Topeka ? In May, the state started a pilot project with AAA in Lawrence to process driver’s license renewals.

The experiment has been a success, state officials say, saving tax dollars and providing convenience to customers.

But on Tuesday, the House Insurance Committee crushed the idea, recommending approval of a bill sought by the insurance industry that would end the AAA arrangement in July.

Several committee members said the deal gave AAA an unfair advantage in marketing and selling insurance over other companies.

“This is a gold mine of leads for AAA,” said Rep. Dick Kelsey, R-Goddard. “It’s a matter of fairness, and this is unfair to everyone else.”

Carmen Alldritt, director of vehicles within the Kansas Department of Revenue, vowed to fight the legislation.

“This is just part of the process,” she said after the committee voted.

In dispute was the Revenue Department’s contract with AAA in Lawrence to handle driver’s license renewals at its 3514 Clinton Parkway location.

Since the program began in May, AAA has processed 1,800 licenses and will save the state $235,000 in one year from not having to open a new office, officials said.

But insurance agents and companies said the arrangement was unfair because AAA also sells insurance. They feared AAA would have an advantage finding new customers.

“Any appearance, directly or indirectly, of one agency having a foothold over another is simply not fair, particularly if such an appearance is put forth by the government,” William Sneed, representing State Farm Insurance Co., the largest auto and home insurer in Kansas, said in testimony last week.

Several other insurance companies, associations and even the Kansas Department of Insurance voiced displeasure with the Revenue Department’s program with AAA.

But James Hanni, AAA executive vice president of the Kansas region, said the nonprofit company was trying to provide a service and had signed a written agreement to not give insurance policy quotes to any customer who came in to renew their driver’s license.

“The only concerns are from the insurance industry, and zero complaints are from the public,” he said.

House Bill 2553 would prohibit the Revenue Department from contracting with businesses for driver’s license renewal services.

Committee Chairman Clark Shultz, R-Lindsborg, commended the Revenue Department for trying to find ways to better serve customers, but said the arrangement with AAA gave the perception that the company has an unfair advantage getting insurance customers.

But Rep. Nile Dillmore, D-Wichita, said the deal should be allowed to continue because it was convenient for customers and no insurance company was able to document any instance where AAA gained new insurance business.

“Without any testimony that there is any actual harm being done by this program, I don’t want to squash it,” Dillmore said.

The committee, however, on a voice vote recommended approval of the bill prohibiting such programs by the full House.