A signature from Oregon’s governor this week finalized a law there that will allow undocumented immigrants to be issued a four-year “driver card” that grants them driving privileges and requires them to purchase insurance.
Those who cannot prove legal status in the U.S. and seeking a driver card will have to undergo the same licensing and permit processes as other motorists and are subject to the requirements that they obtain Oregon insurance coverage.
Driver card recipients will also be required to have lived in Oregon for more than a year. The driver card will include a $64 fee and $44 for renewals.
SB 833, which establishes the program, passed the state Senate on April 23 by a 20-7 vote and the state House a week later by a 38-20 vote. Gov. John Kitzhaber signed off on the law Wednesday.
The law goes into effect on Jan. 1, 2014.
Law to Put More Insured Drivers On the Road
Although the law will undoubtedly put insured motorists on Oregon roads and in the state’s insurance market, there was no legislative estimate of how many participants would join the program.
According to The Register-Guard, 110,000 people will seek the driver cards within the program’s first 18 months.
The Oregon Commission on Hispanic Affairs’ (OCHA) estimates of the number of unauthorized immigrants working in Oregon, based on state data, put the number between 63,000 and 83,000 in 2006, but did not specify current numbers of drivers within that group.
Jim Perucca, executive vice president of the Independent Insurance Agents & Brokers of Oregon, said that “it is difficult to estimate the number of people who will apply for driving cards” but predicted change in the marketplace.
“To the extent lack of driver’s licenses was the cause [that an undocumented immigrant did not get insurance], it could expand the market,” he said in an interview with Online Auto Insurance News (OAIN).
The Oregon State Sheriffs’ Association (OSSA) said that it is neutral on the program and its members “understand the value gained by having insured drivers.”
“We know that illegal immigrants cannot obtain insurance to drive without some sort of state-issued license,” the OSSA said in a statement.
But the group also said it had reservations, including some on the four-year period for driver cards that it said was “too long” and “should be renewed annually.”
The OCHA said more insured drivers on Oregon roads would improve public safety, citing data from the Insurance Research Council, which reported in 2009 that 10.4 percent of Oregon drivers lacked coverage.
Perucca estimated that the uninsured rate was higher, hovering between 15 percent and 20 percent.
“It is simply irresponsible to exacerbate this problem by denying driver licenses to applicants who cannot prove legal presence,” according to a statement from the commission, which added that another possible benefit would be lowering coverage costs throughout the state.
A plan in New York that fell short of passage, the commission said, saw studies published during the legislative process estimating premiums could be cut by 34 percent, or $120 million a year.
The commission also highlighted similar laws in Utah and New Mexico and the ensuing reductions in uninsured rates there.
Washington State has a law allowing undocumented immigrants the right to obtain driver’s licenses. Earlier this year, Illinois became the latest state to create a licensing program for that population.
Other similar measures are in various stages of the legislative process in states across the U.S., including Maryland, Colorado and Nevada; the proposal in Maryland was finalized into law by the governor Thursday.
Industry Faces Questions over New Population of Drivers, Insureds
According to experts in the state’s insurance industry, introducing a new driving population to the coverage marketplace poses many questions.
Karl Newman, president for the NW Insurance Council, said that “it is too early to tell what impact driver cards will have,” adding that insurers’ primary concern is that recipients of the driver cards “pass the same written and driving tests” and other motorists.
Perucca said that, because driving history forms the foundation of how insurers calculate coverage rates, “reaction of carriers will likely vary.”
One possibility, according to Perucca, could be that new motorists with driver cards may be rated as high-risk drivers while they build up a driving history. He also predicted that the high-risk market would see the most immediate impact from the law “until a couple years have passed.”
“It would seem that if there was no license there couldn’t be any history,” he said. “It may be difficult for these new drivers to validate that they are also ‘good’ drivers.”
Newman agreed that a lack of driving background will likely mean driver-card holders pay higher-than-average rates but said a thin driving history “does not mean that they are automatically considered high-risk.”
“It simply means they don’t have the track record to qualify for a preferred rate,” he said in an interview with OAIN.
After legislators greenlit the licensure program in Illinois, Elianne Gonzalez, Hispanic press officer for the Insurance Information Institute, told OAIN that outreach will be vital in educating new drivers about insurance requirements and how coverage works.
To that end, she said, cultural and language barriers will be the biggest hurdle for insurers and agents facing an entire new population needing coverage.
“Sometimes they’re not aware that there are additional portions of a policy so they’ll ask, ‘How come I’m not paid my claim for a stolen car?’” said Gonzalez. “Having only the required minimum insurance doesn’t protect the driver totally. Even people who have lived here for a long time don’t know that, but it pops up a lot in the Hispanic community because they tend to not ask many questions.”
Lawmakers Expect ‘Backlog of Demand’
Between 2013 and 2015, the first two years of the law’s implementation that will include “setting up systems” and dozens of staff members, phasing in the law is estimated to cost $4.7 million. But that will be balanced by an estimated $5.3 million in revenue from driver-card fees during that implementation phase, along with $2.7 million more from fees in the following two years.
There is an “expected backlog of demand,” according to a legislative analysis.