it                                                               
is not accepted,  the department would have to  research the cost                                                               
of  the legislation.    The  resulting fiscal  note  would be  an                                                               
estimate because  companies combine  their insurance  products to                                                               
calculate their premium taxes.                                                                                                  
REPRESENTATIVE   ROKEBERG  commented   that   Mr.  Ridgeway   has                                                               
identified  automobile  businesses  that  are  covered  under  AS                                                               
45.25.620  [Service  contracts]  as   having  to  file  with  the                                                               
Division of Insurance.                                                                                                          
MR.  RIDGEWAY   replied  that   according  to   the  department's                                                               
assistant attorney  general, AS  45.25.620 requires  a disclosure                                                               
document if the business sells  automobile service contracts.  He                                                               
said  the statute  does  not exempt  service  contracts from  the                                                               
insurance code.                                                                                                                 
REPRESENTATIVE  ROKEBERG clarified  that  he was  saying that  it                                                               
sounds as  if most  automobile companies  are complying  with the                                                               
division's regulations.                                                                                                         
Number 0872                                                                                                                     
MR. RIDGEWAY replied  that 90 percent of those  businesses have a                                                               
license to  sell credit insurance,  and a  few have a  license to                                                               
sell property insurance.   He said in that  sense, the businesses                                                               
are not complying  with the insurance law when  they sell service                                                               
REPRESENTATIVE  ROKEBERG  asked  the  difference  between  credit                                                               
insurance  and  property  insurance  as they  relate  to  service                                                               
MR. RIDGEWAY  replied that  credit insurance covers  a loss  if a                                                               
person dies  while they have and  are paying a contract;  it is a                                                               
hybrid type of  life insurance.  He added  that service contracts                                                               
fall under  the property  and casualty  insurance.   He confirmed                                                               
that credit insurance would not be affected by HB 120.                                                                          
Number 0929                                                                                                                     
MR.  RIDGEWAY,  upon   questioning  by  Representative  Rokeberg,                                                               
explained that  a few  automobile dealers  have licenses  to sell                                                               
service contracts.                                                                                                              
REPRESENTATIVE ROKEBERG asked  why there would be  a large fiscal                                                               
note if  most of  the companies referred  to earlier  sell credit                                                               
insurance  and their  payment of  fees would  not be  affected by                                                               
this bill.                                                                                                                      
MR.  RIDGEWAY replied  that  the  fiscal note  would  be tied  to                                                               
exempting  service  contracts  from  the  insurance  code.    The                                                               
insurance companies that pay premium  taxes - a percentage on the                                                               
gross premiums  sold in the state  - would no longer  have to pay                                                               
those  premium  taxes.   So  the  impact  would  be the  loss  of                                                               
thousands and thousands of dollars.                                                                                             
Number 1003                                                                                                                     
REPRESENTATIVE ROKEBERG replied that  the committee would like to                                                               
know the  amount of that  loss.  He asked  if there's only  a few                                                               
firms selling  property insurance now, if  they're registered and                                                               
paying  premium  taxes,  then  how much  premium  tax  would  the                                                               
division lose?   Many firms  aren't registered with  the division                                                               
[and therefore are not paying premium taxes].                                                                                   
Number 1019                                                                                                                     
MR.  RIDGEWAY  explained  that  there are  two  kinds  of  taxes:                                                               
premium  taxes and  licensing  fees.   The  people  who sell  the                                                               
product for  the auto dealers  have to have  a license; to  get a                                                               
license, they pay a fee.   The insurance company that files forms                                                               
with the  division to  sell products in  Alaska pays  the premium                                                               
tax, not  the auto dealer  who sells  the insurance policy.   The                                                               
insurance company  pays a  flat percentage on  gross sales.   For                                                               
example, the  individual State Farm  insurance agent who  sells a                                                               
customer an  auto policy does  not pay premium taxes;  State Farm                                                               
pays those taxes.                                                                                                               
REPRESENTATIVE ROKEBERG  said Mr.  Ridgeway testified  that there                                                               
are  very  few people  who  are  covered  by  this bill  who  are                                                               
registered with  the department.   Why is  the division  going to                                                               
lose a lot of premium tax?                                                                                                      
Number 1079                                                                                                                     
MR. RIDGEWAY  explained that if  service contracts  are exempted,                                                               
