SENATE COMMITTEE ON BUSINESS AND ECONOMIC DEVELOPMENT

 

 

March 17, 2005                                                                                                       Hearing Room B

1:00 P.M.                                                                                                                     Tapes  41 - 43

 

MEMBERS PRESENT:         Sen. Rick Metsger, Chair

Sen. Bruce Starr, Vice-Chair

Sen. Jason Atkinson

Sen. Ryan Deckert

Sen. Laurie Monnes Anderson

 

STAFF PRESENT:                 Theresa Van Winkle, Committee Administrator

James Goulding, Committee Assistant

 

MEASURES/ISSUES HEARD:

                                                SB 1002 – Public Hearing

                                                SB 514 – Public Hearing

                                                SB 554 – Public Hearing

                                                SB 210 – Public Hearing                   

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 41, A

003

Chair Metsger

Calls the committee to order at 1:00 p.m.  Opens a public hearing on SB 1002.

SB 1002 – PUBLIC HEARING

010

Dana Baugher

Legislative Assistant, Senator Schrader’s office.  Begins testimony in favor of SB 1002.  Describes difficulties with a construction contract she engaged in and the less-than-satisfactory work performed.

050

Chair Metsger

Thanks Baugher for her testimony.  Clarifies the contract change SB 1002 would make. 

060

Sen. Monnes Anderson

Points out that if the amount in repairs was greater than $2,500, a contract would be required.

063

Baugher

Explains that she did have a document in writing.

070

Sen. B. Starr

Asks if anyone from the Construction Contractor’s Board would come forward to testify.

073

Craig Smith

Administrator of the Construction Contractor’s Board.

075

Sen. B. Starr

Asks if a person can enter into a verbal contract that would be equally binding to that of a written contract.

083

Smith

Responds and provides written testimony (EXHIBIT A).

095

Sen. B. Starr

Wonders about the dollar amount being advised for a contract requirement.

100

Smith

Notes the chart on page 3 of his testimony.  Discusses contract amounts in relation to complaints received. 

115

Chair Metsger

Asks if the committee has a consensus on potential action for this bill.

117

Sen. B. Starr

Asks if they have any testimony from the contractor representatives at the capitol.

120

Smith

Expresses concern regarding the void ability provision in the measure.  Discusses page 6 of his testimony in relation to contract sanctions. 

135

Baugher

Agrees with Smith’s statement.

139

Sen. Monnes Anderson

Asks question regarding statement that the board does not endorse or oppose SB 1002, but will consider it at their March 29th meeting.

145

Sen. B. Starr

Asks what the fiscal impact might be on this bill.

150

Smith

Replies that he doesn’t expect a fiscal impact on this measure.

160

Chair Metsger

Closes public hearing SB 1002.  Opens a public hearing on SB 514 and SB 554.

SB 514 & SB 554 – PUBLIC HEARING

177

Sen. Jason Atkinson

Represents Senate District 2.  Testifies in favor of SB 514 & SB 554.  Thanks Chair Metsger for allowing this bill to be heard and the great amount of interest of his constituents. 

220

Sen. Atkinson

Discusses insurance companies making a great deal of money on small businesses, such as construction contractors.  Talks about the huge premium hikes on business owners in his district.

255

Sen. Atkinson

Continues to describe the inflated insurance rates that are driving businesses out of state.

275

Sen. Atkinson

Observes that consumer protection is being used as a barrier for small independent contractors.

325

Sen. Atkinson

Relates the stories of contractors being driven out of business and says these measures provide some relief. 

355

Sen. Monnes Anderson

Feels that if they remove liability they are not protecting the consumer.

360

Sen. Atkinson

Clarifies that the current system gives contractors very few choices.  Feels the current law is very beneficial for select insurance companies.    

387

Sen. Monnes Anderson

Wonders how many claims there have been to cause the costs to increase.

400

Sen. Atkinson

Relates that September 11th disrupted huge areas of the economy.

415

Dan Leahy

Vice President, Adair Home Corporation. Testifies in favor of SB 514 and SB 554.

TAPE 42, A

005

Leahy

Continues testimony on SB 514 and SB 554.

040

Leahy

Describes the burden upon consumers to pay for protection through warranties. 

075

Leahy

Suggests the ability to compete on a level playing field.

