Calif. Regulators: New Licensing Law Could Mean Lower Rates

California’s chief insurance official said that a new law allowing undocumented immigrants there to hold state driver’s licenses “could lead to auto insurance savings for all consumers” in the state.

Dave Jones, commissioner of the California Department of Insurance (CDI), applauded Gov. Jerry Brown this week after he finalized AB 60, a piece of legislation that creates a pathway for undocumented immigrants to drive legally in California.

The bill would require the California Department of Motor Vehicles (DMV) to issue licenses to undocumented immigrants who pass safety and driving tests and obtain vehicle coverage.

The bill also requires that insurers use the license number, in lieu of a Social Security Number or other proof of legal residence, when issuing California car insurance policies.

Drivers who “are already on our roads without a license and without any testing” may be brought “out of the shadows,” making them likelier to buy car insurance under the new law, according to Jones.

“Many who are not able to get a license now also decide to forgo auto insurance because they figure why bother since they are already driving illegally,” he said in a statement, adding that, “fewer drivers operating without insurance and lower accident rates could lead to auto insurance savings for all consumers.”

Currently, an estimated 15 percent of drivers in California are uninsured.

DMV Expects 1.4 Million Applicants under New Law

According to the latest DMV estimates, about 1.4 million additional people “will apply for driver licenses [under AB 60] over the next three years once the program is implemented.”

DMV officials said Thursday that efforts are already under way to craft new guidelines and procedures, including the process through which drivers will prove their identity and state residency. Drafts of those guidelines and procedures will be reviewed both publicly and administratively before they are finalized.

The licenses for undocumented drivers would be specifically—but discreetly—marked, with lawmakers hoping to distinguish them from the licenses held by legal residents and U.S. citizens. The law does not extend commercial licenses to illegal immigrants.

Supporters Tout Safety

Much of the bill’s support has hinged on its traffic safety benefits.

Jean Shiomoto, chief deputy director for the DMV, said in a statement that, “thanks to AB 60, we believe more drivers will be safer on California roads.”

Insurance groups were actively lobbying for AB 60 and told California lawmakers that it was an effective way to curb the crash numbers.

The driving factor behind the insurance industry’s support is liability. A DMV report from 2012 showed that unlicensed drivers were three times more likely to be involved in a fatal accident than licensed drivers. The report also found in non-fatal accidents that “unlicensed drivers tend to be more hazardous” than their licensed counterparts.

Pete Moraga, spokesman for the Insurance Information Network of California (IINC), told Online Auto Insurance News (OAIN) that any reduction in the number of uninsured and unlicensed drivers will lead to safer roads.

“Although there are no scientific studies, we hear anecdotally from law enforcement that the rise in the number of hit-and-run accidents is largely due to unlicensed drivers,” he told OAIN. “So another positive from [AB 60] may also be a reduction in hit-and-run accidents.”

According to Moraga, insurers will likely not see drivers seeking coverage under AB 60 any time soon because the DMV is still developing procedures for the undocumented to get licensed, as well as the new license itself.

Once the DMV completes that phase in fall 2014 or early 2015, Moraga said that insurers will start seeing those drivers.

New State Laws Elsewhere also Grant Driving Rights to Undocumented Immigrants

This year has seen a number of states ratifying proposals for motorists, regardless of their immigration status, to obtain driver’s licenses or other driving-related rights. Those states include Illinois, Oregon, Maryland and Nevada, while New Mexico and Washington had previously passed similar measures. In Utah, undocumented workers can obtain “driving privilege cards” after completing state driving safety courses.

Michael Barry, spokesman for the Insurance Information Institute (III), said that those proposals means nationwide growth in the pool of potential policyholders.

“These state Legislatures have dramatically expanded the number of potential auto insurance policyholders in the U.S. while also acted to reduce the number of unlicensed drivers on their roadways,” he told OAIN, adding that the Institute is unaware of any formal studies on the total number such drivers seeking coverage.

In California, legislation similar to AB 60 has been proposed for the past five legislative sessions but stalled either in the statehouse or because of legislative veto.

In the closing moments of this year’s session of the California state Senate, however, legislators revived efforts behind and sent it to the state Assembly for passage.

AB 60 goes into effect January 1, 2015.

“This bill will enable millions of people to get to work safely and legally,” Gov. Brown said in a statement. “Hopefully, it will send a message to Washington that immigration reform is long past due.”

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