Indiana drivers could be in for major changes, from having their coverage status tracked through a statewide coverage database to getting increased penalties for driving without coverage, as lawmakers in a new study group began talks about ways to cut into the uninsured rate there. Lawmakers also discussed the possible effects of raising the minimum coverage levels required by law.
At the meeting, Sen. Travis Holdman (R-Markle), the committee’s chair, said members were in consensus about Indiana’s uninsured rate being “very high.” However, there was less agreement among the legislators about the strategies they should pursue to reduce that rate.
Around 16 percent of Indiana’s drivers are uninsured, according to Insurance Research Council (IRC) figures presented at last week’s meeting of the Interim Study Committee on Insurance.
The latest IRC rankings put Indiana as having the 10th-highest uninsured motorist rate in the U.S.
Officials Tackle ‘Fairly Complicated Issue’ of Uninsured Motorists
Jon Zarich, a vice president at the Insurance Institute of Indiana (III), was the “star of the day,” Holdman said, offering the meeting’s most extensive testimony.
Indiana’s uninsured motorist rate is not too out-of-control, according to Zarich, who told the committee that “most states are going to be in that 14 to 16 percent range.” IRC data shows that the nationwide average rate of uninsured motorists is almost 14 percent.
Zarich said that uninsured motorists pose a complex problem for lawmakers in every state, citing the 11 percent uninsured motorist rate in New Hampshire, the only state in the country without a law requiring motorists to have coverage.
Meanwhile, nearly a quarter of motorists in Florida lack coverage despite a tech-savvy verification process that Zarich said is updated with real-time policy information “to catch everybody at the scene and say you don’t have insurance.”
“It gets to be a fairly complicated issue as far as how you address it,” he said.
Zarich proposed establishing a “no pay, no play” law in Indiana that would bar uninsured motorists from obtaining pain-and-suffering court damages for a car crash, even if they didn’t cause it.
An IRC study showed that “no pay, no play” helps reduce the number of uninsured motorists in states with such laws, which number less than a dozen.
Zarich said the III supports “less stringent” versions of the laws that impose their restrictions on more specific populations of uninsured motorists, like those who have lacked coverage for more than a year.
Zarich also said inflating fines and penalties could stop more drivers from getting behind the wheel without coverage, but some committee members were against the idea, including Rep. Ed DeLaney (D-Indianapolis).
Committee Discusses Coverage Minimums, Verification
The committee also discussed raising the coverage limits for Indiana car insurance, which currently stands at $25,000 per person and $50,000 per accident for injuries caused by the policyholder. Zarich warned against moving into a bracket of $50,000 per person and $100,000 per accident, saying that studies have shown such an increase could produce a hike in premiums.
He estimated that such an increase would result in an average premium increase of 25 percent to 30 percent, or annual hikes of $230 for drives with good records and $400 for those with below-average records.
Sen. Greg Taylor (D-Marion) and Rep. Delaney also cautioned fellow committee members against raising the minimums, saying that it could force more drivers to pass over purchasing coverage because of higher premiums.
Holdman said adjustments to coverage minimums would likely be ineffective in pushing the number of Indiana’s uninsured motorists downward.
“It seems to me that there isn’t a lot of angst and a lot of unrest amongst folks about the limits,” he said. “I think the issue, at least it is for me, is enforcement. If we just had a number better than 16 percent, I think that would relieve a lot of my concern that we’re subsidizing 16 percent of those folks who have the privilege of driving in the state of Indiana.”
To that end, committee members also discussed the possibility of establishing a database containing policy information that would allow authorities to confirm the presence of coverage on a car. Dozens of states across the U.S. use such verification systems to help enforce laws that penalize those whose vehicles aren’t matched in state databases.
Steve Duff, from the Independent Insurance Agents of Indiana, said that he was opposed to establishing a database. According to Duff, more than 1 out of every 5 consumers change their car insurer at least once a year, making it difficult for insurers to manage the policy information that would have to be regularly supplied to such verification databases.
Legislators elsewhere are also turning to databases as a way to deal with uninsured motorists in their respective states.
Last month, Rhode Island greenlit legislation to create a verification system that would be operational by next summer.
Hawaii lawmakers are also looking into establishing a database.
Discussions at meetings between stakeholders for Hawaii’s proposal showed again that insurers are lukewarm to the idea of database verification.
Mark Sektnan, a vice president with the national trade organization Property Casualty Insurers Association of America, told Hawaii legislators that states verifying policies through such systems do not have discernibly lower uninsured rates than states without them.
In addition, he said, establishing such databases were more expensive and complicated than other options, like hardening penalties against uninsured drivers.
However, some database-equipped states enjoy especially low rates of uninsured drivers. Utah, which was cited as a model example by Rhode Island lawmakers as they crafted their proposal, was again highlighted at the committee meeting in Indiana.
Zurich said that Utah pushed its uninsured motorist rate down to 8 percent because its verification enforcement includes an especially harsh impoundment penalty for coverage-less vehicles.
Holden said the committee will continue discussions on uninsured motorists at its meeting next Thursday, when he asked that insurers attend to present “any creative financial responsibility enforcement ideas.”