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Minutes for SB91 - Committee on Financial Institutions and Insurance

Short Title

Increasing the deductible for certain participants of controlled insurance programs.

Minutes Content for Wed, Feb 15, 2017

Chairperson Longbine greeted the committee and guests, then opened the hearing on SB91.  Eileen Ma presented a short summary of the bill.

Scott Casebolt spoke in support of SB91.  He stated that by the current statute, an enrolled party, that is not the sponsor, can't be charged in excess of $2500 for any deductible on the policy.  Mr. Casebolt's organization feels this is unfair, because all the enrolled parties are benefiting from the increased coverage and limits, but it would fall on the sponsor to cover any shortfall on the deductible amount if a loss was incurred.  Mr. Casebolt also posed that there must be deductibles on these policies to prevent abuse and petty claims.  Mr. Casebolt answered questions from Senators Wilborn, Rogers, and Pile.  (Attachment 1)    

Lance Spencer also presented testimony supporting SB91.  He presented a detailed comparison of the justifications for use of a Wrap-up (OCIP/CCIP) insurance program on Kansas construction projects.  He added that these applications are very specific and provide extensive expansion of coverage as well as improved project delivery and public protection.  He urged favorable passage of this bill.  Mr. Spencer answered questions and comments from Senators Wilborn, Suellentrop, Billinger, and Rogers.   (Attachment 2)   

Stephen Bradley 'Brad" Miller spoke in opposition to SB91.  He explained that raising the $2,500 deductible to $25,000 would be unworkable for many of the subcontractors and would keep them from bidding on projects with Wrap-up insurance policies.  He believed that less competitive bids could mean higher bids and more costly projects.  He answered questions from Senators Billinger and Olson.    (Attachment 3)

Sheila Ohrenberg also testified against SB91.  She explained that the purpose of the Prime contractor/owner to provide a controlled insurance program is to save money, make safety a priority and to include smaller and minority firms in projects.  If the deductibles were increased, the subcontractors' only option would be not to provide services to specific contractors and projects.  Ms. Ohrenberg answered questions from Senator Suellentrop.    (Attachment 4) 

There being no further questions or discussion and no other conferees or written-only testimony submitted, the Chairperson closed the hearing on SB91

Chairperson Longbine advised the committee that it would hear SB137 and also work several bills at the next meeting.  The meeting adjourned at 10:15 am.  The next scheduled meeting is Thursday, February 16, 2017 at 9:30 am.