car INSURANCE & REAL ESTATE 10:30 a.m.

PRESIDING CHAIRMEN: Senator Bozek

COMMITTEE MEMBERS:

SENATORS: McDermott, DeLuca

REPRESENTATIVES: Orefice, Klarides,

SENATOR BOZEK: And proceed.

REPRESENTATIVE ESPOSITO: Thank you, Senator Bozek. (mike off) I know. I'm here to speak on HB 5393 but I'm here also in support of SB 477, SB 479 and SB 525. HB 5393 was introduced by me and the Committee's seen fit to raise it and I'm grateful for that and the crux if the bill is that it's happening more and more often now where a car is involved in an accident, towed by a tower and either repaired by the tower or repaired by the body shop, or both.

SEN. BOZEK: (mike off)

REP. ESPOSITO: No, SB 477, SB 479 and SB 525.

SEN. BOZEK: (mike off)

REP. ESPOSITO: SB 525.

SEN. BOZEK: (mike off) -- Representative Amann, good morning. For some of the people who are here, so they know, our Representative Amann was our former House Co-Chairman on this Committee and I know you planned to have something with you, so if you might introduce them for the record.

REP. AMANN: Thank you, Senator and thank you the most wonderful committee in the Legislative Office building. It's great to see you this morning. I appreciate the opportunity to speak. I thought I'd bring everyone up at the same time, Senator, hopefully to save some time and I'll get right into it.

DR. VENDER: Senator Bozek, Representative Jarjura and distinguished members of the Insurance and Real Estate Committee. Thank you for the opportunity to testify this morning. I currently serve as Chief of Gastroenterology at the hospital of St. Raphael. I am also Clinical Professor of Medicine at the Yale University School of Medicine and a founding member of the Connecticut Colorectal Cancer Work Group, an organization composed of representatives from the American Cancer Society, the American College of Gastroenterology, the Connecticut Department of Public Health, patients, and patient caregivers.

SEN. BOZEK: For the record, put your name on here.

RONALD VENDER: Yes, it's Doctor Ronald Vender. V as in Victor, E-N-D-E-R.

SEN. BOZEK: (mike off)

REP. TALLARITA: Good morning, Senator Bozek, Representative Jarjura and distinguished members of the Insurance and Real Estate Committee. I am Representative Cathy Tallarita and I'm here today to support HB 5620.

SEN. BOZEK: (mike off)

SEN. MCDERMOTT: Yes, I wanted to thank you guys for being here this morning. It's an important issue to discuss. I was surprised, Doctor, by your testimony in saying that it's equally between the men and women. I thought this was predominately a men's issue. I was surprised to hear you testify this morning that it was equally men and women.

DR. VENDER: No, absolutely. I think that's a common misconception. Obviously, there are certain problems that are clearly identified as issues for women and get a disproportionate amount of coverage. But this is a significant health problem for women as well as men.

SEN. MCDERMOTT: All the advertisements I've seen on different stations about this being colon cancer month where they're encouraging screenings and that, they've really focussed on men. I don't know where the misnomer comes from or why they don't focus on it being an equal number of men and women, because I'm learning something very important here this morning.

DR. VENDER: Yeah, I really can't speak to that. One of the celebrity cases that I talked about is Supreme Court Justice Ruth Ginsberg who is a, so far fortunately, a survivor of colon cancer.

SEN. MCDERMOTT: What -- you have it in your written testimony you said, but you didn't get a chance to discuss what the cost was. Did you just want to put it on the verbal record as to what the cost would be?

DR. VENDER: Yes, I would be happy to address that and we can look at the cost in two different ways. One is to compare the cost of this intervention to what is currently covered, and I'm going to use rough numbers here because every insurance company pays a slightly different amount.

SEN. MCDERMOTT: How often is it recommended for women to go for breast screening for breast cancer?

DR. VENDER: I'm not an expert in that area. As a gastroenterologist, I'd don't feel qualified, but based on my wife's experience, it looks like every year.

SEN. MCDERMOTT: I thought it was somewhere around there where they encourage women to go every year or I wasn't sure if it was every five years to go and there's been quite a public relations campaign going to encourage women to go for the screening. One of the things that struck me when you were talking about the comparisons, being that you have to go for the -- is it, sigmo --

DR. VENDER: Sigmoidoscopy.

SEN. MCDERMOTT: Sigmoidoscopy. Every four years?

DR. VENDER: Correct.

SEN. MCDERMOTT: And that's -- I would dare say that a -- that procedure is probably more invasive than a breast screening or -- a breast screening. I'm tripping over my words, there.

DR. VENDER: Mammography.

SEN. MCDERMOTT: And it's probably going to be a very difficult campaign to encourage people to go for that testing, that the other added benefit of the full colonostomy is that it's a -- every 10 years as opposed to every four years. So, it's really -- you're saving yourself quite a bit of aggravation or an invasive procedure that I think that most of us would do or try to wish to avoid, is not something I'm sure that anybody would look forward to going to, but I think it's very important to encourage them and if you're going to go through the procedure, you should get the full test and know that you're fine for 10 years and that's got to be a pretty big relief off of people's minds, if they have -- if they stain negative and they don't have any polyps, that they don't have to go back again for another 10 years, as opposed to going back every four years for just as an invasive procedure. I think it's a better public relations campaign.

DR. VENDER: Yes, I agree with that completely, and I think you raised actually two important points, one I forgot to mention, which is accuracy. While I was talking to you about the cost and making a point that this is a cost-effective intervention and probably revenue-neutral to the insurance companies, I left out one important piece of information.

SEN. MCDERMOTT: Well, thank you very much and I applaud you for coming today and applaud Representative Amann for bringing this forward to the Committee again and hopefully we'll be able to do something with it through this Committee cycle. Thank you, Mr. Chairman.

SEN. BOZEK: Representative Geragosian.

REP. GERAGOSIAN: Thank you, Senator. Senator McDermott asked so many good questions that I just have a question about, are you finding a problem with all the insurance companies or just the percent, and you don't have to talk about specific companies, because you know doctors get in trouble for that, here, but what kinds of specific problems are you finding with insurance companies and coverage? Do some cover thoroughly and not -- others, not?

DR. VENDER: Yes, and I'm glad you asked the question the way you did because I want to make it very clear that I'm not here in any way to bash insurance companies and a number of insurance companies -- all insurance companies in this state provide sigmoidoscopy and barium enema coverage. It's a little harder to get at which ones cover and which ones don't because, in part, it's based on official policy and in part it's based on, do they pay or not? Whether it's their official policy or not.

REP. GERAGOSIAN: Thank you, Mr. Chairman.

SEN. BOZEK: Representative Newton.

REP. NEWTON: Thank you. Thank you, Doc, for coming and you said that some insurance companies cover it. Now, let me just ask this question. On the bare minimum, what is covered? Not the colon part. Are doctors able to detect, I heard you say the colon test is more efficient, you can find out, but based on the smaller test, the minimum bare bones test, could you detect colon cancer based on the procedures that some companies do cover, right today?

DR. VENDER: Yes, let me try to answer that as best I can.

REP. NEWTON: Okay.

DR. VENDER: First, let's talk about a sigmoidoscopy, and as I said in the testimony, all these tests are of benefit, it's simply how much benefit? So, when I use the example of colonoscophy, the accuracy of that test is not 100 percent. There's no such thing. It's on the order of 98 percent accurate, based on the current techniques. And there will be a small percentage of people that it cannot be successfully performed in.

REP. NEWTON: (mike off) -- Chairman, you mention your insurance company that you deal with on a regular basis. What has been some of the argument? I probably know what the argument is, but I want to hear it from someone who has called this insurance. What has been some of the argument from the insurance companies on why they do not cover this procedure?

DR. VENDER: I'll preface my response by saying that question assumes that they are sharing their rational with me and I must say that even as a fairly busy practitioner, that sometimes calling these companies to get an explanation doesn't lead to an instant answer.

SEN. BOZEK: (mike off)

REP. WINKLER: Good morning, Senator Bozek and distinguished members of the Insurance and Real Estate Committee. For the record, my name is Lennie Winkler, I'm the State Representative of the 41st District and a practicing nurse in southeastern Connecticut.

SEN. BOZEK: (mike off) -- that the medications are effective for many people. But on the other hand, I'm sure in many cases, doctors themselves and some patients who may make doctors aware of some other medication or condition they have, the doctor's would prefer to prescribe some other medication and I'm sure there's contest about this and there's appeals and these things have gone forward.

REP. WINKLER: Thank you.

SEN. BOZEK: Are there any other Legislators that I don't have signed up here that intended to speak on the legislative hearing? Alright. At this time, then, the -- we're going to call the first bill on the Agenda. We're going to call the Public List. Let me get my agenda out here that I have. The first item we're going to address is issue, SB 1330, SB 1333, AN ACT CONCERNING REAL ESTATE APPRAISERS AND NONRESIDENT APPLICANTS. I'm sorry, S1353. Thank you, Senator, and the first speaker is Pat Famielietti. Famieleitti? Sorry. Pat Famieleitti. And after Pat will be Bill Vibert. Good morning. Just state your name, Mr. Famielietti and for the record, and make sure that -- is that light lit up? In front of you, there?

PAT FAMIELIETTI: Yes, it is.

SEN. BOZEK: Alright and proceed.

PAT FAMIELIETTI: Thank you, Senator Bozek and distinguished members of the Legislature. I'm Pat Famielietti and I'm the current Chairperson of the Legislative Committee for Connecticut Association of Realtors.

SEN. BOZEK: Thank you. Are there any members that have any questions? Pat, I have one question. While I though the bill, the last question -- the last statement you have in your testimony about the individual who would then move to Connecticut. Are you saying that actually the language we have in the bill is clear and protects the person so that he can --

PAT FAMIELIETTI: No, it isn't. Frankly, Senator, it does require clarification.

SEN. BOZEK: (mike off)

PAT FAMIELIETTI: Yes.

SEN. BOZEK: (mike off)

PAT FAMIELIETTI: Thank you very much.

SEN. BOZEK: (mike off)

BILL VIBERT: Good morning, Senator Bozek and distinguished members of the Insurance Committee. Mr. Famielietti has covered this fairly completely and I just have one thing to add that this bill does bring the clarification that we would like to have in this matter of reciprocity and I really have nothing more to say about this and in the interest of time, with your permission, I would be prepared to talk about Raised SB 1293. Do I have your permission?

SEN. BOZEK: (mike off)

BILL VIBERT: Okay, I can proceed on 1293, then?

SEN. BOZEK: Yes.

BILL VIBERT: Thank you. This is a bill prohibiting real estate agents from referring certain home buyers to home inspectors. We oppose this bill. Because we find that it reduces our service to our clients, either buyer clients or selling clients.

SEN. BOZEK: (mike off)

REP. STONE: Thank you, Mr. Chairman. Sir, what's the difference between the bill we rejected last year and this bill?

BILL VIBERT: Could I respond to Senator Bozek for a minute? May I, sir?

SEN. BOZEK: (mike off)

BILL VIBERT: Two considerations, here. The code of ethics is at the, in a sense, at the bottom of the list of all regulations that we face in the state against what you're talking about might be done.

SEN. BOZEK: (mike off)

BILL VIBERT: Now, I'm sorry.

REP. STONE: If I can remember the question. What's the difference between the bill we rejected last year and the bill that's before us, today?

BILL VIBERT: Well, the bill you rejected last year, and I wasn't hearing the testimony but what I remember was the -- came from the Department of Consumer Protection, itself. It's not coming from the Attorney General's Office and the testimony here, before this group, last year was supported by the Committee, in denying the bill, and in the specifics of the issue, I think it had to do with the newness of licensing of inspectors because we -- you just did that, in your wisdom a couple of years ago.

REP. STONE: Okay, in the bill, in sub-section A of the proposal, it talks about prohibiting a referral or recommendation if the sales person or broker has a financial interest in the sale. Is that another way of saying, if they're earning a commission on this sale?

BILL VIBERT: I would say the only financial issue we have in the commission that we get paid by our clients for the service we provide them. The service we provide them is not to appoint inspectors for them. It's to make them aware of who the inspectors are from the list of licensed inspectors, not just -- I wasn't saying going to a Yellow Pages list because we don't think that --

REP. STONE: I understand. I'm trying to get at the language in the proposal that talks -- that refers to a financial interest in the sale. Is that just another way of saying the commission that you would otherwise earn on a sale of a home?

BILL VIBERT: I would hope that's the only thing it says. If the implication that we -- the implication that we might have an interest because we're picking easy inspectors to make the thing take place, is not so.

REP. STONE: Well, in fact your principle obligation is to the people that you represent and have the relationship with, whether it be the buyer or the seller. Isn't that correct?

BILL VIBERT: That's the only relationship we have.

REP. STONE: Now, just one other question. You're regulated by the state of Connecticut?

BILL VIBERT: Yes, indeed.

REP. STONE: You are licensed by the state of Connecticut?

BILL VIBERT: Yes, indeed.

REP. STONE: And you also have a code of ethics which are incorporated into the regulations of the state of Connecticut?

BILL VIBERT: Coming from our Realtor Association, that's correct.

REP. STONE: Now, if you violate the code of ethics or violate the regulations of the state, are you subject to disciplinary action?

BILL VIBERT: We could lose our licenses as far as the regulations of the state are concerned.

REP. STONE: Okay. And what about if you -- if there's an alleged violation of your code of ethics --

BILL VIBERT: Well, the code of ethics --

REP. STONE: Let me finish the question, please, because we can't talk at the same time. If there's a violation of your code of ethics, what if any disciplinary action could take place as a result of that violation?

BILL VIBERT: We could be suspended from the Connecticut Association of Realtors, our Local Board, and the National Association of Realtors which effectively takes us out of business.

REP. STONE: Okay, and it's important that I think that I, at least, know that there are some other avenues if there is a violation or alleged violation, ultimately proved of your code of ethics which would affect your livelihood, your license, etcetera.

BILL VIBERT: That's correct. And in our Section 2320 in the State Statutes, Section 2320 which says, real estate agents from -- keeps them from acting for more than one party in a transaction without the knowledge of people.

REP. STONE: Right.

BILL VIBERT: Section 2320 also prohibits any act which constitutes dishonest, fraudulent or improper dealings. Real estate commissions can be suspended and licenses can be revoked. So, it's -- and if I may point out in the bill --

REP. STONE: Thank you for your response.

BILL VIBERT: Thank you. If I may point out in the bill, at the bottom it says, the purpose of this legislation is to prohibit a real estate broker or salesman from referring any home buyer to a specific home inspector. All of us are taught that's exactly what we shouldn't do and it's emphasized time and time again in our training. Thank you very much.

SEN. BOZEK: (mike off)

SEN. DELUCA: Good morning. You're saying that in most instances that you know of, if someone is asked, if an agent is asked to rec --

SEN. DELUCA: -- they would give more than one?

BILL VIBERT: In my -- yes. In my office we have a list that we put before them and that list includes at least five or six and we ask them to call the people and discuss the fees and what they do and all the rest, and they hire them and they pay them.

SEN. DELUCA: Have you, personally, or know of anybody who's received complaints about inspectors that they have recommended or have been on their list?

BILL VIBERT: Personally, I haven't. I just can refer to those statistics that I gave to you.

SEN. DELUCA: Right.

BILL VIBERT: No.

SEN. DELUCA: If -- I'm not saying that they did something wrong. They were just unhappy with their demeanor, the way they were treated, something of that nature, rather than doing something. They did a good inspection but the person -- you know, was not in a business-like manner, whatever reason, they might have complained.

BILL VIBERT: Well, I can't speak for the 11,000 agents that we have, but when I'm there and I listen to the inspector go over the reports, most of them are thanked for the thoroughness of which they did the job. So, I have not heard that.

SEN. DELUCA: And you testified that last year you heard of only 12 complaints about inspectors?

BILL VIBERT: That's what Representative -- not Representative Frascenelli, Mr. Frascenelli from the Department of Consumer Protection, said.

SEN. DELUCA: 12.

BILL VIBERT: 12. 12 complaints, not 12 settlements or anything else. Just 12 complaints.

SEN. DELUCA: Just 12 complaints and you don't know the result of those complaints?

BILL VIBERT: No, I don't, but that's out of 11,000 agents active in the business.

SEN. DELUCA: Well, I would agree with you that it doesn't seem to be a major problem that we would have to be doing this, especially if all agents -- the majority of agents, shall we say, since no-one is 100 percent perfect, we already know that, the majority of agents do recommend more than one and let the buyer make their own deal with the inspector.

BILL VIBERT: Absolutely.

SEN. DELUCA: And as far as your knowledge, that's --

BILL VIBERT: As far as my knowledge, it's a certainty. I've been in the business 25 years.

SEN. DELUCA: Thank you very much. You've seen a few changes, I assume?

SEN. BOZEK: Representative Geragosian.

REP. GERAGOSIAN: Hi, Bill.

BILL VIBERT: Hi.

REP. GERAGOSIAN: How are you? I think people have to understand how the process works in terms of -- if the purchaser didn't have the realtor to assist in a list of home inspectors, how would they go about finding a home inspector? And, would that be in the best interests of the consumer from that --

BILL VIBERT: Well, if the people said, now, how about inspectors?

REP. GERAGOSIAN: Well, that's the typical --

BILL VIBERT: And my -- if I said, no, then you just got to go find some. That's what would happen. What we say is, that we have licensed inspectors in the state of Connecticut and here's a list of names drawn from that list. And we advise you to call them, negotiate with them and find out what it is they do and if you're not satisfied, come back and ask us for some more.

