Mandatory Auto Insurance Does Not Reduce Number of Uninsured Drivers, Says Insurer Trade Group

Although unlicensed and uninsured drivers comprise a significant traffic safety concern across the country, the solution to the problem is not compulsory automobile liability insurance, according to the Property Casualty Insurers Association of America (PCI).

“Unlicensed and uninsured drivers are involved in more than 20 percent of the fatal crashes on America’s highways,” said Laura Kotelman, PCI regional manager and senior counsel, in an address at the annual meeting of the National Conference of State Legislators (NCSL) in Salt Lake City. “However, compulsory auto insurance laws do not prevent uninsured drivers from owning or operating a vehicle, and are frequently a harassment to responsible drivers who do maintain coverage.”

Auto liability coverage is mandatory in 47 states, 23 of which have state reporting systems, Kotelman noted. But even in these states, uninsured motorists still comprise anywhere from 4 percent to 34 percent of all drivers. “State and local governments and auto insurers in these states are forced to allocate and expend precious resources to enforce laws that apply to all motor vehicle owners and operators, most of whom are insured,” she said. “Remedies should not pose an undue financial burden on insurance consumers or encroach on the freedom of local drivers.”

State reporting database systems in particular are costly, difficult to implement and maintain, and do not do an adequate job of identifying and tracking uninsured motorists, Kotelman said. “Although these systems compare insurer books of business to the state’s Department of Motor Vehicle (DMV) database, they don’t do this in real-time,” she said. “The result is 15 to 20 percent mismatches, a real harassment of law-abiding drivers.”

In lieu of database systems, PCI supports enforcement based on financial responsibility standards and an identification enforcement approach, which target drivers who pose the highest risk to other motorists. According to PCI, “red flags” could include drivers whose licenses or registrations have been previously suspended or revoked; have been convicted of insurance violations; have multiple traffic law convictions; and have repeated accident involvement.

“Problem” drivers would be required to file proof of financial responsibility with the local DMV for one to three years, PCI said in a statement. States that have adopted this system include Illinois, Minnesota and Alabama.

Identification-enforcement programs reduce the uninsured motorist population without excessive taxpayer costs, undue public harassment, and unnecessary insurer expenses ultimately paid by policyholders.