the  insurance  companies  servicing  them  will  no  longer  pay                                                               
premium  taxes.   Every insurance  company that  files to  sell a                                                               
product in  the state is  paying the  premium tax; the  agent and                                                               
the  auto salesperson  do not  pay the  premium tax.   For  every                                                               
automobile service  contract or home  warranty that is  sold, the                                                               
division receives a premium tax.   Even though the person selling                                                               
the contract  might not have a  license to sell it,  the division                                                               
gets the premium tax on the contract.                                                                                           
REPRESENTATIVE  ROKEBERG repeated  Mr. Ridgeway's  testimony that                                                               
the insurance company  paying the premium tax  is registered with                                                               
the department.  He asked  why the division would have difficulty                                                               
identifying the amount of lost premiums.   He asked whether it is                                                               
because the companies  sell multiple products, making  it hard to                                                               
determine which line would be affected.                                                                                         
Number 1135                                                                                                                     
MR.  RIDGEWAY used  State Farm  to illustrate  the difficulty  in                                                               
separating out  [lost premium  taxes on  service contracts.]   He                                                               
said  State  Farm  might  sell  service  contract  policies;  the                                                               
company  also sells  auto policies.    When State  Farm pays  its                                                               
premium taxes, the  amount is calculated on  gross premiums times                                                               
3 percent.   If the companies broke those products  out, a simple                                                               
computer run could determine the amount  of lost premiums.  As it                                                               
is, the  division will  have to  estimate the  premiums currently                                                               
paid on service contracts.                                                                                                      
REPRESENTATIVE   ROKEBERG  asked   about  using   the  division's                                                               
proposed amendment but leaving the  auto service contracts intact                                                               
and  including home  warranties in  the bill.   He  asked if  Mr.                                                               
Ridgeway knew the dollar amount  represented by the home warranty                                                               
Number 1193                                                                                                                     
MR. RIDGEWAY responded that he did  not know the dollar amount of                                                               
[home  warranty  premiums  paid],  but   he  said  he  does  have                                                               
information on the  number of companies - roughly 60  - that have                                                               
filed  to sell  those  products  and how  many  the division  has                                                               
approved.    Some  34 companies  sell  contracts  for  mechanical                                                               
breakdowns  [on  homes],  and 24  companies  sell  contracts  for                                                               
insurance  other  than  auto,  which  is  home  warranties.    He                                                               
confirmed that a mechanical breakdown  could include an item such                                                               
as a boiler.                                                                                                                    
MR. RIDGEWAY said the division  wants to preserve the premium tax                                                               
because it  is the third  or fourth largest revenue  producer for                                                               
the state.  He said  the committee's concern about licensing real                                                               
estate agents  and automobile salesman  is a issue  separate from                                                               
the  state  receiving  the  premium  tax.    With  this  proposed                                                               
legislation,  the state  exempts all  of those  companies from  a                                                               
premium tax.                                                                                                                    
Number 1293                                                                                                                     
REPRESENTATIVE  ROKEBERG explored  the  solution of  specifically                                                               
exempting businesses  from getting  an insurance license  to sell                                                               
home warranties.   He asked if  that would avoid the  loss of the                                                               
premium tax.                                                                                                                    
MR. RIDGEWAY said that is correct.                                                                                              
REPRESENTATIVE  ROKEBERG suggested  exempting automobile  dealers                                                               
from the requirement  to get a license to sell  auto policies and                                                               
asked Mr. Ridgeway's opinion.                                                                                                   
MR.  RIDGEWAY  confirmed  that   [automobile  dealers]  would  be                                                               
excluded from a  licensing fee but the  insurance companies would                                                               
still pay the premium tax.                                                                                                      
REPRESENTATIVE  ROKEBERG   asked  why  the   division's  proposed                                                               
amendment included the figure of "$8,000.00 or less".                                                                           
Number 1356                                                                                                                     
MR.  RIDGEWAY  explained  that  the  amendment  was  directed  at                                                               
consumer products.   He said  his understanding of the  intent of                                                               
the bill  was to exempt  products like TVs, home  appliances, and                                                               
hot tubs from  the insurance code.  A lot  of retail dealers sell                                                               
service contracts with their products.   He said the bill is very                                                               
broad  as written,  and the  division  was not  sure whether  the                                                               
sponsor and the committee understood how broad it was.                                                                          