REP. GERAGOSIAN: But so it becomes kind of a crap shoot for the consumer, though, in that sense. They can get a very good inspector or they can get an inspector who's not so good. Is that right?

BILL VIBERT: Well, it's even possible in our system that they can't all be A students, I guess I want to put it that way.

REP. GERAGOSIAN: Exactly.

BILL VIBERT: But, the chances of them going out on their own and saying, well where do I look? I go to the Yellow Pages and look under "I", or whatever.

REP. GERAGOSIAN: So, in many cases -- you know, I think that I see in practice of most realtors, they want -- I know in my case, I want to have the best inspector to protect the buyer and make sure -- because it affects your reputation as a company, down the line, that if you -- you know, --

BILL VIBERT: You're touching on an important point. The thing that we want most is that people come to us because they believe in us.

REP. GERAGOSIAN: And in -- you know, that if anything goes wrong in a transaction, no matter what it is, it usually points back to the realtor, whether it's beyond your control or within your control. Isn't that true?

BILL VIBERT: (mike off)

REP. GERAGOSIAN: Yeah, so, thank you.

SEN. BOZEK: Mr. Vibert, if this bill went forward, it doesn't to me, it doesn't prevent you from giving that list of people who may be inspectors who deal either in that town or that region or in the Yellow Pages, does it?

BILL VIBERT: You're quite correct. We can still operate --

SEN. BOZEK: Let me ask -- let me ask you something, alright? You're intimating through your discussion, here, that -- and I'm listening, that if you, if this goes forward that somehow they're prevented and you can only tell them on whim how to go look through the Yellow Pages.

REP. FREY: (mike off)

SEN. BOZEK: Representative Frey.

REP. FREY: Thank you, Senator. Thank you, Bill, for coming. I think you made some very good points. I'm somewhat disappointed the Attorney General didn't join us this morning because I had some questions for him.

DAVID EVANS: (mike off)

MIKE DELUGAN: -- did you hear who I was? Mike Delugan, Country Wide Inspection Company. I don't know if you heard that?

SEN. BOZEK: (mike off)

MIKE DELUGAN: The mike was off.

SEN. BOZEK: (mike off)

MIKE DELUGAN: Starting over? Okay.

SEN. BOZEK: (mike off)

MIKE DELUGAN: Starting from scratch. Sorry.

SEN. BOZEK: (mike off)

MIKE DELUGAN: Okay, alright. Look, if you could just put your real estate hat on for a second and make believe you're a consumer, you're buying a house. You call -- the realtor has done the job, he's found you a nice house. You're ready to get a home inspector. If you're not on the list, you're not going to get the job.

SEN. BOZEK: (mike off)

REP. GERAGOSIAN: This bill doesn't talk about anybody receiving any money and I don't -- I've been in the real estate business for 17 years, and our company's never received a dime from a home inspection company and we've used dozens throughout the years, but I mean, this bill doesn't do -- I mean, I think it should be illegal and it is illegal, I believe, to receive funds for a home inspecting company to be --

MIKE DELUGAN: It's going on, right now.

REP. GERAGOSIAN: Okay, well --

MIKE DELUGAN: It's going on, right now. Deaf ear, deaf eye. Nobody says nothing about it.

REP. GERAGOSIAN: Well, we -- I talked -- I asked Mr. Vibert about this. We know there's good realtors and bad realtors and good home inspectors and bad home inspectors, how's it good for the consumer to just throw a dart at a phone book and pick out their home inspector?

MIKE DELUGAN: Well, how is it -- it isn't good. That's the way they do the news on CBS, because it's pretty interesting to go around the whole country and you get an interesting news show. It worked out pretty good. You can find an interesting home inspector that way, too. It doesn't mean you select them. You go random, you can pick people out. There's nothing wrong with free competition.

REP. GERAGOSIAN: No, but how does the consumer know? Is the person who has the flashiest ad in the Yellow Pages? Is it the -- that's my point.

MIKE DELUGAN: Well, the point that I think I'm saying here, Representative Geragosian, that people are if they have -- I would be -- nothing against if every home inspector was given out, fairly. It would be fair if real estate agents wanted to do that, I'm all for it. But giving out two or three names is steering. It is. It's clearly steering and you should be against that. That should be your obligation, here.

REP. GERAGOSIAN: Well, it's my job to protect my client in those instances. Why should I give him a list where I know there's home inspectors that I wouldn't use myself, nor do I think anybody else should use?

MIKE DELUGAN: Well, I get over the majority of my business from real estate agents, right now. I've done over 4,300 home inspections. I've a reputation for being very through and sometimes, picky. I get a lot of inspections from real estate agents who won't give me their clients, but they give me to their relatives, okay?

REP. GERAGOSIAN: But that's -- the problem is the average consumer, going out to buy a home, does not know the process and that's my problem. They're looking to the realtor for advice as to who they think are good people to do -- help them with the transaction and a good realtor wants an inspector that will -- and it's our policy in our company to refer at least three.

MIKE DELUCAN: What about the case I just told you where you can't be on the list unless you pay money?

REP. GERAGOSIAN: That should be illegal.

MIKE DELUGAN: That's being done right now.

REP. GERAGOSIAN: That's not what we're talking about, here.

SEN. BOZEK: It is, and the bill would make it illegal and we'd go after those people.

REP. GERAGOSIAN: Well, I think the issue of financial interest might be have to be clarified in the bill. I don't think that --

MIKE DELUGAN: There's also a kick-back by the way and every time you do the inspection, as well.

REP. GEROGOSIAN: Well, that's not the case in the marketplace that I've worked in since --

MIKE DELUGAN: It is the case. I can talk to you -- I'll give you the name of the company after this, if you'd like.

REP. GEROGOSIAN: Well, that's -- I mean, that's a different issue. But, I ask you to question my point --

MIKE DELUGAN: I don't see it's different.

REP. GEROGOSIAN: -- consumer coming into the transaction doesn't know, first of all, doesn't even know that they need a home inspection -- they don't necessarily need a home inspection but that they --

MIKE DELUGAN: It's in the real estate contract. You have an obvious to sign off for home inspection and environmental test.

REP. GEROGOSIAN: I understand, but the average consumer does not know what that means and they only get one bite of the apple. The average person buys a house every five to seven years.

MIKE DELUGAN: This is an informative brochure. If the agent chooses to send it out, it shows you everything about a home inspection. If they choose not to use you, you don't get it.

REP. GEROGOSIAN: Let me just ask you a question in a different way. As a realtor, would I be serving my client's interest by allowing them to use a home inspector that I knew wasn't -- I knew was the worst home inspector in the marketplace?

MIKE DELUGAN: I take umbrance at that statement about "allowing". I hear too often that I'm being used by the realtor. I think that's unfortunate. Our clients are the buyers, not the real estate agent, and your attitude is really right in line with the real estate agents. We do not work --

REP. GEROGOSIAN: I happen to be a realtor.

MIKE DELUGAN: Well, we don't work for the realtors. You'll have to understand that.

REP. GEROGOSIAN: No, I understand that but my point was, the consumers look to us most of the time, and for me to tell my client, just -- you know, look at the Yellow Pages or go to the internet, -- my question was about, if I knew, in my professional capacity, that that home inspector was a horrible home inspector, they didn't know what they were doing, how am I serving my client as a realtor? I sign onto that contract and every contract --

MIKE DELUGAN: I believe it would be very honorable for you not to get involved in the process of steering into any specific home inspection -- inspector. Let the people -- the people are intelligent, they can go find their own and that's the way it should be. You can ask for the qualifications.

REP. GERAGOSIAN: That wasn't the question I asked. The question, as a realtor, if I knew that the inspector that they -- either didn't have any of those designations, there wasn't at all good, am I serving my client and it's in their best interests for them to go out -- they only buy one house every five to 10 years, or so. They only got one bite of the apple. How am I serving my client as a realtor by allowing that to happen?

MIKE DELUGAN: You should not be in a power position to be able to allow your client to do anything regarding a home inspection.

REP. GERAGOSIAN: I'm in a position to advise, though.

MIKE DELUGAN: Well, you said "allow".

REP. GERAGOSIAN: Yeah.

MIKE DELUGAN: You should not be able to control your client like you can, quite a bit, actually.

REP. GERAGOSIAN: No, I can't control my client. Thank you.

SEN. BOZEK: (mike off)

SEN. DELUCA: Thank you, Mr. Chairman. I'm concerned about your statement that a company requires payment in order to get onto the list, number one. And number two, you also mentioned just a few minutes ago, the kick-backs --

MIKE DELUGAN: That's right.

SEN. DELUCA: -- were being used.

MIKE DELUGAN: That's right.

SEN. DELUCA: Have you ever made a complaint to the Real Estate Commission or the Consumer Protection or either of those agencies?

MIKE DELUGAN: Yes, I have written a letter to the Attorney General on this matter.

SEN. DELUCA: The Real Estate Commission?

MIKE DELUGAN: I went through the Attorney General.

SEN. DELUCA: Alright. Well, the last I looked, Consumer, Realtors and Home Inspectors come under Consumer Protection. I understand the Attorney General gets into a lot of things, but the people that license those realtors and those home inspectors are under Consumer Protection and that's where they are.

MIKE DELUGAN: Well, there's Section 42-110B referred to in the law, unfair deceptive trade practice. That's in there and that's what's going on.

SEN. DELUCA: Well, if you made it to the Attorney General who can't do anything about their license, did you make a complaint to the Real Estate Commission, also?

MIKE DELUGAN: Not yet.

SEN. DELUCA: Oh.

MIKE DELUGAN: I'm waiting to see if this bill goes through.

SEN. DELUCA: But if it's unethical now, why not make a complaint now? Because the gentleman said they got to adhere to a code of ethics. If it's not illegal, which I also think it is, it is surely unethical.

MIKE DELUGAN: I'm making you all aware of what's going on. I'd be glad to give you the name of the company.

SEN. DELUCA: That was not my question. My question was, did you also make a complaint to the Real Estate Commission under the Consumer Protection which controls the licenses of the real estate broker and the salesman?

MIKE DELUGAN: I said, not yet. I'm waiting to see if this bill goes through.

SEN. DELUCA: Thank you.

SEN. BOZEK: Mr. Delugan, thank you very much. I'm sorry. Before -- so I don't forget myself again, before -- Representative Stone -- that particular brochure that you have, is that distributed through the Connecticut Realtors Association?

MIKE DELUGAN: No. This is my personal brochure. What it says, distribution of this material is for informational purposes, only. It does not represent the endorsement of this company or it's services by any real estate company, financial institution or other third party. This is just an informational brochure to get the people to call you so they can make their decision. If they don't get a copy of this, guess what? They don't call you. If you're not on the list, guess what? They don't know what you do.

SEN. BOZEK: If it's possible, if you could mail me -- mail the Commission --

MIKE DELUGAN: I can give it to you, right now, if you'd like.

SEN. BOZEK: Oh, okay, Nance? Alright, thank you, sir. Representative Stone has a question.

REP. STONE: Thank you, Mr. Chairman and thank you for coming in this morning to testify in this matter.

MIKE DELUGAN: You're welcome.

REP. STONE: I have a relatively simple line of questions and it relates to the discussion from the previous speaker between the Chair, concerning the term "refer" or "recommend". And I don't know if you were here during that discussion, but --

MIKE DELUGAN: Yes, I was.

REP. STONE: -- it seemed to be a numbers analysis. Let me just ask you. If I were to, as a real estate agent, recommend one home inspector, or give a buyer one home inspector's name, would you consider that to be a recommendation or referral?

MIKE DELUGAN: Absolutely.

REP. STONE: Okay. If I were to give that same buyer a list of three --

MIKE DELUGAN: Same thing. You're eliminating 197 inspectors.

REP. STONE: So, for purposes of your -- from your perspective, as a home inspector, whether it's one, two, three anything less that 197, I suppose, would be --

MIKE DELUGAN: If it's a list of a 100 and the top three are going to be checked, take those, it's the same --

REP. STONE: So, it's not a quantitative analysis. It's any referral or recommendation, whatsoever.

MIKE DELUGAN: That's right. It's steering.

REP. STONE: Thank you for your testimony.

MIKE DELUGAN: You're welcome.

REP. STONE: Thank you, Mr. Chairman.

SEN. BOZEK: Hold on. One other question, here. We got another -- Mike, hold on. Representative Miner.

MIKE DELUGAN: Yes, sir?

REP. MINER: I can be accused of napping sometimes. Do you -- to go back to Representative Geragosian's questions about reputations of the realtor and the relationship that's developed between someone who buys probably the most expensive thing they're ever going to buy in their life --

MIKE DELUGAN: Buy the what?

REP. MINER: In their life.

MIKE DELUGAN: Yes.

REP. MINER: A home. Do you think to some degree that there's a representation when someone sells a house that is somehow either verified or not verified by the inspection?

MIKE DELUGAN: I don't understand that question, again?

REP. MINER: If I were to sell a house to someone --

MIKE DELUGAN: Yes.

REP. MINER: -- as a real estate salesperson --

MIKE DELUGAN: Yes.

REP. MINER: -- do you think that there is some -- I'll say, not really a warrantee but some validation of my representation of a house as being a good house, as done by a home improvement, home inspector?

MIKE DELUGAN: I would say the real estate agent would not be responsible in any way for the condition of the property. The home inspector would, but not the real estate agent.

REP. MINER: Having never been involved in house sales, but having been involved in sales in the past, I can tell you that quite often, that the relationship is between the person who bought the item and the person who sold it to them. And so, you may think that there isn't that kind of relationship, but I think --

MIKE DELUGAN: You're talking about being a seller now, and the buyer?

REP. MINER: Yeah, I think there are a lot of facts out there that show that there is a relationship.

MIKE DELUGAN: Usually, the way it works, they don't let them talk to each other, too much, usually. You have to go through the agents, so, there's no direct talking between the buyer and the seller, usually.

REP. MINER: I meant, the salesperson.

MIKE DELUGAN: Between the salesperson and the --

REP. MINER: Representing the house, yeah.

MIKE DELUGAN: In talking to who?

REP. MINER: To the buyer.

MIKE DELUGAN: Yeah, well, there of course, obviously they're in close proximity and the trust is there, between the -- a lot of trust.

REP. MINER: And so, in terms of that trust, to go back to the Representative's, I guess, points or comments, you feel it's inappropriate for the seller or the person actually doing the selling, in trying to maintain that relationship to recommend a group of people that they feel might be better able to represent the true picture of a house.

MIKE DELUGAN: Well, as I said before, they may -- some agents will not use me for their clients, but when they have their daughter buy a house, they call me up. It's a big difference when you don't want someone to kill the deal, and be too picky and find too many problems --

REP. MINER: I understand.

MIKE DELUGAN: -- so they may love the person, but they're not going to call the particular inspector up that they might for themselves.

REP. MINER: Thank you.

MIKE DELUGAN: You're welcome.

SEN. BOZEK: (mike off)

REP. FREY: Thank you. How would you like the home buyers to come across home inspectors?

MIKE DELUGAN: I -- personally?

REP. FREY: You're talking about the list of 197, say.

MIKE DELUGAN: I would be happy, personally, if they gave a list of everybody in the state. I don't care. This thing about geographic area and how many in the town is steering. You can drive to another town. That's ridiculous.

REP. FREY: I guess my concern -- I understand what you're saying and certainly, getting back to what Senator DeLuca said, you have an issue with a particular company that's receiving kick-backs or whatever, that should be reported.

MIKE DELUGAN: I have.

REP. FREY: My concern is, now you understand that realtors, real estate salespeople for the most part, represent the buyers.

MIKE DELUGAN: Correct.

REP. FREY: And they're supposed to have the buyer's interests at heart.

MIKE DELUGAN: Correct.

REP. FREY: It's their number one priority. They owe their fiduciary interest to that buyer.

MIKE DELUGAN: Right.

REP. FREY: Now, what happens if the salesperson who's selling the property, knows that there's one particularly poor real estate home inspection company? Should they not have the obligation to make that distinction?

MIKE DELUGAN: I know of an inspector, right now, who is suing some realtor for that, and putting in writing. I don't want to be the judge of that person. I think there's courts out there to handle that. I don't think -- that's innuendo and hearsay sometimes, and it could be a personality thing.

REP. FREY: I mean, you --

MIKE DELUGAN: I would say they should be not doing that, quite frankly.

REP. FREY: So, they should, even if they know they've had -- if they've had first hand knowledge of a poor experience, they shouldn't disclose that.

MIKE DELUGAN: Well, you have define the experience, here. What is it? You mean the guy said the chimney was bad and it needed to be relined, as opposed to get a chimney sweep out there and get it inspected. I mean, I don't understand the reason for the disparity that we don't want to use that inspector. I mean, look, there's good -- I have nothing -- I'm not trying to hammer the real estate agents, at all. My wife was a real estate agent. Generally, they're honorable people. But there's a certain impropriety here. And it's normal. If I was a real estate agent, I would have the same problem, probably. And that is, it does go on.

REP. FREY: I mean, let's face it, unless recently, or soon to be, there's no criteria, no qualifying criteria for a home inspector. You could be a retired house painter. You could be a professional engineer. Or you could be a retired builder.

MIKE DELUGAN: Correct. What's the qualification to be a realtor? You just take a test.

REP. FREY: A state license.

MIKE DELUGAN: Take a test, take a course.

REP. FREY: Right. Which, up until now, the home inspectors don't have to do.

MIKE DELUGAN: That's correct, but that's not what we're talking about here. We're not comparing the qualifications --

REP. FREY: Well, you just brought it up. I didn't.

MIKE DELUGAN: What I -- okay, well.

REP. FREY: Okay, thank you.

MIKE DELUGAN: You're welcome.