080

Chair Metsger

Outlines the numerous amount of legislation addressing construction contractor’s insurance.  Observes they are trying to find the best way to address those issues.  Talks about the need to protect consumers such as a recent settlement in Sandy, Oregon. 

100

Leahy

Replies in regards to the Sandy, Oregon claim.  Talks about exclusions in the policies.

105

Chair Metsger

Responds.

115

Sen. Atkinson

Asks that they give the Construction Contractor’s Board the ability to see if they can have consumer protection while also lowering the high rates.  Observes that state agencies do not feel there is a problem.

127

Leahy

Describes Adair’s philosophy that they are in business forever.

155

Sen. Monnes Anderson

Questions previous practices of building in favorable weather.  Describes the industry changes that allow year round building.  Observes that a builder would probably prefer to build during the dry season.  Discusses potential liability issues.

180

Leahy

Responds on the complexity of the question.  Asks that contractors are treated on their merit.  Feels the system no longer reflects accountability within the industry.

210

Leahy

Continues to testify in reference to current contracting insurance practices and some of the current difficulties.

225

Chair Metsger

Observes similar legislation in previous committees he has served on.  Feels there is a need to address cost and liability requirements.  Asks Mr. Leahy about personal experience.

250

Leahy

Notes the efforts are transient.  Details the difference between liability insurance for an individual and then using insurance as a consumer protection tool.  Feels that insurance does not effectively perform their function. 

300

Gordon Trauter

Contractor. Submits written testimony in favor of SB 514 (EXHIBIT B). Testifies in favor of SB 514.

330

Trauter

Continues testimony, relating that businesses are already liable even without insurance.

360

Chair Metsger

Asks who would pay the claim to the consumer.

380

Trauter

Explains.

383

Chair Metsger

Asks about posting bonds rather than paying insurance.

385

Trauter

Replies he doesn’t know as bonds are purchased through insurance companies.

395

Sen. Atkinson

Comments on the loss of business in his district.

400

Sen. Monnes Anderson

States that she has met others in her district with the same concerns discussed today.

410

Dean Aldrich

Lawyer, Portland, Oregon. Submits written testimony in opposition to SB 514 (EXHIBIT C).

TAPE 41, B

005

Aldrich

Continues testimony in opposition to SB 514.

040

Aldrich

Describes construction defect claims and problems with water damage.

070

Aldrich

Opines that this measure would not solve the problems being experienced, but would destabilize current insurance protections.  Agrees that something needs to be done, but this particular measure isn’t the solution.

093

Sen. Atkinson

Comments on testimony.  Feels current insurance requirement provide people like Mr. Trauter with nothing.

103

Aldrich

Responds.

117

Chair Metsger

Wonders about Mr. Aldrich’s proposal of purchasing bonds.

123

Aldrich

Feels that it would be fine.

135

Craig Smith

Construction Contractor’s Board.  Submits testimony on SB 514 (EXHIBIT E) and SB 554 (EXHIBIT F).  Testifies on SB 514 and SB 554.

170

Chair Metsger

Asks if he has talked with neighboring states that have eliminated this requirement.

180

Smith

Responds he has only talked briefly to his counterparts in other states.   Outlines that when Oregon created its insurance requirement laws, premiums were very low.    

The following prepared testimony is submitted for the record without public testimony:

 

Paul &Renee Haynes

Residents, Sandy, Oregon. Submits written testimony for the record with public testimony (EXHIBIT D).

215

Chair Metsger

Offers that it would be very helpful to hear more from other states on their insurance issues.  Closes public hearing on SB 514 and SB 554.  Opens a public hearing on SB 210. 

SB 210 – PUBLIC HEARING

235

Theresa Van Winkle

Committee Administrator.  Describes the provisions of SB 210.

240

Kevin Neely

Department of Justice.  Presents written testimony in favor of SB 210 (EXHIBIT G).  Presents the committee with proposed -1 amendments to the measure (EXHIBIT H) and testifies in support of them. 

270

Neely

Describes the need for motor vehicle repair shops to properly display preferred provider agreements.

310

Neely

Discusses the -1 amendments and the reason for the changes.  Relates the feedback over this issue.

343

Chair Metsger

Asks for expansion on tracking data of complaints on this issue.

353

Neely

States they do not know who currently has these agreements. Says it is a major reason for this legislation. 

367

Sen. B. Starr

Wonders what other states do in regards to this matter.

377

Neely

Replies that he doesn’t know.