REPRESENTATIVE  CRAWFORD  asked  Representative  Rokeberg  if  he                                                               
objects to the  division's proposed amendment.  He  said it gives                                                               
the division  quite a  bit of leeway  on service  contracts, with                                                               
the $8,000 ceiling.                                                                                                             
REPRESENTATIVE ROKEBERG suggested he  address the question to the                                                               
sponsor of the bill.                                                                                                            
Number 1458                                                                                                                     
CHAIR ANDERSON turned the gavel over to Vice Chair Lynn.                                                                        
MS.  MOSS said  there is  a philosophical  difference here  about                                                               
service  contracts  versus credit  insurance.    She said  credit                                                               
insurance  is clearly  an insurance;  it's insuring  a risk  that                                                               
somebody's going  to die  and the  person is  going to  leave the                                                               
family with  the debt of a  new vehicle, for example.   A service                                                               
contract,  however, is  tied  directly to  property;  an auto  is                                                               
property, a house  is property.  Putting a value  limit of $8,000                                                               
would probably exclude some home  heating systems in Alaska, most                                                               
cars in  decent running  condition, and vacuum  systems in  a new                                                               
home.   If the  bill is  amended with a  dollar amount,  she said                                                               
$8,000  is pretty  low.   And the  $8,000 figure  would tie  many                                                               
service contracts back into the insurance provisions.                                                                           
Number 1546                                                                                                                     
REPRESENTATIVE  CRAWFORD  asked  whether  it  was  the  sponsor's                                                               
intention to  exempt these insurance companies  from paying their                                                               
premium tax.                                                                                                                    
MS.  MOSS  replied no,  she  is  not  convinced that's  going  to                                                               
happen.  She  said that there's very few auto  sales companies in                                                               
the  state that  realize that  they're supposed  to be  licensed.                                                               
She said she  doesn't think the revenue lost is  going to be that                                                               
significant.    She  also  said  the  Division  of  Insurance  is                                                               
spending  a  lot of  manpower  deciding,  case by  case,  whether                                                               
somebody is supposed  to have an insurance license  to be selling                                                               
service  contracts.     She  estimated  that   [the  benefit  of]                                                               
relieving staff  from making piece-meal decisions  would outweigh                                                               
any loss of premium tax revenue incurred.                                                                                       
Number 1591                                                                                                                     
REPRESENTATIVE CRAWFORD asked whether  the sponsor favors changes                                                               
in HB 120  that would exempt these businesses  from licensure but                                                               
would require  the insurance companies  to continue  paying their                                                               
premium taxes.                                                                                                                  
MS.  MOSS  replied  that  the  sponsor  has  not  discussed  this                                                               
possibility with the bill drafter, but  he could do so.  She said                                                               
this bill  excludes the premium  tax on service  contracts, which                                                               
the division has admitted is insignificant at this point.                                                                       
Number 1647                                                                                                                     
REPRESENTATIVE ROKEBERG commented that  too many amendments might                                                               
trigger a fiscal  note, which could be a good  way of getting the                                                               
lost  premium tax  figure from  the  Division of  Insurance.   He                                                               
pondered using  the division's suggested amendment  but modifying                                                               
the  purchase  price  to  a   figure  that  meets  the  sponsor's                                                               
approval.   He considered  further amending  the bill  to exclude                                                               
home  warranty  sales,  which  would   force  the  department  to                                                               
determine  the true  amount of  the premium  tax loss.   He  also                                                               
mentioned excluding  automobile companies from the  provisions of                                                               
the  bill.   He  asked  Ms.  Moss if  that's  a  good approach  -                                                               
triggering a  fiscal note  and moving  the bill  on to  the House                                                               
finance committee.                                                                                                              
Number 1709                                                                                                                     
MS. MOSS replied  that she thinks that approach would  work.  She                                                               
noted that  Representative Coghill had discussed  a dollar amount                                                               
of  $20,000, not  $8,000, with  the Division  of Insurance.   She                                                               
cautioned that  $20,000 limit  might buy a  decent used  car, but                                                               
there are very few new cars that  can be bought for $20,000.  She                                                               
said $8,000 is too low a figure.                                                                                                
REPRESENTATIVE  ROKEBERG asked  Ms.  Moss how  the sponsor  would                                                               
feel  about the  committee adding  amendments that  excluded home                                                               
warranties  and the  automobile companies,  thereby triggering  a                                                               