SEN. BOZEK: Thank you very much. Thank you. The next speaker that I announced was John Ross. John, are you here? After John will be Bill Stanley.

JOHN ROSS: Senator Bozek, members of the Committee. I'm John W. Ross, a director on the Board of the Coastal Connecticut Chapter of the American Society of Home Inspectors and I'm here to represent their view.

SEN. BOZEK: Thank you very much, Mr. Ross. Mr. Ross, are you an inspector, yourself?

JOHN ROSS: I am.

SEN. BOZEK: And do you have a license?

JOHN ROSS: Not yet. The licensing that goes into effect, they're just in the process. We received applications now, they're to be in by July 1 or June 1.

SEN. BOZEK: (mike off)

JOHN ROSS: This first one, I think, good through July of 2003.

SEN. BOZEK: (mike off)

JOHN ROSS: Yeah, that's my understanding.

SEN. BOZEK: Are there any questions? Senator DeLuca.

SEN. DELUCA: Thank you, Mr. Chairman. Are you aware of any requests for fees to list either your's or any members of your organization, through a real estate agent and or any kick-backs?

JOHN ROSS: I've never heard of any kick-backs. I've never been solicited for any fees to be listed. I do know of such, yes.

SEN. DELUCA: You personally haven't experienced it but you have heard of it?

JOHN ROSS: That's right.

SEN. DELUCA: Thank you.

SEN. BOZEK: Representative Frey.

REP. FREY: Thank you. I'm just looking at the Code of Ethics for -- I guess it's the Home Inspection Licensing Board has issued and wouldn't it be a violation of the Code of Ethics to offer commissions or allowances or so-called kick-backs, according to the Code of Ethics? I think it's number five, here.

JOHN ROSS: I believe so.

REP. FREY: Thank you.

SEN. BOZEK: Any other questions? Being none, I thank you very much.

BILL STANLEY: Senator Bozek, members of the Committee, let me first apologize for being late. I had an inspection this morning and my client needed it to be done today, so I did it today. I will be brief because I understand that you've had other speakers on this subject and undoubtably they've covered some of the same ground, but I am currently President of the Southern New England Chapter of the American Society of Home Inspectors, here in Connecticut and we oppose the legislation for a number of reasons.

SEN. BOZEK: (mike off)

BILL STANLEY: About eight years.

SEN. BOZEK: (mike off)

BILL STANLEY: My particular practice? I do tend to do -- I enjoy older homes and antique homes and I do a fair number of those and sometimes people -- a lot of times people call and because they know that we like to do those, so that would be an area that I may have expertise in.

SEN. BOZEK: (mike off)

BILL STANLEY: Have there been cases like that? Oh, yes.

SEN. BOZEK: (mike off)

BILL STANLEY: You mean, in some cases are there two real estate agents involved? One on the sellers side and one on the buyers side?

SEN. BOZEK: (mike off)

BILL STANLEY: Primarily buyers, but we do, do occasionally do it and more -- actually as time goes by, more inspections for sellers. A seller wants to know what his house's condition is before he puts it on the market and oftentimes we will go do an inspection for them.

SEN. BOZEK: (mike off)

SEN. DELUCA: Mr. Chairman. I just want to ask you the same question. As an inspector for eight years, and President of an Association, have you been or are you aware of any members being solicited to pay to get on a list and or solicited for kick-back?

BILL STANLEY: There are programs that some of the larger insurance -- real estate companies are now putting in place that require -- it's my understanding that they require you to pay a fee to be on this preferred referral list. You, as an inspection company. You can choose to do that, or not. And I am aware of those programs out there. I am not aware of anybody being solicited for a kick-back.

SEN. DELUCA: When you say, "those programs", does that mean they solicit you to have your name on there or do they just make that available that you -- if you want to be on our preferred list, we require "x" amount of dollars?

BILL STANLEY: Yes, that's basically it.

SEN. DELUCA: And you experienced it, yourself?

BILL STANLEY: They have not solicited me, particularly. I know that they are there. I know that certain companies are members of those -- are participating in those programs and again, my understanding is that you pay a fee to be on this list. And certain companies are going to just allow certain inspection companies to be on that list and you have to pay the fee to be on the list.

SEN. DELUCA: Thank you very much.

SEN. BOZEK: (mike off)

BILL STANLEY: My pleasure.

SEN. BOZEK: (mike off)

BOB KEHMNA: Thank you, Senator Bozek, members of the Insurance and Real Estate Committee. My name is Bob Kehmna. I'm President of the Insurance Association of Connecticut a trade association representing insurers doing business here in the state.

SEN. BOZEK: (mike off)

REP. OREFICE: Thank you. Last year there was some question as to if a company thought the -- an inspection audit was coming, they would audit themselves and discover the facts ahead of time. And I can't recall. What was the difference in this year's bill that prevents that or gives the State Auditor some protection that they won't be superseded to find that error?

BOB KEHMNA: There is specific language in the bill, Representative, that prevents an insurer from hiding behind an audit that they start, they invoke after learning that they are about to be examined for whatever purpose by the Insurance Department. So, you can't set up the audit for what would amount to a fraudulent purpose.

REP. OREFICE: And that's in this --

BOB KEHMNA: Yes, it is.

REP. OREFICE: Okay, thank you.

SEN. BOZEK: (mike off)

BOB KEHMNA: Thank you, Senator.

SEN. BOZEK: (mike off)

MIKE HAMPTON: Thank you. For the record, my name is Mike Hampton with Golden Rule Insurance Company. We'd like to start by thanking the Committee for raising SB 1291. Excuse me. We've asked the Committee to raise this subject to bring awareness to the issue of timely approvals of health insurance products.

SEN. BOZEK: (mike off)

MIKE HAMPTON: Thanks.

SEN. BOZEK: (mike off)

BOB KEHMNA: Thank you, Mr. Chairman, members of the Committee. My name is Bob Kehmna, Insurance Association of Connecticut.

BOB KEHMNA: I'm here today to speak in favor of SB 1292, AN ACT CONCERNING FLEXIBILITY IN AUTOMOBILE INSURANCE RATE FILING REQUIREMENTS. Prior to 1993, Connecticut was a competitive rating state for auto insurance. As part of the '93 reform bill, the Legislature passed language that made auto insurance mandatory coverages subject to prior approval and a few years after that, that language was made permanent.

SEN. BOZEK: (mike off)

REP. FELTMAN: Mr. Kahmna, I'm sure will be surprised, not surprised to learn that I'm not enthusiastic about the proposal. How did you arrive at the figure of seven percent?

BOB KEHMNA: I believe that comports with New York's system of seven percent.

REP. FELTMAN: What's the rate of inflation in Connecticut, today?

BOB KEHMNA: The rate of inflation?

REP. FELTMAN: Right.

BOB KEHMNA: I guess at two, three percent? Somewhere in there?

REP. FELTMAN: So, your proposal as I understand it, would allow an insurance company to raise their rates by two to three times the rate of inflation without having the Insurance Department take a look at it, is that correct?

BOB KEHMNA: Well, from a strict numbers standpoint, if my original number is correct, yes. But of course if the insurers is increasing their rates in today's marketplace, well beyond what is justified, they won't be competing in that marketplace very well. This bill would actually work, we believe, to enable companies to price more aggressively because they will be able to change what they charge for the product more quickly.

REP. FELTMAN: Well, I would have no problem with the insurers reducing rates without prior approval but I do have a problem with them raising rates in excess of the state -- the rate of inflation without prior approval and there's a study that's been done, a draft study that's been done, that -- by the Working Group of which Chairman Jurjura is the Co-Chair indicating that the profitability of Connecticut insurers exceeds the United States average in the last -- over the last four years. Actually, from '95 to '98. So, it would be unclear, it would seem to me that if the insurance industry is interested in making their product more competitive, than perhaps that they would be able to put out products that have -- at a lower profit rate.

SEN. BOZEK: (mike off)

BOB KAHMNA: I've been told that there are six or seven states. I don't have the list today. I'd be glad to get it if you'd like it.

SEN. BOZEK: (mike off)

BOB KAHMNA: Sure.

SEN. BOZEK: (mike off)

BOB KAHMNA: Yes.

SEN. BOZEK: (mike off)

BOB KAHMNA: I will get that information for the Committee.

SEN. BOZEK: (mike off)

REP. OREFICE: Not directly related to the prior bill about the work of the -- the filing of the -- it's probably a question more appropriate for the Insurance Commissioner's Office, but at this seven percent, how many -- do you have any rough idea of how many rate approvals would be not needed and free up people at the Department to do other things?

BOB KAHMNA: That would vary with company -- I believe the overall rate change for the state in the last competed year, year 2000, according to the Insurance Department, had an overall average rate increase on the mandatory coverages of three percent, give or take.

REP. OREFICE: But, it would be safe to conclude that this would, on smaller rate increases the rate filing process would be eliminated?

BOB KAHMNA: Yes.

REP. OREFICE: Thank you.

SEN. BOZEK: (mike off)

BOB KEHMNA: This is a test of my filing system, Senator. Thank you, Mr. Chairman, members of the Committee. My name is Bob Kehmna from the Insurance Association of Connecticut. I'm here today to speak on SB 410, AN ACT CONCERNING NOTICE OF AUTOMOBILE INSURANCE POLICY ISSUANCE AND CANCELLATION.

SEN. BOZEK: I have a question.

BOB KAHMNA: Yes?

SEN. BOZEK: (mike off)

BOB KAHMNA: As I understand it, the current system is a monthly dump of data. A monthly dump from insurers to the Motor Vehicle Department. They process that data as you say, with a vendor. That vendor tries to compare the Insurance List with registration and VIN number lists to determine who, in fact, is not insured and driving in the state, and from that -- problem?

SEN. BOZEK: (mike off)

BOB KAHMNA: And from that, should follow a letter of warning and then there are follow-up procedures to that. My understanding, though, is in the current process because of the volume of information and the concern about mismatches that you're actually distilling that process down to a sample of a sample, if you will, and it's not as broad-based.

SEN. BOZEK: (mike off)

BOB KAHMNA: Yes.

SEN. BOZEK: (mike off)

BOB KAHMNA: If I could mention one other thing to that point? The 24 hour notice requirement that this bill contemplates, we're supposed to give notice upon cancellation. One of the prime reasons for cancellation is cancellation for non-payment. Non-payment of premium.

SEN. BOZEK: (mike off)

SEN. DELUCA: Thank you, Mr. Chairman. Bob, having been the one who started this in '93, could you tell me what reduction of uninsured motorists from '93 to last year, was? What the numbers were, then and now, approximation?

BOB KEHMNA: I don't recall, Senator, where we started, but I do know that Connecticut right now is the bottom third, my understanding, of states across the country in percentage of uninsured drivers, by two different services that I've seen, two different surveys, that number is, depending on who you talk to, eight or nine percent. And that would put Connecticut in the lower third. States run as high as, I believe, 32 percent in the percentage of uninsured in their particular state.

SEN. DELUCA: So, you're saying we're at about eight or nine percent, now?

BOB KEHMNA: Yes.

SEN. DELUCA: My recollection is in 1923, we were in the high 20's. High 20 percentile. It's my recollection. So, this current system that we now have, has in some way helped in reducing the number of uninsured.

BOB KEHMNA: Part of the system's benefit, I would assume, would be getting the word out that this could occur. They could -- whatever the enforcement mechanisms are. So, it becomes prophetic in nature. You get -- it happens to someone and they tell four other people and that could be the benefit that comes from it.

SEN. DELUCA: Well, most laws like this, we hope that will force people to conform to the law rather than be punished. My other mention is, I've heard that since we are now changing to a new plate, and as you go in to re-register your car now you get the new reflective plates, that at this point they will catch a lot of other people will not be registered and so if they are running around with stolen plates or outdated plates, and uninsured that this would immediately be apparent to law enforcement, is that correct?

BOB KEHMNA: I honestly can't speak to that, Senator. I'm not aware.

SEN. DELUCA: I have heard that. That's why I -- and I guess lastly, my concern is what you said about cancellation if it were in a 24 hour thing and then there is a grace period in somebody's thing. I would hate to be the person that gets stopped for the bad tail light and my thing came up on the policeman's thing, that I had no insurance when I had already paid and then had my car towed away. I don't know who would be -- I don't know who would be responsible.

BOB KEHMNA: It also could occur if when you cancel your insurance with one company to move to a second company and there's simply, through the accidents of timing, may not -- those that transfer of information may not occur, first and second, coordinated to result in the person of this policeman knowing that in fact you are insured, that you went from one company to another.

SEN. DELUCA: Yeah, you cancelled one to go -- so therefore, there is a notice of cancellation --

BOB KEHMNA: Right.

SEN. DELUCA: -- and when you have picked up on someone else. But I'm just concerned about if in that interim of period, the person got stopped and legally under the current law their car can be towed. So, who would be liable when in fact they are insured and it was erroneously put out.

BOB KEHMNA: I've heard anecdotal stories like that from New York.

SEN. DELUCA: Thank you very much.

SEN. BOZEK: (mike off)

REP. NEWTON: Yeah, you talked about the cancellation and the grace period. I know consumers don't about credit history being used to determine their insurance rates. On the grace period are consumers aware that they have this five day grace period or is it top secret?

BOB KEHMNA: I don't know how or when there would be notice. I would be glad to find that out for you, Representative, and get right back to you on that. That should be an easy answer to get.

REP. NEWTON: So, you can get that information?

BOB KEHMNA: Yes, I'll get it right back to you.

REP. NEWTON: How many insurance companies let their consumers know that they have a grace period and they're not dropped automatically --

BOB KEHMNA: I should be able to get right back to you on that.

REP. NEWTON: Okay.

SEN. BOZEK: (mike off)

REP. FELTMAN: Feltman, right. Mr. Chairman, would you object if I go back to 1292 in which Mr. Kehmna was previously speaking, because I had another question that occurred to me? It's on the last bill.

SEN. BOZEK: (mike off)

REP. FELTMAN: To Bob, right.

SEN. BOZEK: (mike off)

REP. FELTMAN: Mr. Kehmna, could you tell me what the Department says? Has the Department taken a position on 1292? Do you know?

BOB KEHMNA: To my knowledge, they didn't testify today. I don't know that they've taken a position on it.

REP. FELTMAN: Okay. And when the Department reviews, under the present regulations, they review a rate change proposal, do they just take into account, claims experience as you were discussing or do they also take into account loss reserves, profitability and other factors as part of their review process?

BOB KEHMNA: There's a full filing made to the Department with standards required by the Department to give them the information they need to make that determination. If you're looking for specifics, I'd be glad to get you an outline of what is provided.

REP. FELTMAN: And you said that one state -- one other state has this no prior review change in rates.

BOB KEHMNA: New York has a system similar to what we are proposing for your consideration, today, that seven percent band, rating band? If you're above it, cumulatively in the previous 12 months, you're subject to prior rate approval, below it you are not. There are -- my understanding, five or six other states beyond New York which I'll get you a list on, who have a similar program, I don't know what the numbers are. That band size, whether it's seven percent or something different. May be higher, may be lower, but I'll get that information for the Committee.

REP. FELTMAN: Well, what I'd be most interested in is how in the state you arrived at that seven percent figure and what the rational for that was.

BOB KEHMNA: I honestly couldn't say. Honestly couldn't say. My rational in offering the bill to you, is that it's been in New York for years and seems to work. And I don't know that there's any opposition to it's operation in New York.

REP. FELTMAN: Okay. It's been -- my recollection's been if it's been the experience of -- or it's been the position of the Insurance industry in prior years that the experience of one state should not be the basis for Connecticut's public policy when these two legislators have introduced measures that have been successful in one other state. So, I assume that if that rule applies to us, I assume it applies to the Association, as well.

BOB KEHMNA: Well, we understand that there are other states that use the same rule. Heck, if you'd like to talk about competitive rating -- going back to competitive rating, we'd love to do that and there are plenty of states that do that, also.

REP. FELTMAN: Okay, thank you for your testimony.

SEN. BOZEK: (mike off)

JAY JACKSON: Good afternoon, Mr. Chairman and members of the Committee. My name is Jay W. Jackson. I'm an attorney in Hartford, Connecticut and I'm here representing the National Association of Independent Insurers. NAII, which is a non-profit trade association representing almost 700 property casualty insurers, nationwide.

SEN. BOZEK: (mike off)

JAY JACKSON: Okay. Perhaps I can address it to him privately. I'm here in opposition to SB 410. While I understand, Mr. Chairman, it's a meritorious intention, for the Connecticut legislator to seek ways to improve the present situation, there are so many problems with the bill as drafted that the NAII must respectfully submit its opposition.

SEN. BOZEK: (mike off)

REP. NEWTON: Thank you. Good afternoon.

JAY JACKSON: Yes, --

REP. NEWTON: I heard where, in your testimony, you stated that it would be costly on a 24 hour basis to get that information out, but when consumers get their bill, I'm sure that if owe my insurance company a premium on my insurance automobile, I'm sure there are ways of getting that out in a 24 hour period of time, so I'm just wondering, when you give a testimony that says, you know, would be burdensome to the Department with our Commissioner and to agencies, but there's no problem when someone has a bill and they owe auto insurance, they can get that out within 24 hours. So, I don't understand the difference if we can get it out to bill people, that owe auto insurance, why is it so consuming to get this information out in a 24 hour period of time?

JAY JACKSON: At the present time --

REP. NEWTON: Thank you, Mr. Chairman.

SEN. BOZEK: Yes.

REP. NEWTON: At the present time, Representative Newton, many of the companies are not physically equipped to do this on a 24 hour basis. They are able to do it on the monthly basis, where they batch all of the material together and they don't do it on an individual basis, which would probably be required under the terms of SB 410.

