Ohio Bill Would Trade Random Mail-Ins for Electronic Verification

A piece of legislation in Ohio is looking to replace the state’s decade-old, mail-based system of verifying auto insurance for an electronic system that lawmakers want operational by next summer.

HB 71 was introduced last month by Rep. Kristina Roegner (R-Hudson) and currently sits in the House Insurance Committee.

The electronic system would allow law enforcement to access a database stored with updated information on car policies throughout the state so that they could check the status of coverage during traffic stops. The database would also be available to the Bureau of Motor Vehicles (BMV), deputy registrars and court officials.

Information about cancelled, renewed and newly bought policies would be provided by insurance companies on a regular basis, according to the bill.

Also under the bill, other proof of coverage would not suffice if a motorist’s policy cannot be found in the database, as it “supersedes any motor-vehicle liability policy proof of financial responsibility produced by a motor vehicle owner or operator.”

The proposed system would be created by a private third-party company and be ready by July 2014. It would replace the current mail-in system that picks motorists by random and requires them to prove they have coverage.

In Ohio, penalties for driving without car coverage include a total fee of $150 on a first offense, $350 on a second offense and $650 on a third offense, all of which also include license suspensions.

According to the Insurance Research Council (IRC), more than 15 percent of Ohio drivers are without coverage, giving it the 12th-highest rate in the U.S. The nationwide average is 13.8 percent, based on the IRC’s latest data from 2009.

A Look at the Current System

The state currently uses a random verification program requiring notified motorists to mail in proof of coverage. The BMV program began in 1998.

Under the program, a motorist who receives a “Notice Requiring Proof of Insurance” has three months to provide proof of insurance to the BMV—with suspension notices issued in the meantime—before the suspension is finalized.

“The Bureau wants to ensure that individuals understand that they face suspension of their driving and registration privileges if they fail to respond,” the BMV states in its program walkthrough.

According to BMV statistics, more than 145,000 suspensions were generated through the program between Nov. 30, 1998, and Dec. 31, 2005, accounting for nearly 6 percent of the notices that were evaluated in that time.

Similar Systems Recently Put In Place, Discussed Elsewhere

After a public awareness campaign that included radio and billboard advertisements and county-based pilot-testing last year, Alabama launched its verification system at the beginning of 2013.

In Montana, highway patrolmen began using a similar verification system last summer before usage expanded in 2013 to officials who issued license plates. Officials have encountered bumps implementing the system, which returned “unverified” statuses of commercial and out-of-state vehicles that had proper policies in place.

Also this year, Hawaii officials recommended a bill creating a statewide database as they rejected another bill that would have established separate systems for counties. The proposal for the statewide system was passed in one House committee and referred to the next committee early last month.

The Ohio Insurance Institute (OII) said that it is wary of proposals for electronic databases, as similar systems in other states remain unproven in reducing rates of uninsured motorists.

“While these arrangements may be lucrative for vendors they have not proven to be more effective in reducing the number of uninsured motorists than Ohio’s current verification programs,” the OII said in a statement. “While the success of this enforcement tool remains questionable, it has the potential of increasing the cost of auto insurance while placing consumer personal information at risk.”

Oklahoma lawmakers are dealing with their uninsured motorist problem in a different way, with officials proposing a multi-pronged approach of increased fines and tag and license plate removal. Legislators, who have grappled with a high rate of uninsured drivers for years, passed HB 1792 in the state House earlier this month; senators are currently considering the proposal.

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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