fiscal note.                                                                                                                    
MS.   MOSS  said   Representative  Rokeberg   has  a   legitimate                                                               
suggestion  to get  the bill  to the  House finance  committee so                                                               
this issue  can be  resolved.   She said she  does not  think its                                                               
going to  attract a big  fiscal note, but  Representative Coghill                                                               
would be  willing to amend it  with a larger purchase  price than                                                               
$8,000 and send  it to finance committee to have  a discussion on                                                               
the fiscal impact.                                                                                                              
Number 1744                                                                                                                     
MS. MOSS, in reply to a  question from Vice Chair Lynn, said that                                                               
if a  bill triggers  a fiscal  note, when it  is read  across the                                                               
floor,  it would  be referred  to the  finance committee  where a                                                               
hearing would be scheduled.                                                                                                     
REPRESENTATIVE   ROKEBERG  suggested   using   the  Division   of                                                               
Insurance's amendment but replacing the $8,000 with $20,000.                                                                    
REPRESENTATIVE  CRAWFORD  pointed  out  that  the  $8,000  amount                                                               
served  the purpose  of limiting  the bill  to service  contracts                                                               
that cover consumer goods; he said  he didn't think that the bill                                                               
was intended to include automobiles and other high figure items.                                                                
MS. MOSS  said HB 120  is intended to separate  service contracts                                                               
on  property  from  insurance;  the sponsor  views  them  as  two                                                               
different things, regardless  of the value of the  property.  She                                                               
said Representative Coghill is  compromising because he perceives                                                               
a policy on an automobile to be  a service contract on a piece of                                                               
property,  regardless of  whether the  property costs  $20,000 or                                                               
$50,000.  With a service contract,  there is no real risk tied to                                                               
a financial disaster; something on  the piece of property becomes                                                               
dysfunctional  for some  reason  and the  seller  of the  service                                                               
contract agrees to replace it or repair it.                                                                                     
Number 1850                                                                                                                     
REPRESENTATIVE ROKEBERG  moved to  adopt Conceptual  Amendment 1,                                                               
which read,                                                                                                                     
     Page 1, line 6, after "state"                                                                                              
     Insert  "where the  tangible  property  has a  purchase                                                                    
     price of $20,000  or less, exclusive of sales  tax.  In                                                                    
     this  subsection, 'tangible  property' means  household                                                                    
     consumer goods."                                                                                                           
There being no objection, it was so ordered.                                                                                    
Number 1866                                                                                                                     
REPRESENTATIVE  ROKEBERG  moved  Conceptual  Amendment  2,  which                                                               
     Page 1, line 5, after "service contract"                                                                                   
     Insert:  ", or home warranties"                                                                                            
REPRESENTATIVE ROKEBERG  explained the  purpose of  the amendment                                                               
was to  exclude the sale of  home warranties from the  purview of                                                               
the Department  of Community and  Economic Development.   He said                                                               
according to  Mr. Ridgeway's testimony,  such an  amendment would                                                               
require the  department to  describe any  cuts to  premium taxes,                                                               
thereby tripping a fiscal note  which would require a referral to                                                               
the House finance committee.                                                                                                    
Number 1930                                                                                                                     
CHAIR  LYNN asked  whether there  was any  objection to  adopting                                                               
Conceptual Amendment 2.  There being none, it was so ordered.                                                                   
REPRESENTATIVE  ROKEBERG  discussed  another  possible  amendment                                                               
that would  exclude motor vehicle  sales activity from  the bill,                                                               
leaving it under the purview of the division.                                                                                   
MS.  MOSS replied  that she  couldn't  answer for  Representative                                                               
Coghill because it was a new  concept.  She added that the Senate                                                               
intends  to   exempt  motor   vehicle  [service   contracts  from                                                               
insurance regulation].                                                                                                          
REPRESENTATIVE  ROKEBERG said  in his  proposed third  conceptual                                                               
amendment, the motor vehicle activities  would be exempt from the                                                               
provisions  of HB  120.   He  said he  doesn't  intend to  delete                                                               
subsection (e) but wants to add a new subsection (f).                                                                           
Number 2029                                                                                                                     
MS. MOSS proposed  revising the language drafted  by the Division                                                               
of Insurance.   On line [5],  a period would be  placed after the                                                               
words  "means household  consumer goods".   She  suggested adding                                                               