REP. NEWTON: Just a follow-up question, Mr. Chairman.

SEN. BOZEK: (mike off)

REP. NEWTON: I asked the gentleman there about the cancellation, the grace period. Are you aware, or do you let the consumer or make the consumer aware of the five day grace period that he or she has on their auto insurance should they not pay in a timely manner, that there is a grace period that exists out there and that the consumer and the people know it other than the insurance companies?

JAY JACKSON: I believe that that the companies, the NAII companies, do make that aware, but I cannot tell you right now that they do, but it would be my feeling that it would be done.

REP. NEWTON: Well, I get kind of nervous about feelings on things that are done --

JAY JACKSON: Just as Bob Kehmna said he will try to get you information, I will --

REP. NEWTON: Well, the reason I asked that is because you all don't make the consumer aware of their credit history being checked by auto insurances, so I get nervous when you say, you know we do or you're not sure if we make the consumer aware that there is a grace period of five days or four days and -- you know, I think that it's --

JAY JACKSON: My only point is, Representative Newton, I think there's about 200 companies that are doing business. I just can't speak for all of those companies. But I will do my best to --

REP. NEWTON: I would like to find that information out on the cancellation policy if the consumer is aware that they have, and I heard the testimony today, that they have five days or whatever amount of time, before their policy lapses, should they pay within that period of time. So, I would like to find out, you know, do your organization, if that's a written policy?

JAY JACKSON: Right. It's my understanding that they do, but I will verify that.

REP. NEWTON: Okay, thank you.

SEN. BOZEK: (mike off)

TOM SWAN: Good afternoon, Senator Bozek, Representative Jarjura, other distinguished members of the Insurance Committee. My name is Tom Swan, and I'm the Executive Director of the Connecticut Citizen Action Group.

SEN. BOZEK: Thank you very much. Seeing no questions, thank you very much, Tom.

TOM SWAN: Thank you, Tom.

SEN. BOZEK: (mike off)

BOB KEHMNA: Thank you Senator Bozek, Representative Jarjura and members of the Insurance and Real Estate Committee. My name is Bob Kehmna, President of the Insurance Association of Connecticut.

SEN. BOZEK: (mike off)

SEN. BOZEK: You're all done?

BOB KEHMNA: What bill am I on?

SEN. BOZEK: (mike off)

BOB KEHMNA: The insurer's contractual responsibility is to the claimant, not to the tower or repairer. We don't question in any way the tower or repairer's right to be paid. It's simply not up to us in this circumstance.

SEN. BOZEK: (mike off)

BOB KEHMNA: Yes.

SEN. BOZEK: (mike off) -- we are aware that there is some conflict with regard to the collecting the monies and from different businesses managing all of this. Even on some of these businesses where they have multiple bays and they handle a lot of business. It requires, in some cases, just all the mechanics, an extra body to handle the extra paperwork for some of these and in a small garage it consumes a lot of time.

REP. NEWTON: I've got one question, Senator.

SEN. BOZEK: Okay. Nothing on credit history, though.

REP. NEWTON: No, this is on this here bill.

SEN. BOZEK: Okay.

REP. NEWTON: And I guess I understand why you all submitted this bill. A body shop does work on a person's car. Right now, you make the check out to the person who owns the car. That person decides, well, I'm going to leave the car there, I'm going to take the money and use it for something else.

BOB KEHMNA: Well, this bill focusses on totalled motor vehicles. So, in most cases, there would not be an awful lot of repair work, or should not be, an awful lot of repair work done on it. It's totalled.

REP. NEWTON: Right. Storage and some other things --

BOB KEHMNA: Storage and towing, right.

REP. NEWTON: -- are included in that.

BOB KEHMNA: Right.

REP. NEWTON: And it would be up -- as it is today, if this bill doesn't pass, it would be up to an insurer, the person who owns the car. You give me a check for a total loss of my car to pay the body shop or the person who stores the car.

BOB KEHMNA: As I understand the problem that was the genesis, was the perceived problem, was the genesis of this bill --

REP. NEWTON: Right. Right.

BOB KEHMNA: -- is that particular circumstance where the individual owner decides to keep title to the car.

REP. NEWTON: That's right.

BOB KEHMNA: Our point though, is that we really, and I'm not trying to be ficecious here, but we really can't be a collection agency for the repair shop. Our duty is to pay our insured or the claimant what is owed them for all the repairs that may or may not, may have been done and certainly towing and storage and they then take that check and they bring it to the shop and with that check, get that car back.

REP. NEWTON: But the reason the bill is here in front of Senator Bozek is that that is not happening. Evidentially, people are receiving their check and not paying whatever the storage might be. Whatever the minor repairs on the totalled loss car and I would assume that that's why this bill is here, to help those individuals get paid in a timely manner or to stop people from just walking away, not paying.

BOB KEHMNA: I don't think we're, if there is a problem out there, I don't think we're the source of that problem. Besides which, our responsibility is to the insured, we're paid according to the relationship, in the contractual relationship we have with that insured.

REP. NEWTON: Okay.

SEN. BOZEK: (mike off)

REP. STONE: Thank you, Mr. Chairman. Good afternoon, Bob. The -- there are two situations, and one is which, both related to total loss, one is where the insured keeps the car and the other one is where the insurance company gets the car.

BOB KEHMNA: Right.

REP. STONE: Who makes that determination? The insured?

BOB KEHMNA: Well, we would declare it as a total and the insured would have the right, if they so chose, to keep the car.

REP. STONE: Right. Let's assume, just to give you an example, let's assume the insured decides to keep the car. You would then pay the insured for the loss value. Is that? The value of the vehicle --

BOB KEHMNA: The value of the vehicle and whatever charges there exists. They would be paid for the towing and storage and then --

REP. STONE: Okay, you would pay those as of the date of accident through the date that you make the declaration or notify the insured of that declaration of a total loss?

BOB KEHMNA: The actual date of that check?

REP. STONE: No, not the date of the check. The storage charges that we're talking about.

BOB KEHMNA: Right.

REP. STONE: They run from the date of the accident, the event that caused the total loss, to another date. You pay for, from the date of loss through what date? The date you notify the insured that it's totalled, and the insured makes the election to keep title? The date they get notice? When is -- how much do you pay?

BOB KEHMNA: I'll have to get that for you. I don't know --

REP. STONE: How many days?

BOB KEHMNA: Right. I don't know.

REP. STONE: Let's assume that you pay, just for the sake of discussion, you pay until the insured gets notice of -- until the insured makes a choice of keeping the car.

BOB KEHMNA: Okay.

REP. STONE: They retain title.

BOB KEHMNA: Right.

REP. STONE: You send one check to the insured?

BOB KEHMNA: Right.

REP. STONE: Alright, and that check would include storage costs.

BOB KEHMNA: Right.

REP. STONE: And so you --

BOB KEHMNA: And towing.

REP. STONE: And towing. So, you don't necessarily have a problem with paying, you have a problem with who you pay, is that correct?

BOB KEHMNA: We want to pay once to the people we are obligated to. It's their responsibility, their obligation to take that check, go get their car that the shop will not release the car without being paid --

REP. STONE: So, your concern is within that example, is who you pay rather than whether you pay or not for the storage?

BOB KEHMNA: We are paying for storage.

REP. STONE: You're paying for storage, right?

BOB KEHMNA: Yeah.

REP. STONE: Okay, and if the insured gets the money and goes to pick up their car and decides that they don't want to pay the storage, the body shop repairer would have lien rights or be able to withhold the car from them?

BOB KEHMNA: My understanding is, that they would not release the car unless they were paid.

SEN. STONE: Okay. Let's assume that scenario two, the insurance company retains title. Now, you have an obligation, a further obligation, to remove the car --

BOB KEHMNA: Right.

REP. STONE: -- from that repair shop.

BOB KEHMNA: Right.

REP. STONE: You now have title to the car.

BOB KEHMNA: Yep.

REP. STONE: Who do you pay for storage, in that example?

BOB KEHMNA: What the insurer would do, they usually have a relationship with a salvage company. We'd call up XYZ salvage company, goes to such and such a place, and pick up this car. The salvage company would come in, cut their own check to reimburse the tower or repairer for whatever charges are outstanding and then take the car to their salvage yard.

REP. STONE: So, on that scenario, you pay directly, either through the salvage company agent picking up the car or a check from you. You pay directly to the dealer or repairer?

BOB KEHMNA: That amount that the salvage company pays --

REP. STONE: Yeah.

BOB KEHMNA: -- the repair shop would be subtracted from what we would otherwise -- we will otherwise get from the salvage company when they dispose of the car, however they dispose of it.

REP. STONE: Okay. But, it's not the insured that's paying the autobody shop. It's either you, directly, or your agent, the salvage company, paying the shop for their towing and storage charges? Right?

BOB KEHMNA: Right.

REP. STONE: Okay. Have you had any problems in that scenario, in terms of -- is there a problem calculating the number of days? Is that ever an issue? Or is it merely --

BOB KEHMNA: Not to my knowledge, but I'd be glad to look into that. I don't -- I understood this to be a non-problem. When we first saw the bill, frankly, we couldn't quite understand what the reason was for it and meeting with representatives of autobody shop associations, it seemed to me that the problem can be distilled basically down to the issue of when the insured keeps title and their claim that sometimes they are simply not coming to pick up the car.

REP. STONE: Okay. Well, that may be another issue that's not solvable through an insurance law change, but what's the -- after you decide to, that you're -- or after the insured opts to transfer title to the insurance company, how long does it take you to get the car out of that repair shop?

BOB KEHMNA: I don't know.

REP. STONE: Okay. Is it more than 10 days?

BOB KEHMNA: I honestly don't know. I'll have to check. I'm sure there are standards that companies operate by. I'll have to check.

REP. STONE: Regardless of the amount of time that's actually elapsed between the time that that decision is made and that time that that car's picked up, you pay for every day?

BOB KEHMNA: My understanding is, we pay for storage, yes.

REP. STONE: Okay. Up until the time that that car's physically off the lot, in a situation where the insurance company retains title, the insurance company is paying every day of storage, correct?

BOB KEHMNA: Yes.

REP. STONE: Okay. Thank you. Thank you for your indulgence, Mr. Chairman.

SEN. BOZEK: (mike off) -- my car gets damaged such that it's going to be totalled, you send me a check. You say -- the agent calls you up and says, Tom, your car's a total, we're going to send you a check. And would you please somehow give us title? Get title to us or to the agent, mail it in, badda bing, badda boom, okay? So, I say yes.

BOB KEHMNA: The salvage company, going there, cuts its own check.

SEN. BOZEK: Cut's its own check. And then you --

BOB KEHMNA: Now, it's certainly, it would be to the insurance companies advantage to get that salvage company to that shop as quickly as possible, to minimize storage cost, because that amount is checked. I'm sorry. That amount that the check is cut for by the salvage company isn't subtracted from what otherwise would be the return to the insurer from what the salvage company does with that car.

SEN. BOZEK: Hold on. Hold on. I got a totalled car.

BOB KEHMNA: Right.

SEN. BOZEK: And I have towing in my policy, right?

BOB KEHMNA: Uh-hmmm.

SEN. BOZEK: Okay? So, my car's damaged. It's towed over to ABC autobody. It's on Friday night. On Monday, maybe even Monday, the agent, the secretary calls me up, quarter after four and says, the agent was over to your place, the car's totalled. It's worth $73,000 dollars.

BOB KEHMNA: That's a heck of a car.

SEN. BOZEK: A hell of a car.

REP. NEWTON: It's a Senator's car.

SEN. BOZEK: So, I get the -- I'm going to get, let's say it's $5,000 dollars. I'm going to get the $5,000 dollars. Is the towing and storage for Friday, Saturday, Sunday, Monday, because maybe the storage guy can't get there until -- most likely the best now is probably Tuesday. Would the insurance company going to pay ABC autobody? Are they -- no. The people who pick up, the salvage company that pick up the car, they're going to give ABC a check for towing and storage.

BOB KEHMNA: Right. Yes, right.

SEN. BOZEK: Okay? Now, is that $5,000 dollars that I was supposed to get for the car, are you taking storage and towing out of it?

BOB KEHMNA: The value of the car is the value of the car. What you are due for a totalled motor vehicle, is what you will get. And then --

SEN. BOZEK: Alright, I get the $5,000 dollars.

BOB KEHMNA: Now, there -- I don't know if there's a -- if there's a deductible, but whatever you're due, you will get, yes.

SEN. BOZEK: So, let's say there's a $100 dollar deductible. So, I get $4,900 dollars, alright? So, now, the salvage company comes and gets that vehicle. You have some type of contract.

BOB KEHMNA: Right.

SEN. BOZEK: Basically, though, you have to pay them for -- you have to reimburse them because they paid ABC autobody?

BOB KEHMNA: No, we reimburse them by them subtracting out from what otherwise would be our return.

SEN. BOZEK: Oh, okay. So, I got that. But, they pay them. They pay them. And the salvage company pays ABC.

BOB KEHMNA: Right.

SEN. BOZEK: Right?

BOB KEHMNA: Right.

SEN. BOZEK: Then, what happens is, the salvage company says, this car to us is worth $1,200 dollars, okay? So, you get, say you get $1,200 dollars from them, minus - or you them -- them, oh, yeah, $1,200 dollars, minus say, the $150 dollars for towing and storage.

BOB KEHMNA: Correct.

SEN. BOZEK: Alright, okay. So, that's all good. Now, I decide I want to keep that car. Okay? And so, you say to me, it's okay, then you can keep the car, and we're going to send you a check for the $5,000 dollars minus the $100 dollars. Do you still pay the towing and storage up for those few days? And you give me the money, or do you pay ABC autobody. Or, you don't pay anybody?

BOB KEHMNA: The salvage -- oh, you're keeping the car?

SEN. BOZEK: I'm keeping the car.

BOB KEHMNA: I'm sorry. We're cutting you a check for towing and storage due and you get that total check and you're supposed to take that check, and --

SEN. BOZEK: Hold on, Bob, hold on. Bob, Bob, Bob. You're paying me $5,000 dollars --

BOB KEHMNA: Plus.

SEN. BOZEK: -- minus my $100 dollars, alright? Now, are you adding onto that $5,000 dollars, the towing and storage?

BOB KEHMNA: Yes.

SEN. BOZEK: Alright. So, now it's supposed to be my responsibility to pay those guys?

BOB KEHMNA: They're holding your car.

SEN. BOZEK: Is it my responsibility?

BOB KEHMNA: Yes.

SEN. BOZEK: To pay them. Alright. So, what we have is the difference here is that when you're working only with me, then I'm supposed to take care of

BOB KEHMNA: Right.

SEN. BOZEK: And when you're working with the salvager, okay, then ABC body's all taken care of --

BOB KEHMNA: Right.

SEN. BOZEK: -- and like that.

BOB KEHMNA: It should be seamless because the salvage company's coming --

SEN. BOZEK: Come out, alright, so now the only -- one other difference here is that is the additional check that you're -- because you don't want to work with ABC, and me, that's two transactions, you want to work -- but when I don't keep the car, when I don't keep the car, then you work with me and with your salvage company.

BOB KEHMNA: Right.

SEN. BOZEK: So, there's two transactions.

BOB KEHMNA: There's a debit and credit situation with the salvage company because they're first giving a check to ABC, in your example, taking some dollars on that total vehicle --

SEN. BOZEK: I'm with you. I just want to know the explanation, because we covered that. It's just so I want to make sure I get the mechanics.

BOB KEHMNA: Yes.

SEN. BOZEK: Alright. Other questions? Representative Stone, then Chairman Jarjura.

REP. STONE: Thank you --

SEN. BOZEK: I'm sorry. You know, excuse me -- okay. Alright, go on.

REP. STONE: Thank you, Mr. Chairman and thank you, Representative Miner and Representative Jarjura. I apologize, this will be the second and last time on this issue for this witness, at least, or this individual. Bob, have you ever heard of a term called "insurance dumping"?

BOB KEHMNA: Insurance dumping?

REP. STONE: Yeah.

BOB KEHMNA: No, I have not.

REP. STONE: Was there ever a time when an insurance company that doesn't have or that -- where the insured decides to give the car to the insurance company, where an insurance company after getting title, decides not to go pick up the car?

BOB KEHMNA: I talked to several members about that. The answer was "no". There could be a human mistake in dropping a file, forgetting you have a car there, but that would be rectifiable.

REP. STONE: Would they, in determining whether -- if they come up with a salvage value that's extraordinarily low, it may be in their best interest not to pick up the car, wouldn't it?

BOB KEHMNA: Honestly, I don't see where -- I am told that that is not an issue. That if we have title, we pick up the car. That car has value. We're going to make use of that value.

REP. STONE: So, if we have a testimony from someone else that talks about this practice of insurance dumping, that as far as you're aware of, that practice of -- was basically getting title, making a judgement call on whether the salvage value is worth picking up the car, the insurance company decides not to pick it up, and then we've got a repairer or dealer that's stuck with a vehicle that has to wait a number of days, if not months, to get rid of a car because the insurance company has decided not to pick it up, that practice does not exist?

BOB KEHMNA: To my knowledge, no. And I would suggest you call the Insurance Department. To my knowledge, they've not received of any complaints to speak of, so I don't --

REP. STONE: I'm also going to question now, because it's going to come up later.

BOB KEHMNA: Oh, I understand.

REP. STONE: I want to give you the opportunity to respond, that's all.

BOB KEHMNA: The answer is no.

REP. STONE: Okay, thank you. Thank you, Mr. Chairman.

SEN. BOZEK: Representative Miner.

