The uninsured motorist problem

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This is a genuinely perplexing issue. Given today’s technology, there should be no uninsured drivers on the road. There are state databases showing all the vehicles registered for use on the public roads, and the insurers have their own records showing which vehicles are insured and by whom. It should be the easiest coding task to combine the two databases and produce a list of all the registered vehicles where there’s no valid auto insurance policy in force. Law enforcement officers can therefore work through the list, visiting all the registered addresses to verify whether the vehicles are being used. If so, prosecution should be automatic. In repeat cases, the vehicle should be removed to the pound until proof of insurance if produced. As to law enforcement on the roads, the majority of police vehicles now come with license plate reading systems. Immediately an uninsured vehicle is spotted, it can be pulled over and the driver ticketed. There’s nothing hard or difficult about this process. All it takes is the political will to make it happen.

Why should we care?

The latest annual report from the Insurance Research Council shows the number of uninsured motorists dropping slowly from 15% in 2003 to 12.6% in 2012. On the face of it, this should be a cause for celebration. Except there are two problems. The total number of vehicles on the road has risen and so the smaller percentage actually means about the same number of vehicles are uninsured. Second, the volume and amount of claims involving uninsured drivers has risen dramatically. The IRC estimates the value of the claims in 2012 was $2.6 billion. That’s a 75% increase since 2003. For the record, that value only reflects claims for medical expenses and ignores the claims for property damage. You will therefore understand, the $2.6 billion is a serious underestimate of the value of uninsured motorist claims. All this money has to come from somewhere. Yes, it comes from you through higher annual car insurance premium rates. If uninsured motorist claims could be eliminated, the auto insurance rates would fall.

Is law enforcement the answer?

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There’s little difference in the level of uninsured drivers between states. No matter whether the state has lax or strict laws, the number is about the same. There’s also no statistical link between the state of the economy and the number driving uninsured. It’s tempting to believe more people drive uninsured because they are poor. During a recession, more people are poor. But there’s no appreciable difference in the percentages depending on whether the economy is booming or in recession. There may be a correlation between the rate of unemployment and the value of claims, but it’s as yet unproven. All we can say is that there are about 30 million people who ignore the law and drive uninsured. Perhaps the answer lies in aggressive enforcement. At present, no state is aggressive. Perhaps the policymakers fear an electoral backlash if too many people are penalized. As it is, we’re all being penalized through higher car insurance rates. That can’t be right.

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