Hawaii Moves on Electronic Insurance Database Legislation

Hawaii lawmakers on Monday expressed support for a proposal to set up a statewide, web-based insurance database that verifies drivers’ coverage status over a county-based approach.

The state House Committee on Consumer Protection and Commerce recommended HB 136 for approval by a 11-1-3 vote while recommending HB 157 for a deferral.

Committee Heard Two Proposals for Databases

HB 136 was the result of recommendations to lawmakers who commissioned a working group to investigate ways of lowering the state’s rate of uninsured drivers. The group’s members, including government, insurance industry and law enforcement officials, said that a web-based database verifying whether or not a driver has a current policy should be implemented in two years.

HB 157 was a separate proposal that would establish a county-based verification system. Under that bill, Hawaii’s counties would have been be responsible for creating and maintaining their own verification databases as well as issuing “insured motorist stickers.”

Gordon Ito, Hawaii’s insurance commissioner, said his state regulatory agency “prefers” the database proposed under HB 136 over that proposed under HB 157.

“The department supports the intent of [HB 157, but] … establishing four different data systems may result in different procedures, which may be problematic for motor vehicle insurers,” Ito said in a statement.

Insurers Question Impact of Databases

Officials from the National Association of Mutual Insurance Companies (NAMIC) said that language in HB 157 stating that the legislation aimed to “significantly reduce traffic on Hawaii’s congested roadways” was misguided.

According to the bill, a database-reporting system would take uninsured cars off the road and do more for traffic jams in Oahu than a proposed rail transit system.

The NAMIC said that there was no such evidence ensuring that outcome. In addition, the trade group said, the bill would burden both the industry and state.

“The bill will do nothing more than create an unworkable, impractical, and ineffective bureaucracy that will increase administrative costs for insurers and county agencies,” the NAMIC said in a statement.

Industry representatives who participated in the working group recommending HB 136 also questioned the impact of database-reporting systems. According to Mark Sektnan, a vice president with the Property Casualty Insurers Association of America, there was “no significant difference” in the uninsured motorist rates of the 33 states with such systems compared to those without one.

Although Sektnan said he still recommended Hawaii’s web-based proposal, he also said that there were “simpler and less costly” methods of taking uninsured drivers off the road, according to the working group’s report.

In Hawaii, penalties for driving without insurance include a maximum $500 fine and three-month license suspension for first-time offenders. Repeat offenders can be fined at least $1,500.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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