REP. MINER: Thank you, Mr. Chairman. In terms of cutting a check to more than one individual, that's not an issue. In terms of this bill, there's some language in here, about you know, wanting to make sure everybody gets paid and I can't remember, sometimes these things go on for awhile.

BOB KEHMNA: Right.

REP. MINER: Did you say that there was a concern about having the relationship only with the insured and that -- you know, really shouldn't be having the body shop's name on a check, or?

BOB KEHMNA: As I understand this bill, although it's not clear, this bill would require us to cut two checks, or more and we would submit that that's not our responsibility. Our responsibility is to the insured or the claimant, and that that act of requiring two checks could actually add considerable cost when you multiply by the thousands of claims that we're talking about, here, in the overall auto claim processing system.

REP. MINER: In terms of, instead of going with the two check theory, to just a one check theory which would mean that you put the insured on and the garage on. Do you think the Association would have any problem with that?

BOB KEHMNA: Yes. In fact, there's a bill later in your hearing, HB 5393, that speaks to that very issue. We are in opposition to it and when that bill comes up I intend to testify and give reasons why.

REP. MINER: Okay, and my other question in regard to the dumping was already asked. I'm all set. Thank you.

SEN. BOZEK: Hold on, Representative Jarjura, Co-Chairman.

REP. NEWTON: I'll yield to the Chair.

REP. JARJURA: Oh no, that's okay. Representative Newton, you know I always yield to you.

REP. NEWTON: Okay, Representative Newton, I'm just going to make him aware of we've already been past credit history.

REP. NEWTON: Right.

REP. JARJURA: Thank you. Bob, it seems to me that when it's just within the -- when the insured is out of it, say, it's between you, the tower, the body shop, whomever has the car, and the salvage company, things seem to go pretty smoothly. I can't imagine there's a lot of cases where if you say a car is totalled to your client, that they're going to say to you, we want to keep that car. Is that --

BOB KEHMNA: Well, there may. You have a older car, where the damage that causes it to be totalled, meaning exceeding a certain percentage of its value, is more cosmetic in nature or the problems, the structural problems, are fixable. They may wish to keep that car even though it's totalled.

REP. MINER: Okay. So, say we're in one of the situations, now, where okay, the car is physically at somebodies body shop, garage, tow company or whatever. The decision's been made that this car is totalled, for whatever reason. The frame is bent, I don't know, whatever reasons that they come up with totalling a car and the person says, I'm going to keep it, you deduct the salvage value from it.

BOB KEHMNA: We have fulfilled our obligation.

REP. MINER: Yeah, okay, I know.

BOB KEHMNA: I --

REP. MINER: I know, you don't want to --

SEN. BOZEK: No more checks.

REP. MINER: Thank you, Mr. Chairman.

SEN. BOZEK: Representative Newton and then Representative Miner.

REP. NEWTON: Just a follow-up. So, maybe I can understand. If I walk away from my car, I leave it at ABC. When the title comes clear through the insurance company, who gets that title? Do you give it to ABCD or do you give it to the owner of the car?

BOB KEHMNA: We get the title. We may want to salvage the car. We now, because we have title, we can take that car. We can take the car off the lot to a salvage company. There may be instances where the repair shop wants the car. It has value to them. They, for whatever reason they think they can put it back on the road, so there may be some negotiation, there. But we can remove the car, via the salvage company. Take it to the salvage yard, generate dollars from that.

REP. NEWTON: Okay, what I'm talking about, after the insurance company sends me the check, okay? It's not going to the salvage place. I walk away. I say, I don't want it. You've already paid for storage, those kinds of things, when I get my check. Car's not worth anything. I walk away. The insurance company is not sending to a salvage place. You just walk away. Do you send the title? Once you receive the title? Let's say my car is still sitting there. I got my check. You've included in that check what the storage is, what the fees were, whatever it might be. I take the check. I leave the car. It still sitting there in somebody's shop, ABCD shop.

BOB KEHMNA: Right.

REP. NEWTON: I don't pay you.

BOB KEHMNA: Right. I think that's the compliant that that generated the bill.

REP. NEWTON: Okay, so I'm trying to understand and you said you're going to testify on this other bill on why, if you know where a car is stored at, why couldn't you make the check -- instead of doing two checks, make the check payable to the storage or body place for whatever those fees are, so that if before I can cash that check, I need two signatures so he can get paid?

BOB KEHMNA: If the person has said they want the car, then title is not part of our world. You know, we are not involved in that situation.

REP. NEWTON: Okay, but I don't pay. Here's the point I'm making. I don't pay --

BOB KEHMNA: Right, I understand.

REP. NEWTON: Do you send that title to the owner of that car or would you send it to the garage that was holding that car?

BOB KEHMNA: I don't believe that we're part of that situation. If the insured, if the claimant is retaining the car --

REP. NEWTON: Right.

BOB KEHMNA: -- for themselves, we will never have title to that car. They are keeping it as their own and therefore, they are the party that can and should remove it off the lot and they have title to do that.

REP. NEWTON: Just a final question, Mr. Chairman.

SEN. BOZEK: (mike off)

REP. NEWTON: Could a garage who has this car, knowing that the person got the check, the storage fees and everything was included, he walks away, could that body shop owner appeal to whoever has the title to get control of that title, since the person walked away from that car? Through our laws today as they're written?

BOB KEHMNA: There may be laws on abandon --

SEN. BOZEK: (mike off)

BOB KEHMNA: There may be laws on abandonment of motor vehicles. I -- that would be my best guess, Representative, as to what could be done.

SEN. BOZEK: (mike off) -- one second. You have a question, Representative Miner?

REP. MINER: I don't have a question.

SEN. BOZEK: Oh, okay.

REP. NEWTON: Well, that's -- that's -- I mean, this bill is here so that people can get paid, the body shop or the garage. I'm just curious. Could a garage, as we speak today, if a car is left there, he's not getting paid for it, you've cut the check to me, there's a title. Could that garage --

SEN. BOZEK: I can't remember, but the only place I know there's a longer process going back either of another prior year or talking to garage people who have a complaint about this bill. There's some longer process and in many cases, they're greater problem is the value of the car is the question.

REP.REP. JARJURA: But I think -- just a comment or two, not to debate the bill right now, but I think Representative Newton is focussing on a good point in that we've been talking about the insurer, the body shop or tow shop owner and I guess the question that you raise is now how do get to the insured who decided to keep this title. What writ of mandamus or short circuiting process can we get to that person to get -- so, that he could either give the title to the body shop owner, or take the car off their property. I think that's the goal, and maybe --

REP. NEWTON: That's what this bill is aiming --

REP. JARJURA: -- we can look at DMV, some type of a process where they --

REP. NEWTON: Right.

SEN. BOZEK: Any further discussion with Mr. Khemna? Representative Miner.

REP. MINER: Thank you. You talk about the relationship between the insurance company and the insured. And having had some experience in this business, I know there's also a relationship between the insurance company and the individual who has towed the vehicle to their garage. And probably 85 percent of the conversation that goes on during this time is between the insurance adjustor and the guy at the body shop. Is that fair to say?

BOB KHEMNA: The determination --

REP. MINER: The individual whose automobile got towed, might have gone to the hospital, could have gone anywhere, but from that point, someone says, alright, talk to my insurance company, and Representative Newton's body shop is then communicating with one of your insurance companies.

BOB KHEMNA: And then the appraiser would go to determine whether, in fact, the car is totalled enough.

REP. MINER: Right. I mean, so is it -- would it be fair to say that there is somewhat of a relationship? I mean, I don't know if culpable is the right word, but there certainly is some understanding of what's going on here, between the company and the company that towed the vehicle, and yet it almost sounds like what you're saying is, our obligation is to the insured and therefore we cut them the check and whatever we might have said during this process about value and payment really goes out the window, once the insured makes a decision to do something else.

BOB KHEMNA: We have paid value and we have paid for services. We have done that. I don't think it's our responsibility, with all due respect, to be a policeman and to make sure that our insured follows through with what that insured does with the check that he or she gets.

REP. MINER: And I might tend to agree with you on that point if the relationship always stayed between the insurance company and the insured. But I think the reality of life is that it goes between the insurance company and the guy that towed the vehicle in, and so during that process of developing that other relationship, I'm not so sure that I see it as clearly as you do, but thank you.

SEN. BOZEK: (mike off)

BOB KHEMNA: Thank you.

SEN. BOZEK: (mike off)

JAY JACKSON: Senator Bozek and Representative Jarjura, members of the Insurance Committee. My name is Jay W. Jackson. I'm an attorney in Hartford representing the National Association of Independent Insurers. NAII is in opposition to SB 477 as it's presently written.

SEN. BOZEK: (mike off)

JAY JACKSON: Thank you.

SEN. BOZEK: (mike off) -- Vin DeLauro? Tom Tedford.

TOM TEDFORD: Representative Jarjura, Senator Bozek, distinguished members of the Committee. Thank you for allowing me the opportunity to address and comment on Proposed SB 477. To my right is Roman Priputnewitz, who is the President of the Towing and Recovery Professionals of Connecticut, the Association which I'm here to represent, today.

TOM TEDFORD: -- title, at that point. That's all. I'd like to address at this point and I'd be happy to take any questions from the Committee.

SEN. BOZEK: Representative Stone.

REP. STONE: Thank you, Mr. Chairman. Thanks for coming in, Tom and Roman, to testify. How often does it happen where a -- let me back up, first. The decision to, by the insurance -- by the insured to either retain title or transfer title to an insurance company on a total loss is the insured party's decision to make, right? It's not the insurance company that makes the decision, the insured party does.

TOM TEDFORD: The insurance company in a case where the vehicle has low salvage value will sometimes offer back to you the right to reclaim the vehicle. In many cases, you as the consumer or the owner of the vehicle are not going to reclaim the vehicle because, quite frankly, the towing and storage charges will exceed, or the cost of repairing that vehicle and then having to go through the complete inspection process to make sure that it is legal to go back on the road, would exceed any benefit to keeping it.

REP. STONE: But you now, you as the insured party are making that choice and I think this is the example that Chairman Jarjura was talking about and why would someone choose to retain title only to abandon the vehicle later on? But, I want to talk about those situations where they choose to give it to the insurance company, and it seems equally unlikely or at least odd, that an insurance company would take title to a vehicle and just leave it abandoned. And I guess that's really the situation that you're talking about in your testimony. Does it happen that often where the storage, towing and ancillary repair cost exceed the salvage value of the vehicle?

TOM TEDFORD: Yes, and especially in most cases where the vehicles are deemed total losses they're usually -- the tow bills are more than the minimal tow charges because in most cases, the accident may have had extreme circumstances and required extensive recovery or other things that may have been involved in retrieving the vehicle from inside a building, in a swimming pool, in a house, etcetera and brought back to the property of salvage company.

REP. STONE: Well, you just added a new wrinkle to this. My understanding was that if the insured party transfers title to the insurance company, that the insurance company when their salvage company comes out to pick up the car, authorizes their salvage company to pay your towing charges and storage charges up to that date out of -- from their funds.

TOM TEDFORD: Not if they pick up the vehicle.

REP. STONE: Okay, --

TOM TEDFORD: If they come and pick it up, they cut the salvage company that they send to pick up the vehicle, comes out and pays us as a check. The salvage company presents that and then they bill that back to the insurance company.

REP. STONE: What if they don't pick up the vehicle?

TOM TEDFORD: Then they pay that to the insured.

REP. STONE: They pay the storage cost --

TOM TEDFORD: Towing and storage cost, our cost to the insured. They ask for our invoice, compute the storage cost up to the date of -- you had a question before as to what date they pay.

REP. STONE: Right.

TOM TEDFORD: Up to the date they deemed it a total loss.

REP. STONE: Okay.

TOM TEDFORD: Which in some cases, there's another issue that arises, in some cases, that relates to a long time delay, be it specially in the period of the winter months because insurance companies are over-whelmed with claims and the adjustors will take two to three weeks to come and view the vehicle.

REP. STONE: Let me just get this straight because I -- the insured party decides to transfer the car to the insurance company. The insurance company, for whatever reason, let's assume it's an economic one, the storage and towing costs exceed the value of the car. The insurance company decides not to come pick up the car. Right?

TOM TEDFORD: That's correct.

REP. STONE: Even though they have title.

TOM TEDFORD: That's correct.

REP. STONE: Is it the situation that they -- that insurance company then pays the storage charges and towing charges to the insured? Who's already given up title?

TOM TEDFORD: When they settle the claim to get the title sent, they settle the charges at that point, to the insured.

REP. STONE: And just to -- just one follow-up. How often or is it a more than rare occurrence that the storage and towing cost exceed the salvage value of a vehicle?

TOM TEDFORD: I would say it's more than rare. Yeah.

REP. STONE: Okay, alright. Thank you and thank you, Mr. Chairman.

SEN. BOZEK: (mike off)

REP. JARJURA: Representative Miner, go ahead.

REP. MINER: (mike off)

REP. JARJURA: Doesn't matter. Alright. This may be unrelated to the bill I was -- the question I had. Suppose this vehicle was in a, say a vehicular homicide in which this vehicle may be needed for evidence and things like that. This is for my own personal knowledge. Is somebody told by you to retain this vehicle from the prosecuting department, criminal department?

TOM TEDFORD: In most cases such as that, and the change has occurred in the last two years, in most cases now, most municipalities and law enforcement agencies will hold those vehicles on their own properties now, so that no storage charges increase and go forward from the point the vehicle is seized.

REP. JARJURA: Okay, so they actually take them back to their --

TOM TEDFORD: In the majority of instances now, most municipalities have their own small impound area where those vehicles will be held for evidencuary purposes. In the extreme case where there's may be a town that doesn't have that then the vehicle is normally brought back to the facility contracted with the law enforcement authority where such -- the order of hold, a hold order on the vehicle is presented to the garage and in many cases, it's the responsibility at that point, due to the case involved and under the contract with the provider for service for law enforcement agency and the enforcement agency, itself, it's the responsibility of the municipality to cover the costs on that.

REP. JARJURA: In response to Representative Stone's inquiry a few minutes ago, you said even in the case where the insured doesn't want to keep title to the vehicle, he says to the insurance company, I'll -- whatever the value is for the total loss, I'll keep it. You're saying that the insurance company is still paying the insured the cost of towing and storage?

TOM TEDFORD: Yes, they still pay the insured the cost of the towing and storage and they leave it up to the insured to settle the bill with the towing and storage company.

REP. JARJURA: That counters the testimony we heard earlier, I think. So, we'll have to -- because that would make no sense at all. Because why should that person be getting the money for towing.

TOM TEDFORD: That's -- the point of the case is we're not asking -- number one, we're not asking for a blank check. We're not asking for the insurance company to continue adding storage charges on. We're just asking, quite frankly, we're not even concerned if the industry can recoup the towing and storage charges up to that day, then it recovers and recalls some of the cost of us having to get the title later on down the road, through that process and covers our administrative costs for having to do so to get rid of the vehicle. And our point, it's irrelevant on whether the vehicle's $20 dollars or $500 or $5,000 dollars in value. We can't dispose of it unless we have title to it.

REP. JARJURA: Right. No, I understand that. And I think even when the case where the insured decides to keep title to the vehicle and take a reduced amount in settlement, maybe there could be some equity in that the tow owner and repair shop gets paid up, up in to the point where the insurer says, this is a total loss, we're settling with the owner, instead of giving that money to the insured, that -- at least to that point, should go to the repair owner. But now, you're saying that even in the case where they don't take title, that person's still getting the money.

TOM TEDFORD: And I'm not saying that that occurs in every instance, but yes, it occurs in instances.

REP. JARJURA: 50-50?

TOM TEDFORD: I would say it's probably about 50-50.

REP. JARJURA: Thank you, Mr. Chairman.

SEN. BOZEK: (mike off)

REP. MINER: Thank you, Mr. Chairman. In a prior testimony, we heard about some concern with the issue of paying outstanding charges and that was kind of an open checkbook. Is there a -- is there some kind of a -- I guess, a policy in place? Does Motor Vehicle have something in place where an individual, whether it's an insurance company or an insured, can question charges from --

TOM TEDFORD: I had that written down and I apologize for not bringing it up and addressing it. They mentioned unauthorized charges. All of the licensed dealers and repairers are required to file their charges with the Connecticut Department of Motor Vehicles, Dealers and Repairers Division.

REP. MINER: So, it's not then as much of an open checkbook as --

TOM TEDFORD: No.

REP. MINER: Okay. And one other question. In terms of the disposal of a vehicle, how does somebody make a determination as to its value? I mean, just the average lay person or even an individual in a body shop, when they salvage a vehicle, is there any recourse back to that individual if they've disposed of a vehicle improperly?

TOM TEDFORD: That would fall under abandonment laws and there's little to no real penalties back to the owner of the vehicle. To go back after them for abandoning the vehicle in the state.

REP. MINER: But how about the repairer, if they were left with the vehicle and they went through the normal course of the paperwork, which I'm not sure how long that takes, but let's say they disposed of the vehicle because it was left with them and --

TOM TEDFORD: It's resulted in literally hundreds of small claim courts, filings being filed against the insured, per say, to try and reclaim those fees or those losses.

REP. MINER: Thank you.

TOM TEDFORD: I would, one other point that I want to make clear that I think comes about in most cases that the dumping, the insurance dumping happens, is especially when there's third party loss in effect. There's a third insurance company involved or third party involved and that's where many of the cases come around.

SEN. BOZEK: (mike off)

TOM TEDFORD: My name is Tom Tedford and this is Roman Priputanowitz and you can spell that if you want.

SEN. BOZEK: Alright, thank you very much. The next speaker --

TOM TEDFORD: Thank you very much.

