Conference committee keeps rebating limits in SB 2374, adds study on towing for liability-only vehicles

A Senate–House conference committee voted unanimously Tuesday to amend engrossed Senate Bill 2374 to remove a proposed exemption for large commercial insurance risks from the state—s rebating restrictions, clarify that federal crop insurance is subject to the same rebating rules, and add language directing a study into towing and recovery costs for motorists who carry liability-only coverage.

The change to SB 2374 came after extensive discussions with insurers, agents and stakeholders, and a presentation from Deputy Insurance Commissioner John Arnold. "The proposed amendments ... are to remove the large commercial rebating from the bill, and keep the rest of the bill intact," Deputy Insurance Commissioner John Arnold told the conference committee.

The committee's action follows concerns raised by industry representatives and state law enforcement about two separate problems: uncertainty over how rebating rules should apply across different sizes of insured entities, and increasing incidents in which motorists with liability-only insurance abandon low-value wrecked vehicles on the roadside because towing and recovery costs are not being paid.

Why it matters: The rebating changes affect how insurance agents may share commissions or provide value back to buyers; removing the large-commercial exemption means the rebating rules would apply uniformly across small, medium and large risks. The towing study responds to complaints from the highway patrol that some tow companies may stop clearing vehicles when owners only carry liability coverage and the cost or payment process makes recovery impractical.

What the committee did and why: Arnold said the conference language removes the portion of the bill that would have exempted "large commercial" customers from rebating restrictions after attempts to reconcile Senate and House versions produced disagreement among the aging-advocacy groups and the agent community. Arnold added that the committee would retain the remainder of the bill and that staff could help draft study language if the committee wanted it.

Arnold also described the towing problem as a practical concern relayed by the highway patrol: "They're concerned that they're quickly approaching the point where towing services may not come and remove vehicles, if the owner has liability only coverage, because of the hassle of getting paid for removing that vehicle from the side of the road." The committee inserted a "shall consider" study provision to examine potential solutions before the next legislative session.

The conference amendments also explicitly add federal crop insurance to the statute's coverage, to ensure those federally administered policies are treated as insurance for rebating purposes.

Votes and procedure: Representative Johnson moved to adopt the House amendments and further amend SB 2374 with the attached language on towing; the motion was seconded by Senator Cline. The conference committee approved the amendment on a roll-call vote, 6-0 (Representative Brown: yes; Representative Volmer: yes; Representative Johnson: yes; Chairman Barta: yes; Senator Kessel: yes; Senator Klein: yes). The committee then voted 6-0 to pass SB 2374 as amended. Committee members said staff would finalize renumbering and drafting before the measure returns to each chamber for final action.

What remains unclear or pending: Committee members asked staff to confirm how the rebating rules would apply to producers licensed in neighboring states who sell policies covering land in this state; Deputy Commissioner Arnold said his legal team would research the cross-border implications and report back to the committee. The study language on towing was not fully polished during the meeting; staff agreed to draft final language for committee review.

The conference committee recorded the amendment—s technical edits as: retain critical language on page 5 (lines 25—6), add clarification on federal crop insurance on page 6 (line 10), remove the line on page 8 (line 17) that would have exempted large commercial risks from rebating restrictions, and renumbering on page 10 (line 1) as needed.