OAI: Database Proposals Part of Push for Car Insurance Verification

Share Article

States’ efforts to authenticate coverage are in different stages, with cost a major issue, according to OnlineAutoInsurance.com

Tennessee senators are scheduled this week to hear a proposal to create an information database showing coverage status for every car in the state, highlighting insurance verification efforts across the U.S. that come with different drawbacks and benefits, according to OnlineAutoInsurance.com.

The proposal in Tennessee, titled SB 2292, follows passage of an Idaho measure last month that sets up a similar database there by January 2014. The majority of states have or are putting into place such systems that collect state registration data and link it to policy information provided by insurers to better identify vehicles that lack coverage.

For example, the presence of auto insurance in Texas is verified by TexasSure, the state system that officials say cut the rate of registered vehicles that could not be matched to an insurance policy by 2.6 percentage points in two years.

Unmatched policies trigger notices that are sent to vehicle owners about the process of reacquiring insurance to avoid possible penalties.

The percentage of uninsured drivers in Texas was estimated to be 15 percent in 2009, according to the Insurance Research Council (IRC), almost the same as the nationwide rate.

Tennessee’s proposed database would work similarly to TexasSure and aims to reduce the high 24 percent rate of uninsured drivers in the Volunteer State. But high or low, a state’s percentage of uninsured motorists doesn’t necessarily translate into how its lawmakers are tackling the problem.

Idaho had the seventh lowest rate of uninsured drivers, 7.9 percent, in 2009, but recently instituted both a measure allowing phone-based proof of coverage and a measure to establish a verification database.

In the same month that Idaho legislators passed their database proposal, a bill to do the same in Mississippi stalled during the legislative process. At 28 percent, the Magnolia State’s rate of uninsured drivers was the highest in the U.S. and more than double the nationwide rate, according to IRC estimates.

Mississippi lawmakers proposed almost identical legislation to launch a verification database last year, but the bill was ultimately vetoed by then-Gov. Haley Barbour because of cost concerns.

The price of Tennessee’s proposal may also be the biggest point of contention for politicians there gearing up to debate the issue. State analysts’ financial summary of the bill estimated initial net decreases in state and local revenue of $2.98 million and $9.76 million, respectively. The drops in revenue would come from uninsured drivers who are notified through the database but choose to stay uninsured and, in turn, don’t pay the renewal fees associated with the registration process.

Also, the state would have to spend $2 million to establish the database and $200,000 annually to maintain it, along with an $18,100 one-time expenditure to integrate the database into the Department of Safety’s current system.

Analysts predicted increases in local administrative and court costs but also said the state would collect millions in tax revenue from drivers who reacquire insurance and renew registration after being flagged by the database.

SB 2292 was passed unanimously in the Finance, Ways and Means Committee earlier this month and was placed on the April 24 calendar of the state Senate. If passed, the proposal would become active January 2013.

Source: http://wapp.capitol.tn.gov/apps/billinfo/BillSummaryArchive.aspx?BillNumber=SB2292&ga=107

For more on this and related issues, head to http://www.onlineautoinsurance.com/texas/ for access to an easy-to-use quote-comparison generator and informative resource pages.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Charles Nguyen
Visit website