SEN. BOZEK: -- is Joe Pandolfe.

JOE PANDOLFE: Good afternoon, Chairman Bozek and members of the Insurance and Real Estate Committee. My name is Joe Pandolfe and I'm here today on behalf of the Connecticut Auto Recyclers Association, also known as CAR and I'm here to express our concern with SB 477 as it is currently written.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Yes, there are. I mentioned the branding of titles. There is a situation, we're dealing with totalled vehicles, here and there is a situation where a vehicle is required by law, the title of that vehicle is required to stamp salvage parts only on that title.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Yes.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Yes, sir.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Right. Those vehicles --

SEN. BOZEK: (mike off)

JOE PANDOLFE: Exactly, and those vehicles by law are only to go to a facility that has a recycling license. So, in the situation of that this SB 477 proposes, with the tendering of the title as part of the issue here, within this bill, if the title was to be tendered to the repairer shop or tower, they would be taking possession of a vehicle, if they took possession of a vehicle that the insurer, the insurance company had stamped salvage parts only, that really would not be legal and we are asking that a provision be made, the language be -- our proposed language be included so that that would be taken care of properly, if this bill were to pass.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Salvage parts only.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Yes, it is up to the insurance company to brand the title. Not much has been mentioned in the previous testimony, today, about branding of titles, and the insurance company would be required to brand the title salvage parts only, and what happens in a normal situation, if the insurance company follows the procedure, has the salvage company pick up the vehicle, is sold at auction. At those auctions it's required by law that that vehicle only be auctioned off to someone with a recycler license.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Yes.

SEN. BOZEK: (mike off)

JOE PANDOLFE: Well, not in all cases as I stated in my testimony. If it's less than 15 percent, because you could -- you do have scenarios of the vehicles that are recovered theft that may not have physical damage, that may have -- or very minor physical damage, scratches or -- you know, in need of minor repair, then branding is not required. The branding --

SEN. BOZEK: (mike off)

JOE PANDOLFE: Even thought the vehicle is towed. Even though a totalled settlement was made. There's some confusion there with -- people hear the term "totalled" and I think they picture a car with a lot of damage. That's not necessarily so. It just means that the total value was paid out by the insurance company in the claim.

SEN. BOZEK: So, at some point the insurance company can, if three of us have an accident, one may be totalled -- salvage parts only. One may be "salvage" and one may not be either. It's a possibility?

JOE PANDOLFE: I guess it is possible.

SEN. BOZEK: And yet, each of us could get a totalled payment from the insurance company for the value of the car.

JOE PANDOLFE: Exactly.

SEN. BOZEK: Do you have any knowledge, which while I have you because I'm thinking of it before, why they make those determinations on the one that are not salvage or salvage only, but they total them? What might be the benefit to the insurance company, or?

JOE PANDOLFE: If I understand your question, --

SEN. BOZEK: Why would they give you a total and pay you off for the car and yet it's not a salvage car?

JOE PANDOLFE: I think they're required within your insurance policy if say, hypothetically if -- what you mean if your car was stolen, and it's gone --

SEN. BOZEK: I don't mean stolen. Accident.

JOE PANDOLFE: If the car was in an accident and you -- it has a certain amount of damage, I mean the insurance company is required to compensate you for that based on the terms of your policy, as far as totalling it, it has to do with the value of the car, the book value, the condition of the car --

SEN. BOZEK: Would it be safe the say that some 10, 15, 20 thousand, let's all say it, $10,000 dollar car, may only have $2,500 dollars worth of damage and in some conditions, some cases the payout -- you pay the insured the $10,000 dollars yet it's repairable for $2,500.00. Is that possible?

JOE PANDOLFE: Yes, that -- in that situation -- if the insurance company gets in a situation with the insured where they purchased the vehicle from them as a total, then they are required to brand the title "salvage" and if it's greater than the 15 percent, they're required to brand it, "salvage", and dispose of it. And it behooves them to dispose of it at auction for the most money that they can recoup from that.

SEN. BOZEK: Alright, I mean, I'm just arguing that -- I'm thinking that they give you $2,500.00, they may be able to sell it for $3,000.00.

JOE PANDOLFE: Yes.

SEN. BOZEK: Argumentatively. Alright, alright. No other questions? Sorry, Representative Stone.

REP. STONE: Thank you, Mr. Chairman. Have you ever run across a situation where the towing charges and storage charges exceed the salvage value of the vehicle?

JOE PANDOLFE: Yes, quite often.

REP. STONE: In your work, have you run across the term, "insurance dumping"?

JOE PANDOLFE: Pardon me? I'm sorry.

REP. STONE: Have you ever heard of the term, "insurance dumping"?

JOE PANDOLFE: Yes, I'm very aware of that situation and I can say in my own -- by business is located in Berlin, Connecticut which is kind of central in the state and there are a lot of -- I'm under the impression there are a lot of towers, who especially in the winter months when there are a lot more accidents, end up with their lots full of vehicles and they want to move them on and it's an upsetting situation for them to have vehicles that they can't bring closure to, and they have to, in my estimation from what I've observed, they have to go through the process of dealing with these cars as abandoned and the paperwork over the last few years has become a lot more complicated, plus I believe they're exposing their businesses to situations of possible law suits if people come back looking for vehicles, things like that.

REP. STONE: Now, you're in the salvage business?

JOE PANDOLFE: Yes, sir.

REP. STONE: Okay. And are you a tower, as well?

JOE PANDOLFE: No.

REP. STONE: Okay. And are you a repairer?

JOE PANDOLFE: Yes.

REP. STONE: Okay. Have you ever had a situation where the vehicle has been left on your property, as a repairer? Because the value of the vehicle as salvage was less than the cost of towing and storage?

JOE PANDOLFE: Not very often, because in my particular situation, we're geared pretty much to the salvage end and very minor in the repair, but there are people, again I speak for the Association of approximately 150 members, there are a lot of people out there that experience that on a daily basis.

REP. STONE: Thank you.

SEN. BOZEK: Thank you very much, Mr. Pandolfe.

JOE PANDOLFE: Thank you very much.

SEN. BOZEK: (mike off)

STEPHEN OESCH: Mr. Chairman, thank you very much for the opportunity to talk to you, today about some research done by the Insurance Institute for Highway Safety. The Insurance Institute for Highway Safety is a non-profit research organization based in Arlington, Virginia.

REP. STONE: Can I ask you a question on this?

STEPHEN OESCH: Yes, sir.

REP. STONE: Could you just scroll back a little bit and stop it, for a second?

STEPHEN OESCH: Right there?

REP. STONE: Put it on pause. If I might, Mr. Chairman, for you?

SEN. BOZEK: Yes.

REP. STONE: On the top photograph, you see the front wheel? The white wall?

STEPHEN OESCH: Yes.

REP. STONE: There are some things that are coming off of the barrier, there. Those three -- look like four by fours?

STEPHEN OESCH: Yes, right.

REP. STONE: What are those?

STEPHEN OESCH: That is an aluminum honeycomb structure that is on the front of the vehicle. As I mentioned, what we're trying to simulate here is the driver's side of one vehicle striking the driver's side of the other vehicle. This is aluminum honeycomb --

REP. STONE: What are those three things you just pointed out in front of you?

STEPHEN OESCH: That is part of the barrier face. In other words, it is to simulate the energy absorption --

REP. STONE: Okay, and that's coming off the top picture, there?

STEPHEN OESCH: Right.

REP. STONE: How come it's not on the bottom?

STEPHEN OESCH: You'll notice here that it is coming off, down here.

REP. STONE: Well, can you play it to the end, because it doesn't -- at least I didn't see it come up. Are you going backwards, now? I know, -- I'm sorry. No, you're going the right way. You're coming back. Oh, well. It did come? Alright. Thank you. Thank you, Mr. Chairman.

SEN. BOZEK: Thank you.

STEPHEN OESCH: Mr. Chairman, I'd be very pleased to answer any other questions that the Committee might have.

SEN. BOZEK: (mike off)

EILEEN SOTTILE: Mr. Chairman, members of the Committee, my name is Eileen Sottile. I am the Director of Government Affairs for Keystone Automotive Industries and in this capacity, I also represent the National Autobody Parts Association which are all of the Parts Distributors around the country.

SEN. BOZEK: (mike off)

EILEEN SOTTILE: Okay. Okay. If this bill were to pass, consumer's cars would be totalled and you talked a little bit about this. If someone's upside down in their lease or purchase, they have to pay the difference in getting out of the vehicle and then pay again to go back to the dealership to purchase that vehicle.

SEN. BOZEK: (mike off)

EILEEN SOTTILE: That's what we're talking about.

SEN. BOZEK: (mike off)

EILEEN SOTTILE: Thank you. Yes, thank you.

SEN. BOZEK: (mike off)

JAY JACKSON: Good afternoon, again, Senator Bozek and members of the Committee. My name is Jay W. Jackson. I'm an attorney in Hartford and I'm here representing the National Association of Independent Insurers in opposition to SB 525.

SEN. BOZEK: (mike off)

REP. GERAGOSIAN: Hi, Jay.

JAY JACKSON: Yes.

REP. GERAGOSIAN: Just a question about your members and riders they offer for the different plans? Do they offer riders for original parts versus --

JAY JACKSON: They can, you can specifically have original equipment coverage. Our companies will, many times if there is any question about a part not fitting correctly, they will put the original equipment piece on the car, but the vast majority of the cases, the after-market parts -- you know, are an exact duplicate and a replica. I'm not sure I answered your --

REP. GERAGOSIAN: Yes, well, then the question I -- in those riders, will you allow people to order a factory manufacturers parts versus the -- just generic, let's say.

JAY JACKSON: Yes.

REP. GERAGOSIAN: What's the typical difference in premiums? I just want to get a grasp on what we're talking about, here.

JAY JACKSON: I would have to get that specific information for you.

REP. GERAGOSIAN: Thank you, Mr. Chairman.

SEN. BOZEK: (mike off)

REP. KLARIDES: Thank you, Mr. Chairman. Just actually, I want to address this to Jay, but I want to respond to something Chairman Bozek said, just about the 80-20, and if they were really good enough and maybe 80-20 the other way? I almost liken this, and correct me if I'm wrong, to prescription drugs and generic drugs.

JAY JACKSON: I'm sorry. Which part were you --

REP. KLARIDES: Just in bill it mentions --

JAY JACKSON: Which line --

REP. KLARIDES: -- to inquire that an estimate for repairs to the visible exterior sheet metal or plastic parts of a damaged motor vehicle. Now, that wouldn't include an airbag, would it?

JAY JACKSON: Not necessarily, but what line are you specifically on?

REP. KLARIDES: I'm looking at the Statement of Purpose, but where would it be in the bill? Oh, it's in line three. Whenever repairs are necessary to the visible exterior, sheet metal or plastic parts of a damaged private passenger motor vehicle.

JAY JACKSON: That is correct. This specifically says, to the visible exterior sheet metal or plastic parts.

REP. KLARIDES: Alright, so it wouldn't be necessarily quote, unquote, safety things such as an airbag?

JAY JACKSON: No, I don't believe so.

REP. KLARIDES: Okay, thank you.

JAY JACKSON: But, may I just respond to your earlier comments. I think I alluded to the fact that the automobile manufacturers have established a multi-million dollar public relations campaign to try to have the public feel that their parts, you know, are better.

SEN. BOZEK: Senator DeLuca.

SEN. DELUCA: Thank you, Mr. Chairman. I lost my train of thought listening to what you were saying. I guess, and just a comment on that, I guess we all -- we're conditioned to think that if it's more expensive, it's better, especially if somebody else is paying for it. You know? If somebody else is paying for it, I always want what is the most expensive because I assume I'm getting the best.

JAY JACKSON: I think there may be some. I don't have any statistics, Senator, but as I alluded to in my earlier testimony, our companies, if they want to have a satisfied customer, they want to have a satisfied policy holder and if something doesn't fit just perfectly, I know from my own personal knowledge that they have changed and brought in an original equipment part and put it on and took the after-market part off, if there wasn't a perfect fit.

SEN. DELUCA: Well, I don't condemn them for that. That's the American way. We all want to make more money. So, I don't condemn them for trying to increase -- you know, increase their profit. That's what they're in business for, is to make a profit, so I believe in choice and if somebody convinces me that this one is better for me, then so be it. I don't want to take away people's choice.

JAY JACKSON: Thank you.

SEN. BOZEK: (mike off) -- I'm in favor of choice, myself and I think that if you have your Lexus in an accident for your I30 or your Cadillac or your up-scale car, you're not going to expect that you're going to have an after-market part put on there, because -- just because you don't want -- you want the value to remain, later on, if the material is not equal and I don't know, I don't have a list of the after-market parts as to the models of cars.

JAY JACKSON: I completely agree, Senator, but has been pointed out earlier, I've frankly, myself, could not probably detect the difference between an original equipment fender and an after-market fender that are sitting there side by side and everybody that has tested --

SEN. BOZEK: No, no. Look, that's not everybody because you don't have documentation to say that everybody that's tested, but --

JAY JACKSON: Well, I say the vast majority that have tested, show that they're almost comparable, Senator. I don't want to belabor it, but I understand what you're saying and --

SEN. BOZEK: Thank you very much. The next speaker is Chip Platz. Is Chip here? After is Vin DiLauro. Are you here? Do you want to speak now? You're on.

VIN DILAURO: Thank you for the opportunity to be here, today. My name is Vin DiLauro and I'm a third generation owner in an autobody collision repair shop business in New Haven, Connecticut. My grandfather started the business in 1928 and we're in our 73rd year and third generation.

SEN. BOZEK: Who was that? I'm sorry.

VIN DILAURO: Consumer Reports, February '99 had that. So, in closing, I want to get back to we all like to pay for what -- to get what we pay for and yes, you can do things maybe a little bit cheaper on a job, but you're getting a little bit less.

SEN. BOZEK: I have a question, Vin. Your in the business? The automobile parts or repairs or --

VIN DILAURO: Automobile Collision Repair business.

SEN. BOZEK: Let me ask you. Do you know on the -- and I should have asked this sometime before, but with regard to the replacement parts. Would I be correct in saying that for a lot of cars that they don't have the replacement parts for the autobody stuff or is --

VIN DILAURO: There are a number of automobiles that do not have after-market parts. Yes.

SEN. BOZEK: I'm just curious. Would they be upscale -- more or less, upscale cars?

VIN DILAURO: More of the upscale cars, correct. And also it depends on the particular part.

SEN. BOZEK: The part. Does anybody have any questions? Thank you very much.

VIN DILAURO: Thank you.

SEN. BOZEK: Next person is -- go back to Chip. Are you here, Chip?

CHIP PLATZ: Yeah, I'm going to give my time to Dave Fogarty.

SEN. BOZEK: Dave -- alright. Dave, you're going to fill in for Chip?

DAVE FOGARTY: Right.

SEN. BOZEK: I'm going to write your name in here. Just give us your name, pronounce it slow for the record, alright?

DAVE FOGARTY: Mr. Chairman, members of the Insurance Real Estate Committee. My name is Dave, David Fogarty and I am the parts wholesale director for the Lawrenceson Auto Group as a primary occupation. I'm also very active member of the -- and I'm representing today, the Autobody Association in Connecticut.

SEN. BOZEK: Yeah, I'm paying attention.

DAVE FOGARTY: Okay. Is it okay to begin? Nice to see you, too.

SEN. BOZEK: Go ahead.

DAVE FOGARTY: Okay. I'm going to give you a chronological time sequence of exactly what I'm going to present here. Let's date back. Mr. DiLauro had referenced Consumer Reports magazine came out with a February of 1999 edition which we have 50 copies, at a later date whenever anybody would like to see them.

SEN. BOZEK: Okay, thank you. On some of the items that you've referred to is an opportunity to make copies of this.

DAVE FOGARTY: Absolutely.

SEN. BOZEK: (mike off)

DAVE FOGARTY: Absolutely.

SEN. BOZEK: (mike off) -- thank you very much and the next speaker is Scott Edwards. Are you here, Scott? After Scott will be Paul Facino. All right Scott, please proceed.

SCOTT EDWARDS: Chairmen, Committee members, my name is Scott Edwards. I am the President and owner of VENG USA. We distribute autobody parts throughout the New England region and we have warehouses in both Manchester and Milford, Connecticut.

SEN. BOZEK: (mike off) -- is that in your written testimony?

SCOTT EDWARDS: Yes, sir.

SEN. BOZEK: It is? All of that is in your original testimony?

SCOTT EDWARDS: Yes, sir.

SEN. BOZEK: I only have two items for written testimony, followed by --

SCOTT EDWARDS: I haven't submitted written testimony.

SEN. BOZEK: Okay, here it is. I'm sorry. Please, you have 30 seconds to summarize. Yeah, I'm -- just summarize, please.

SCOTT EDWARDS: Okay. What I'd like to do is just answer some of the questions that we had prior to. There was a question on 80 percent and 20 percent of parts. What happens a lot of times, is there are a lot less popular models that there are not after-market parts available for.

SEN. BOZEK: (mike off) -- Representative Jarjura.

REP. JARJURA: Yes, thank you, Mr. Chairman. You were here for the testimony that the gentleman -- prior to you and he mentioned a Consumer Reports indication on this Honda bumper that disintegrated and I didn't know -- I mean, you're in the parts business. I didn't know if you were familiar with that and if you would like to comment on that or not?

SCOTT EDWARDS: Yes. Consumer Reports tested 18 parts out of millions of parts that we have available. Consumer Reports never identified the brand. We have many different brand parts that are of good quality. Hela is an OEM manufacturer out of Germany.