the  words "In  this  subsection, 'service  contract' means"  and                                                               
then  continue  with  the  rest  of  the  language  in  HB  120's                                                               
subsection (e).  She repeated her  wording at the request of Vice                                                               
Chair Lynn and  Representative Rokeberg.  She  explained that all                                                               
the language in HB 120 would consist of subsection (e).                                                                         
Number 2105                                                                                                                     
REPRESENTATIVE ROKEBERG  moved to  adopt Conceptual  Amendment 3,                                                               
as follows:                                                                                                                     
     Page 1, line 8, after "money."                                                                                             
     Add:  "Motor vehicle sales and activities are excluded                                                                     
     from this subsection."                                                                                                     
MS.  MOSS  asked for  clarification.    She  said that  if  motor                                                               
vehicle activities and sales are  excluded from subsection (e) of                                                               
the bill, that puts them back within Title 21, Insurance.                                                                       
REPRESENTATIVE  ROKEBERG  confirmed  that's  what  the  committee                                                               
wants to do because that's the status quo.                                                                                      
MS. MOSS  said that  the language  leaving motor  vehicle service                                                               
contracts  out of  the  bill  would probably  be  amended in  the                                                               
Senate.    She  said  if the  committee  excludes  motor  vehicle                                                               
contracts,  then  they  would  remain  under  the  regulation  of                                                               
insurance statutes.   She  said it's a  matter of  opinion [about                                                               
whether  motor vehicle  service  contracts are  regulated by  the                                                               
Division  of Insurance],  and it's  part of  the reason  for this                                                               
Number 2185                                                                                                                     
REPRESENTATIVE  ROKEBERG  said he  still  wanted  to exclude  the                                                               
motor vehicle sales from this legislation.                                                                                      
MS.  MOSS asked  for clarification  about whether  Representative                                                               
Rokeberg would exclude motor vehicles over the value of $20,000.                                                                
REPRESENTATIVE   ROKEBERG  said   the  intention   of  Conceptual                                                               
Amendment  3  is  to  maintain the  current  status  [with  motor                                                               
vehicle  sales  of any  amount]  so  there  is oversight  by  the                                                               
Division of Insurance, with the  hopes of diminishing the size of                                                               
the  fiscal note.    He  said motor  vehicles  appear  to be  the                                                               
largest  area  of   premium  tax  impact.     He  suggested  that                                                               
automobile dealers would like to maintain the status quo.                                                                       
Number 2222                                                                                                                     
REPRESENTATIVE DAHLSTROM  asked for  clarification on  where home                                                               
warranties   fall   [in   terms  of   regulation   and   consumer                                                               
MS. MOSS said  that a list of statutes that  cover state contract                                                               
law was included in the bill packet last week.                                                                                  
Number 2240                                                                                                                     
REPRESENTATIVE GATTO  said he  was too confused  to vote  on this                                                               
amendment.   He  suggested  that  the amendment  or  the bill  be                                                               
rewritten so that the language is clearer.                                                                                      
MS. MOSS suggested that the  committee adopt Conceptual Amendment                                                               
3 and then hear the committee's  next bill.  Staff could write up                                                               
the  three  conceptual  amendments  so the  committee  could  see                                                               
[later this afternoon] the bill's exact language.                                                                               
Number 2290                                                                                                                     
VICE CHAIR LYNN,  asked if there were any  objections to adopting                                                               
Conceptual  Amendment 3.   There  being no  objection, it  was so                                                               
REPRESENTATIVE  ROKEBERG clarified  that  Conceptual Amendment  3                                                               
excluded  vehicle  sales  from subsection  (e),  maintaining  the                                                               
status quo,  continuing oversight  by the Division  of Insurance.                                                               
Conceptual Amendment  2 excluded home warranties  [from oversight                                                               
by the Division  of Insurance].  Conceptual  Amendment 1 excluded                                                               
any service contracts up to $20,000.                                                                                            
REPRESENTATIVE  GATTO  said  this  bill  needs  to  be  read  and                                                               
understood  by ordinary  people.   He  said his  concern is  that                                                               
people   will  read   these  exclusions   and  violate   the  law                                                               
unknowingly or get around the law deliberately.                                                                                 
Number 2341                                                                                                                     
VICE  CHAIR LYNN  ordered HB  120 held  over until  the committee                                                               
could see the rewritten paragraph.                                                                                              
REPRESENTATIVE  CRAWFORD confirmed  that  Conceptual Amendment  3                                                               
passed without objection.                                                                                                       

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