385

Sen. Monnes Anderson

Observes it would be easy for an auto shop to put a sign up even if they don’t have proper insurance.

397

Leif Hansen

Owner, Leif’s Auto Collision Center.  Submits written testimony in support of SB 210 as introduced (EXHIBIT I).  Opposes the proposed -1 amendments. 

TAPE 42, B

005

Hansen

Details the substandard work performed by preferred shops.

045

Hansen

Continues to detail the problems with insurance for preferred auto repair shops.

080

Sen. Monnes Anderson

Asks for clarification on this issue.  Wonders what good having a sign in a shop would do. 

087

Hansen

Offers it is a good start.

093

Sen. Monnes Anderson

Responds.

100

Sen. Deckert

Considers how much a sign would assist in informing consumers.

107

Hansen

Feels full disclosure is the best policy. 

110

Sen. Deckert

Asks for an example.

113

Hansen

References a GEIKO case where an insurance company tried to skirt the law and illegally require a consumer to pay more to get the correct parts installed.  Notes that these types of claims occur all the time. 

130

Sen. Deckert

Asks for a guess on how many cars out of a 100 that he works on have substandard repairs.

135

Hansen

Guesses that 30% to 40% have had prior repairs, and that 90% need to be re-repaired.

147

Sen. Monnes Anderson

Reiterates the benefit of a sign. Seems that there should be more transparency in what insurance companies will cover. Talks about a cap on what insurance companies will pay.

155

Hansen

States that they have a cap. Explains in detail.

177

Sen. Deckert

Offers his concern that the process is transparent to the consumer.  Considers an amendment to sign off on repairs.

185

Hansen

Clarifies that the problem is that the insurance company and body shop are working with each other and there is no third party to intervene. 

230

Fred Linenko

Owner, Specialty Auto Body.  Presents written testimony in favor of SB 210 as drafted (EXHIBIT J).  Testifies in favor of SB 210.

275

Linenko

Reiterates the need for consumers to be able to make informed choices.

285

Don Braden

Chief Operating Officer, Kadel’s Auto Body.  Presents written testimony in favor of SB 210 (EXHIBIT K). Testifies in favor of SB 210.

320

Ron Davies

Consumer, auto repair industry. Presents written testimony in favor of SB 210 (EXHIBIT L).

340

Miguel Ramos

Consumer, auto repair industry. Presents written testimony in favor of SB 210 (EXHIBIT M).

363

Sen. Deckert

Talks about the -1 amendments. Asks if a sign specifying that the shop is a preferred provider for certain insurance companies would give him any useful information.

377

Ramos

Replies it would provide some idea of the nature of the relationship between an insurance company and an auto body shop.

390

Davies

Notes that it would be a start. 

397

Sen. Deckert

Offers that they provide clearer language on the signage to make it clear to consumers.

410

Davies

Feels the original language was clearer to the consumer.

420

Shawn Miller

Property Casualty Insurance (PCI).  Testifies in opposition to SB 210 in regards to the definition of a “preferred” service provider.

TAPE 43, A

001

Miller

Continues testimony on SB 210.

030

Sen. Deckert

Proposes “this repair shop has an agreement to provide this insurance company with discounted prices,” as possible signage.

035

Miller

Responds.

045

Sen. Deckert

Says that the language needs to be changed so that it is easily understood.

047

Chair Metsger

Makes concluding remarks on this issue.  Feels additional considerations need to be made.  Closes public hearing on SB 210 and adjourns the committee at 2:59 p.m.

 

 

EXHIBIT SUMMARY

 

  1. SB 1002, written testimony, Craig Smith, 6 pp
  2. SB 514, written testimony, Gordon Trauter, 2 pp
  3. SB 514, written testimony, Dean Aldrich, 46 pp
  4. SB 514, written testimony, Paul and Renee Haynes, 3 pp
  5. SB 514, written testimony, Craig Smith, 45 pp
  6. SB 554, written testimony, Craig Smith, 48 pp
  7. SB 210, written testimony, Kevin Neely, 1 p
  8. SB 210, -1 amendments, Kevin Neely, 1 p
  9. SB 210, written testimony, Leif Hansen, 19 pp
  10. SB 210, written testimony, Fred Linenko, 2 pp
  11. SB 210, written testimony, Don Braden, 1 p
  12. SB 210, written testimony, Ron Davies, 1 p
  13. SB 210, written testimony, Miguel Ramos, 1 p