REP. JARJURA: So, even though they may have -- you're saying even though they knew this, should that have any bearing on durability or stand-up qualities of this part, or?

SCOTT EDWARDS: It's my understanding when Consumer Reports does a test, they typically would identify brand names. If they did a test on washing machines, you would know it was a Whirlpool or it was a type of washing machine. Again, they took a very small sampling of 18 different products that I don't know what the manufacturers are or where they received them from, out of millions and millions of parts that we have available.

REP. JARJURA: Thank you. Thank you, Mr. Chairman.

SEN. BOZEK: (mike off)

REP. OREFICE: Just one other, one quick question. After-market manufacturers, is there -- to me, ISO and -- is a critical component of the decision, here. Are most of these people ISO qualified or how do you -- how does it -- how would you identify a manufacturer that has ISO certification?

SCOTT EDWARDS: I have certificates in my office of the factories that we purchase from. I, personally, visit most of the factories that we buy from and as I mentioned before in my testimony, 85 percent of the manufacturers that we purchase parts from or 85 percent of the products come from manufacturers that are QS9,000 certified. This is not new to our industry.

REP. OREFICE: Would you buy stuff, would you buy component parts from someone who was not qualified?

SCOTT EDWARDS: There are some manufacturers that we do purchase from that are not QS9,000 certified, as of yet. But most of the -- again, the majority of the major suppliers that we deal with are QS9,000. And most of them -- a lot of them as I mentioned before and I just did a small sampling, actually produce parts for OEM.

SEN. BOZEK: (mike off) -- the issue of if you're making it to quality standard and I don't know the whole industry but I'm going to bet that I can make it -- I can contract for somebody and I make it to their standard, so it's the same, and then there are the parts that aren't made to standard.

SCOTT EDWARDS: Mr. Chairman, can I mention one more thing?

SEN. BOZEK: Sure.

SCOTT EDWARDS: I would just like to conclude by extending an open invitation to any legislator to please visit our Manchester facility. There's a lot more to our industry than three minutes of your valuable time, can tell. Thank you.

SEN. BOZEK: Thank you.

REP. JARJURA: I never knew what that ISO, QS9,000 -- I see it on these banners on all these buildings and I was wondering what that was, so I appreciate that, today.

SEN. BOZEK: (mike off)

PAUL FOLINO: I'll do my best to keep it brief, too. Senators, Representatives, my name is Paul Folino. I'm the Director of Sales and Marketing with Erik Veng Collision Replacement Parts Company and I do oppose SB 525. I'm responsible for the sales and distribution of tens of millions of dollars annually in after-market auto parts throughout New England.

SEN. BOZEK: (mike off)

REP. KLARIDES: Thank you, Chairman. Is there any way to monitor the consistencies of the after-market parts? Like from where you, who you work for, let's just in the hypothetical, say that there -- the parts that you're going to put in are just as good as the other parts, but say every -- you know, every shop or every business, how -- would there be any way to monitor that?

PAUL FOLINO: There are the different quality certifications that you've heard, the ISO and the 9,000 and the QR9,000, there's CAPA that also monitors the quality of certain parts, and then we also have our own internal system, as well. We monitor everything that is sold and everything that is returned, and if we can determine that there is a genuine problem with a part, we will discuss that with the manufacturer and discontinue selling it, at that point.

REP. KLARIDES: So, that makes it consistent across the board?

PAUL FOLINO: Yes.

REP. KLARIDES: It's the same standard for everybody.

PAUL FOLINO: Yes.

REP. KLARIDES: Thank you.

REP. OREFICE: I'm going to call my mother and tell her I'm running the Committee. Next speaker, and actually, just if it hadn't been mentioned before there are the other Committee members are listening. There's several committee meetings going on, so despite the fact that there's only two of us here, now, the information is available to the rest of the Committee. They may be listening in their office or in other committee rooms, so please don't take it as a sign of disinterest that there's only two people here. Mr. Kehmna.

BOB KEHMNA: Thank you, Representative Orefice, members of the Committee. My name is Bob Kehmna and I'm from the Insurance Association of Connecticut. I'm here to oppose SB 525, AN ACT CONCERNING THE USE OF ORIGINAL EQUIPMENT MANUFACTURED PARTS FOR AUTOMOBILE REPAIRS COVERED BY INSURANCE.

BOB KEHMNA: -- Center for Auto Safety both created by Ralph Nader. The Chamber of Commerce of the United States, the National Association of Insurance Commissioners and the National Conference of Insurance Legislators and COIL.

REP. OREFICE: Questions? And that concludes the testimony on SB 525. The next bill, and you can stay in your seat, Bob, is HB 5393, AN ACT CONCERNING INSURANCE PAYMENTS TO AUTOMOBILE REPAIR SHOPS. You're the first one to testify.

BOB KEHMNA: Okay. Excuse me. For the record, my name is Bob Kehmna, Insurance Association of Connecticut. We are here today to oppose HB 5393, AN ACT CONCERNING INSURANCE PAYMENTS TO AUTOMOBILE REPAIR SHOPS.

REP. OREFICE: There are some. I mean, I think I've gotten checks where there is a -- I think for medical coverage as a matter of fact, where it requires my signature and the physician's signature or the autoshop signature. Do some companies issue checks requiring two signatures?

BOB KEHMNA: If they do, it's of their own volition. I'm not aware of it. We would suggest that this bill would delay -- think of auto collision instances. How many of them do not involve a tow, a storage, or a repair charge? You're talking about the vast majority -- majority of cases involving a collision, and in each one of those cases, as required by this bill, you'd need a two-party check.

REP. OREFICE: Thank you. Next speaker is Tom Tedford. Tom here?

TOM TEDFORD: Thank you, Mr. Committee. I'm before you again, today, to speak briefly upon Proposed HB 5393. My name is Tom Tedford. I represent the Towing and Recovery Professionals of Connecticut and association composed of several businesses throughout the state, involved in the business of auto repair, towing and storage of vehicles.

REP. OREFICE: Are you aware of any neighboring states having this type of statute? People in Rhode Island, Massachusetts?

TOM TEDFORD: I have not researched that. I don't have that in place. No.

REP. OREFICE: Thank you. That will complete the testimony on HB 5393. Next bill is SB 479, AN ACT CONCERNING AN INSURED'S SELECTION OF AUTOMOTIVE REPAIR SHOP. First testimony from Bill Denya. Bill, good afternoon. Get your name, right?

BILL DENYA: Yup. Bill Denya. I'm the Immediate Past-President of the Autobody Association in Connecticut as well as my own facility in Meridan. I speak on behalf of the Autobody Association to offer to raise the SB 479, AN ACT CONCERNING INSURED'S SELECTION OF AUTOMOBILE REPAIR SHOPS.

REP. OREFICE: You indicated earlier in a testimony that the Insurance Department has a list of complaints that have --

TOM TEDFORD: We have a meeting with them often and we're going to meet with them, shortly, on these complaints.

SEN. OREFICE: Thank you. Next is Bob Kehmna.

BOB KEHMNA: Thank you, Mr. Chairman, members of the Committee. My name is Bob Kehmna from the Insurance Association of Connecticut. I'm here to oppose, once again, SB 479, AN ACT CONCERNING AN INSURED SELECTION OF AN AUTOMOBILE REPAIR SHOP.

REP. OREFICE: Thank you. Do you know, do the customers -- the companies, internally -- we've had testimony that the claims handlers are -- make the case that it's less than an option. Do you -- are you aware of internal programs with the companies to ensure that their claim handlers make clear that it's an option to go to the -- to another place?

BOB KEHMNA: It is made expressively clear according to the rules of the law that already exist. There's statements made on forms and verbally. There's a script that is used if the first conversation is over the phone. There is no doubt that this is the letter and the spirit of the law is being followed, right now.

REP. OREFICE: Thank you.

BOB KEHMNA: Thank you.

REP. OREFICE: Next speaker, Joe Negro from Glass Dealers.

JOE NEGRO: Mr. Chairman, thank you for allowing me to speak to the Committee for passage of SB 479, AN ACT CONCERNING AN INSURED'S SELECTION OF AUTOMOTIVE REPAIR SHOP. My name is Joseph Negro. I own National Glass and Mirror Company in Stratford and I'm currently the President of the Connecticut Glass Dealers Association.

REP. OREFICE: Thank you for your testimony. Next speaker, Jay Jackson.

JAY JACKSON: Good afternoon, Representative Orefice. My name is Jay W. Jackson, I'm an attorney in Hartford and I'm here representing the National Association of Independent Insurers, which strongly opposes SB 479 which encompasses all repairs, violates commercial free speech and simply will not allow companies to control in any way the level of service they would like to provide to their customers.

REP. OREFICE: Thank you, Jay. Next speaker is Chip --

JAY JACKSON: Thank you. Thank you. It's always nice to have a one-person committee.

CHIP PLATZ: Good afternoon. I hate to see everybody's gone.

REP. OREFICE: As I mentioned before, if we have written testimony, it will be available to the Committee. We have a three minute limit, here.

CHIP PLATZ: Yes, sir. My name is Chip Platz. I'm an independent body shop owner. Right here, we didn't -- we didn't have enough time. These are all -- and if you have a copy of this, what Consumer's Choice has signed. These are just some of the consumers. There's thousands, here, and we didn't have time, if you'd like them, to get 50 copies of each one of these to you. It's a lot of printing.

SEN. OREFICE: Just put, "thousands like this".

CHIP PLATZ: "Thousands like this". I did give you an actual copy of what we've done and what this Consumer has signed. I'm not going to read my statement because you do have it on file. I would just like to bring up -- there is a -- in 1963, there was a consent degree which the government enforced the insurance associations, back in 1963, this is -- was by John F. Kennedy and I'm just going to read a couple of strong wordings that the government found the insurance companies were doing and they're still doing, today.

REP. OREFICE: Is that a copy? Actually, thank you very much for coming and taking the time to compile that type of information.

CHRIS PLATZ: I mean, these are votes. You've got to understand. These are consumers out there, that are voting for legislation --

REP. OREFICE: Did you separate these East Lyme guys?

CHRIS PLATZ: No, they're voting for legislation, you know my representative, Mrs. Tymniak, in my district, I voted for her and I'm going to get her as many of these as I can. Now, you've got to understand these are people that voted for you to put you guys in office. We're trying to stay in business, here.

REP. OREFICE: Again, thank you for that testimony and thank you for the compilation of the information. If that is a copy, it can be left with the clerk and it will be made available to the rest of the Committee. You don't need to make copies.

CHRIS PLATZ: Yeah, just one other -- could I read a quick letter to you? The Attorney General's Office, state of Connecticut. I received a letter regarding independent auto body shops. This is enclosed per my voice mail message to you. He has requested a meeting in order to explain the documented, alleged abuses by insurance companies.

REP. OREFICE: Thank you very much.

CHRIS PLATZ: Thank you.

REP. OREFICE: Next speaker is Michael Wilkowski.

MICHAEL WILKOWSKI: Afternoon, sir.

REP. OREFICE: Afternoon.

MICHAEL WILKOWSKI: My name is Michael Wilkowski. I'm the President of the Auto Body Association of Connecticut. I'm here today to testify in support SB 479, AN ACT CONCERNING AN INSURED'S SELECTION OF AUTOMOTIVE REPAIR SHOP.

REP. OREFICE: Thank you, Mike. Thank you for taking the time and thank you for staying and giving testimony.

MICHAEL WILKOWSKI: Thank you.

REP. OREFICE: Next speaker is Mike Brunt? Brandt?

MIKE BRUNT: Good afternoon. I'm not going to read word for word on the letter we turned in. I'm going to try to give you a scenario of what's happened several times. This particular one, how the insurance companies are getting the customers to go to their pro shops or back up shops or whatever they want to call them.

REP. OREFICE: Thank you for your testimony. Any questions? Thank you. Next speaker is Vin DiLauro.

VIN DILAURO: Good afternoon. My name is Vin DiLauro. I'm president of Columbus Auto Body Works from New Haven, Connecticut, third generation owner. Our company's been in business for 73 years. I'm here today on SB 479 and the Statement of Purpose of that Bill is to ensure that an automobile insurer does not influence an insured's selection of an automotive repair shop.

REP. OREFICE: Thank you, Vin. Any questions? Next speaker is Larry Alan and he will conclude the testimony on SB 479. The next bill, 6883, Nancy Chupak will be the first speaker.

LARRY ALAN: Thank you, Mr. Chairman. It's my pleasure to conclude the testimony on this bill. My name is Larry Alan. I represent Nationwide Insurance Company. I am here to speak in opposition to SB 479. I'm just going to try to refocus back on the language of the statute.

REP. OREFICE: Thank you, Larry. Are there any questions?

LARRY ALAN: Thank you, Mr. Chairman.

REP. OREFICE: One -- wait. Question from the real Chairman.

LARRY ALAN: Oh, the real Chairman.

REP. JARJURA: Thank you, Mr. Vice-Chairman. These -- how does a shop become part of a network? Is there an application process?

LARRY ALAN: Well, it is an application process. Sometimes, they're recommended. Sometimes they apply to us. And I can only speak for our company, obviously. Sometimes they apply to us. Sometimes they're recommended by other shops. Sometimes they're recommended by customers.

REP. JARJURA: Now, if somebody wants to be part of the network, do they have pay anything or any bonus or anything?

LARRY ALAN: No, it's an application process. We sit down with them. We look at the criteria. We match them up to that and then we talk about all the other elements of the contract. We will be -- for example, we won't have, depending on the area, we won't have more than one or two of the network shops in that area. If there aren't many of our customers who are in that area.

REP. JARJURA: This isn't like health care. I mean, if I want to -- if I want to get my car fixed at my shop that I've been going to, you have to cover that, right?

LARRY ALAN: Absolutely. And it's your choice from the get-go. You call that in and you say, I've had my shop towed to Joe's. We're not going to say, no, you haven't. We're taking it out of there. That's your choice. That's how we treat it.

REP. JARJURA: Okay, thank you. Thank you very much. Representative Miner?

REP. MINER: Somebody previous to you had talked about discounts. You're not aware of insurance companies negotiating discounts?

LARRY ALAN: Well, there are, certainly, discounts that are part of that. I mean, they may be relative to parts. It may be relative to other elements of the contract. I mean, again, I don't negotiate those contracts and I don't have in front of me a list of everything that's in them. They're extensive. So, there are some things that are back and forth. There are trade-offs, back and forth.

REP. MINER: You made a statement that, as you understand it, DRP facilities represent about 15 percent of the overall business?

LARRY ALAN: That was the number that Bob gave earlier, on average, yes.

REP. MINER: I guess I could flip that the other way and it appears that for 15 percent of the business, it seems like the industry, the insurance industry has a strong interest in that 15 percent, as well. What is the issue? I mean, how much are we talking about, here?

LARRY ALAN: Money-wise?

REP. MINER: Yeah.

LARRY ALAN: Well, I mean, for example, it's got to be -- well, just for one company, say we spend $20 to $25 million dollars a year. I'm not great at math, but I mean, that means something like a little under $20 million dollars in auto repair dollars go to the non-network shops. That's just one company.

LARRY ALAN: -- the top ten riders plus 180 some odd licensed insurance companies licensed to sell auto insurance in Connecticut and that's a significant amount of money. My point when I mentioned Bob's statistic was that there's some noise being made about networks being a threat to mom and pop shops to the industry itself, that there's this effort to take control. That number, 15 percent hasn't really moved in a number of years, but it -- again, we like to work with our network body shops because just for example. It offers us this opportunity to guarantee.

REP. MINER: Right, and in terms of that guarantee, is that guarantee backed up by the original body shop doing the work? Or is it backed up by the insurance company?

LARRY ALAN: It's backed up by the insurance company. That's our Nationwide guarantee to our insureds.

REP. MINER: In terms of all the nuts and bolts that go into what a premium costs, how big a percentage of a premium's cost would you consider to be your warranty? Or is it at all factored in?

LARRY ALAN: It's factored in to some extent, but that would be determined by how often we would actually have to go back and exercise that guarantee. Now, I can't tell you how often that happens. I would hope that it doesn't happen very often, at all, but it's our pleasure to provide that guarantee, as again, in a business especially in a state like Connecticut where auto insurance is highly competitive, price wise as well as everything else. Service and programs that help you offer better service are key to keeping customers, getting new customers in, getting new insureds in and keeping them with us. Keeping them happy with our company. So, it's a service issue as well as anything else.

REP. MINER: Thank you. Thank you, Mr. Chair. Both of you.

SEN. BOZEK: Larry --

LARRY ALAN: Yes, sir?

SEN. BOZEK: I got a kick out of the invasion of your free speech, if you're not allowed to do a certain thing. I just -- each of us here -- I'm a speaker, myself. I'm concerned about the public. Now, we each in our own homes hear these specials that come on with regard to how the consumer is defrauded and different things happen that they're not aware of, you know?

REP. JARJURA: Thank you for coming. Our next speaker on HB 6883 is Nancy Chupak.

NANCY CHUPAK: Hello. Senator Bozek, distinguished Committee, my name is Nancy Chupak. I am an attorney here in Hartford but today I'm not here in a legal representative capacity but as a private citizen in support of 6883.

REP. JARJURA: Any questions by the Committee? Senator Bozek?

SEN. BOZEK: Yeah, would you do me a -- thank you, Mr. Chairman, --

NANCY CHUPAK: Sure.

SEN. BOZEK: Would you do me a favor and mail to the Chairman of the Insurance Committee the -- any medical information that you can, namely the doctors that may perform this work? I'm curious as to -- I can call them and ask them, how -- you know, how many patients they average and how long this stuff takes and you know, might just get into some other conversation about it. In the event that we go forward with this and there's some questions about other dimensions a physician can better give -- answer questions to.

NANCY CHUPAK: Okay, great. Thank you.

REP. JARJURA: Can I ask you --

NANCY CHUPAK: Certainly.

REP. JARJURA: Have you ever consulted with Aetna as to why they've refused coverage, or?

NANCY CHUPAK: Yes, we have. And they said they considered it as a purely cosmetic procedure.

REP. JARJURA: And but, PHS, they said they would cover right from the get-go?

NANCY CHUPAK: They have covered it right from the get-go. They did refuse in the beginning to cover the medication portion and the medication is used to cool the area before the laser is applied, but when we told them what the medication was for, then they paid for it.

REP. JARJURA: Now, are you aware of like any groups or support groups that you -- or other -- is it just for children or is this children and adults?

NANCY CHUPAK: It's for children and adults. It's the Yale Dermatology Center.

REP. JARJURA: Okay. I was just wanting to get an idea of how many insurance companies cover it and how many don't cover it. Because you know, a lot of times we're faced with a decision whether or not to mandate a coverage and in many times, some of it's being covered, and here we have a situation where sometimes it's being covered, sometimes it's not being covered.

NANCY CHUPAK: Thank you.

REP. JARJURA: Okay, thank you for your time. That's all the testimony on that bill. Going to move on to SB 1352 and our first speaker signed up is Susan Halpin. Sue? Okay, our next speaker is Don Roll. Okay.

SEN. BOZEK: Are they in the smoking room? Okay, Brooks, you're going to be able to talk on the next issue. After those two are on.

REP. JARJURA: Well, Susan's not here.

DON ROLL: In the interest of time, I'm just going to submit.

REP. JARJURA: Okay, Don. Thanks.

SEN. BOZEK: That was on 1352, Don.

REP. JARJURA: Okay, Brooks, do you want to do anything in the interest of time? No, I'm only joking with you.

SEN. BOZEK: At least we'll hear it.

BROOKS CAMPION: I wish I knew your response in advance. Okay.

REP. JARJURA: This is on HB 1295, AN ACT REQUIRING A STANDARDIZED PRESCRIPTION DRUG INFORMATION CARD.

BROOKS CAMPION: Yes, exactly. Hello, Senator Bozek, Representative Jarjura, members of the Committee. My name is Brooks Campion. I am here on behalf of the Connecticut Association of Health Plans. We're here to testify today in opposition to SB 1295.

SEN. BOZEK: Any questions by the Committee? So, does that mean you're for or against the bill?

BROOKS CAMPION: I'm afraid -- we're opposed, sir. Sorry.

SEN. BOZEK: Thanks for coming in, Brooks.

BROOKS CAMPION: Okay, thank you.

REP. JARJURA: The next speaker is Christine Ciariglio.

CHRISTINE CIARIGLIO: Good afternoon, Senator Bozek, Representative Jarjura and members of the Insurance and Real Estate Committee. I'm here to speak in opposition to SB 1295, AN ACT REQUIRING STANDARDIZED PRESCRIPTION DRUG INFORMATION CARDS.

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: To replace the existing cards, yes.

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: Well, it's a million members, so each one of them, each one of them gets a card, and in some instances spouses get cards, but --

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: We actually had multiple conversations with the folks from NCPDP in Indiana and in Ohio, which is where our Pharmacy Benefit Management Company comes out of. And we have talked about that, that we certainly would like to see standardized cards of some form, it's a great concept and it makes sense for us. But, it does kind of need to come from the Federal level, down, as opposed to a state by state deciding what the standardized form is, the standardized card is, in that particular state.

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: Well, I certainly think --

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: I understand. Right, right.

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: Well, I think that from the pharmacist's point of view, I think that they probably would like some just basic information which is co-pay information for the different -- everybody pretty much now has tiered formularies, right? And who, obviously a 1-800 number for them to call. All of our cards contain that. There isn't much more information, I think, a pharmacist needs. Maybe, obviously, an ID number and a group number.

SEN. BOZEK: (mike off)

CHRISTINE CIAREGLIO: Right.

SEN. BOZEK: (mike off)

CHRISTINE CIAREGLIO: Well, I think, yeah. I think that maybe in -- and I understand what you're saying about the smaller and medium carriers, a concept might be that to give the Insurance Department maybe some discretion over the cards and what they -- what they, you know, have some standards, obviously, and if some companies meet those standards, which I suspect most do, waiting to see what the Federal government does and have the standards that are already out there allowed to go through might be one way to approach it.

SEN. BOZEK: (mike off)

CHRISTINE CIARIGLIO: Bar codes, yeah. Well, that's a kind of -- I think that's one that's coming, but I don't know that every carrier is ready to do it yet, so --

SEN. BOZEK: Thanks for coming.

CHRISTINE CIARIGLIO: Thanks.

REP. JARJURA: Next speaker is Jay Jackson.

JAY JACKSON: Good afternoon, again, Senator Bozek and Representative Jarjura. My name is Jay W. Jackson, I'm an attorney in Hartford and I'm here on behalf of Merck MedCo. Merck MedCo is opposed to SB 1295 as it's presently written.

REP. JARJURA: Okay, thanks, guy.

JAY JACKSON: Thank you.

REP. JARJURA: Next speaker is Marghie Giuliano. Guiliani?

MARGHIE GIULIANO: Good afternoon, Senator Bozek and Representative Jarjura. My name is Marghie Giuliano and I'm a pharmacist and executive vice-president of the Connecticut Pharmacists Association and I'm here today to speak in support of HB 1295, AN ACT REQUIRING STANDARDIZED PRESCRIPTION DRUG INFORMATION CARDS.

REP. JARJURA: Marge? We're going to ask you to conclude, but I have a question for you.

MARGHIE GIULIANO: Yes?

REP. JARJURA: The seven states that have passed these requirements of the cards, do you have any data on how it's working in those states. If, well, I could have Jerome, our person, look into it, but I just didn't know if you had any of that.

MARGHIE GIULIANO: I mean, it's my understanding that some of the states that had done this a couple of years ago, had to adopt different legislations. So, when we talk about a national -- a uniform card, everybody is looking at the NCPDP as the standard setting. The cards are working. Again, we do spend a lot of time on more than just processing issues for the insurance industry.

REP. JARJURA: And are doctors still writing out prescriptions on the scripts or are they, is there a computer network now or they e-mail it to the --

MARGHIE GIULIANO: We -- that is not a largely used -- widely used process as far as electronic transmission of claims. Right now, it's still the pharmacy is -- you know, patient brings it into the pharmacy or the physician phones it in.

REP. JARJURA: Okay. Any other questions by the Committee? Thank you for coming in.

MARGHIE GIULIANO: Thank you.

REP. JARJURA: Next speaker is Rick Cardbray? Cardbury?

RICK CARBRAY: Senator Bozek, Representative Jarjura. Good afternoon. My name is Rick Carbray. I'm Vice-President of Pelton's Drug Store, an independently owned chain of pharmacies in Middlesex and Hartford county. I do have some testimony. I will get copies to you. I just came in from another hearing. And I am also Legislative Chairman of the Pharmacist's Association.

REP. JARJURA: Senator Bozek.

SEN. BOZEK: Rick, Advanced PCS, it says here in a letter that they have managed 75 million lives and deal with $18 billion dollars annually in their health care spending. And they endorse the idea of the card. Who is this Advanced --

RICK CARBRAY: Advanced PCS is a third party administrator, so not an insurance company as such, but the agent, so to speak of the insurance company that's paying these claims for the insurer. So, yes, as Marghie mentioned in her testimony, too, with Express Scripts, they are basically the same type of entity.

SEN. BOZEK: Let me ask you because people who are Medicare, is there a uniform card for people who are on Medicare for prescriptions?

RICK CARBRAY: No, currently --

SEN. BOZEK: No, they don't get prescriptions. I'm sorry.

RICK CARBRAY: Right, currently not. Medicaid, yes.

SEN. BOZEK: Medicaid, Medicaid, there is.

RICK CARBRAY: Yes.

SEN. BOZEK: Medicare -- Medicaid, there is.

RICK CARBRAY: There is.

SEN. BOZEK: Alright. Probably would you guess, or know -- would you have knowledge that in each state Medicaid type processes, they have a uniform card? At least in each of their own states?

RICK CARBRAY: In their individual states, as far as I'm aware, yes, that's correct, yeah.

SEN. BOZEK: Is there any other uniformness that out there with regard to pharmacy stuff that --

RICK CARBRAY: Well, actually, if you go back quite a ways, I mean, I go back to -- unfortunately, I've been in practice that long, we go back to the Universal Claim Form.

SEN. BOZEK: Thanks a lot.

RICK CARBRAY: Thank you.

SEN. BOZEK: I'm going to catch up to and I want you to come see me again, so soon, if you get a chance, even if you give me a call -- phone, alright?

RICK CARBRAY: Great, thanks.

REP. JARJURA: Moving on now to HB 5639, AN ACT CONCERNING THE USE OF DRUG FORMULARIES BY HEALTH INSURERS. Our first speaker is Mag Morelli.

MAG MORELLI: Good afternoon, Senator Bozek, Representative Jarjura and members of the Committee. My name is Mag Morelli and I'm the Director of Government Relations for the Connecticut State Medical Society. I'm here today to testify in strong support of HB 5639, AN ACT CONCERNING THE USE OF DRUG FORMULARIES BY HEALTH INSURERS.

REP. JARJURA: Thank you. Questions? Thank you for coming, Mag.

SEN. BOZEK: (mike off)

MAG MORELLI: Yes.

REP. JARJURA: Our next speaker is Dr. Steven Holland.

SEN. BOZEK: Let me ask you --

REP. JARJURA: Mag, you're back up.

SEN. BOZEK: Well, wait until Doctor --

MAG MORELLI: Holland? Okay.

SEN. BOZEK: When he's done, I can ask her.

STEVE HOLLAND: Good afternoon. My name is Steve Holland. Senator Bozek, Representative Jarjura, members of the Committee, I'd like to talk about the same bill regarding the formulary issue. Mag outlined the issue pretty well and I'd like to speak to it from my point of view, being an emergency physician.

REP. JARJURA: Thank you, Doctor. Senator Bozek.

SEN. BOZEK: (mike off)

STEVEN HOLLAND: Having those types of conversations, you know, I would rather have bamboo shoots up my fingernails, because it is so hard getting through to the right person and to speak -- you know, I should be speaking to another physician. I should say, this is my reasoning why I want this child on this antibiotic and no, it's not on your formulary, but this is my reasoning why. They got the allergy over here, they got this -- it's impossible to get through to the -- the last time I had that conversation, my hair was Representative Jarjura's color and so, I'm being fascias, but of course --

REP. JARJURA: But you still have more of it than I do.

STEVEN HOLLAND: But the hoops that you have to go through for a busy physician and you know, all physicians are busy. It's just so impractical to try and have that conversation done in real time, you know?

SEN. BOZEK: -- more latitude in the formulary that you want to use on a patient you're dealing with, more or less?

STEVE HOLLAND: The formulary from the HMO?

SEN. BOZEK: Well, --

STEVEN HOLLAND: I have no special privileges, based on that, no. No.

SEN. BOZEK: Okay, so -- oh. So, you might say, look, what plan are you on? And --

STEVEN HOLLAND: Well, I might say that to try to get an idea of it, but there's going to be no guarantee that what I write is going to be from that formulary, again, you know? It's not --

SEN. BOZEK: When you do write --

STEVEN HOLLAND: Don't have that information.

SEN. BOZEK: When you do use a formulary, for the individual, let's just use -- sake of an argument this ear ache thing. Did you ask the child's parents or whoever it is, that -- what plan are you on, so I can look at your formulary?

STEVEN HOLLAND: Some cases, yes.

SEN. BOZEK: Some cases, yes.

STEVEN HOLLAND: Because you try to, but like I say, the impracticality of that, where you're working with over a dozen plans, you never know if you have the up-to-date plan or not and you don't actually know from within that plan, which plan they belong to.

SEN.BOZEK: Sure, okay. So, you prescribe something or you use some formulary on the individual and then you know it has to be extended for a continuing use. You give them some script for it and then if it's possible, it comes back.

STEVEN HOLLAND: It's not a rule, if it does happen, because again, that's the issue. The pharmacists are calling us back. They know that -- or in the Emergency Department and they know why the medicine was prescribed, but when they match it up to the formulary that they have on their computer, that's not an allowable antibiotic. So, that's why they have to call us back and ask for another one, and then they'll give us the choices.

SEN. BOZEK: Now, in some cases, in some cases are basically either the alternative uses are things that you prefer. I mean, in some cases, it's alright? But in some other cases, that you --

STEVEN HOLLAND: Oh, sure. Sure. The antibiotic was the one I used and I think that's a more important one, but for example, if you come in with a stomach problem, I end up prescribing you, let's say, Zantac and they call me back and they say, no, Zantac's not on this plan, how about Pepcid? And I say, oh, that sounds great.

SEN. BOZEK: Do you know that this occurs with other physicians who are in the Emergency Room?

STEVEN HOLLAND: Well, I didn't say it, but I'm here representing the Connecticut College of Emergency Physicians and this is an issue we talked about and voted on.

SEN. BOZEK: They've had similar experiences?

STEVEN HOLLAND: Absolutely.

SEN. BOZEK: And do you, Doctor, from your experience also with other colleagues who may not be emergency use, do they have reasonable or substantial complaints about difficulties in trying to address the formulary with their patient?

STEVEN HOLLAND: Well, it's the same level of frustration but again, --

SEN. BOZEK: Outside of you.

STEVEN HOLLAND: Outside the Emergency Department in their private offices, they have a little bit better handle on their patients because of that continuity and knowing what plans that they are, that it's a little bit easier for them to make the initial adjustment with the formulary, but still, having to pick -- you know, from that thing is a restrictive issue that they don't like any more than we do.

SEN. BOZEK: Would you -- I'm interested, also -- just -- I think this should be the last one of this, is -- with regard to wanting to give one formulary and it's not on the list, then you alter -- you give it a substitute, an alternate formulary. Is there -- I mean, as a physician, you have some kind of -- not good feeling about -- I wish, actually I think this formulary actually is a better performing, working medication than what I have to prescribe because they have a different formulary. Would that be --

STEVEN HOLLAND: Yeah, no, that happens and some cases, you say, well, you know it's an issue because this one that we're prescribing has a 30 percent risk of GI side effects, where as the other one, -- you know, only has five percent that I'm worried about so I think it's the better one. Some cases, we give out samples and say, I think this is the better one, -- you know, and so, and particularly, when you come to the uninsured, the indigent, we do that quite a bit. We'll give them the course.

SEN. BOZEK: Thank you. Thank you very much, Mr. Chairman.

REP. JARJURA: Thank you. Any other questions? Thank you, Doctor for coming in.

STEVEN HOLLAND: Thank you.

REP. JARJURA: Moving on to our final bill of the day of 5620, AN ACT CONCERNING HEALTH INSURANCE COVERAGE FOR COLON CANCER SCREENING. We have two speakers. Zana Baruch. She's not here? And, Lorraine. Are you Lorraine? Okay. You'll be our final speaker of the day, Lorraine. Bob, did you come in to testify on the last bill?

LORRAINE GIALLUICA: Good afternoon, Senator Bozek and Representative Jarjura. Before I start, if you have the handout that we gave you, there is a chart with a picture of a colon in it and it's kind of important to know that there are really three parts to the colon.

SEN. BOZEK: Hold on a minute, please.

LORRAINE GIALLUICA: Okay.

SEN. BOZEK: Just for your information, we did -- we'll be polite. We didn't receive that. Alright. We'll take your word for it.

LORRAINE GIALLUICA: Okay. I'll hold up the chart. Maybe you can see it well enough for me to tell you. When you do a sigmoidoscopy, they only examine the area from the rectum up to this first turn in the colon, up here, the beginning. That's called a sigmoidoscopy. It's done in the doctor's office. They put a thick, flexible tube in there and they visualize the area.

REP. JARJURA: You had you're signot --

LORRAINE GIALLUICA: Sigmoidoscopy.

REP. JARJURA: In '99?

LORRAINE GIALLUICA: Nine, yes.

REP. JARJURA: And then when did you have the colonoscophy?

LORRAINE GIALLUCIA: In summer of the year 2000.

REP. JARJURA: 2000.

LORRAINE GIALLUICA: Because I had developed symptoms by then.

REP. JARJURA: Okay.

SEN. BOZEK: I have a question, too.

REP. JARJURA: Senator Bozek.

SEN. BOZEK: You had surgery before or did you have surgery to determine that you had the cancer in the colon?

LORRAINE GIALLUICA: The colonoscophy showed the cancer, when I finally had the colonoscophy, it showed the cancer, then I had to have surgery to remove that part of the colon that was cancerous.

SEN. BOZEK: So, so it -- that was the determination at the time, and are you -- and currently you're a -- you're on chemotherapy?

LORRAINE GIALLUCIA: Yes. Which is very expensive and insurance companies are paying for it.

SEN. BOZEK: How many -- how long have you been on it?

LORRAINE GIALLUCIA: I started in November.

SEN. BOZEK: And yours is a weekly thing?

LORRAINE GIALLUCIA: Yes.

SEN. BOZEK: And what do you have? A yearly program?

LORRAINE GIALLUCIA: It's indefinite.

SEN. BOZEK: Indefinite. Okay, Lorraine. Thank you very much.

LORRAINE GIALLUCIA: You're welcome.

REP. JARJURA: We wish you very well with your chemotherapy. Is Zana in the room? Do you want to speak? That's our last bill and our last testimony for today, so I think we'll adjourn the Public Hearing.