Tennessee Senators Consider Insurance Database Setup

Senators in Tennessee are scheduled today to consider legislation that would set up a database to electronically verify the insurance status of cars in a state that has wrestled with high rates of uninsured drivers.

Supporters backing SB 2292 are seeking to implement a multi-million-dollar system that would store vehicle information entered by insurers, state departments and authorities. The database would be available to county clerks, employees of law enforcement agencies and the state Department of Safety (DOS) that want to issue or renew car registration and titles or confirm that auto insurance coverage is in place.

With almost 1 out of every 4 drivers in Tennessee without insurance, the state’s higher-than-average rate places it third-highest of all states in the U.S. Nationwide, the average rate of uninsured drivers in 2009 was almost 14 percent, according to the Insurance Research Council.

Tennessee still had a relatively high number of uninsured motorists in 2007, with 20 percent of its drivers lacking coverage when the rate nationwide was 14 percent.

The proposal for a database aims to combat the problem with electronic listings that cross-reference information from every policy in the state with vehicle titles and registration.

The legislation would require every insurer in the state to, upon issuing a policy, submit:

–The name of the car owner

–The vehicle identification number

–The effective dates of coverage

–The car’s make, model and year

Insurers would also be required to notify state departments whenever a policy is canceled. The information provided by the insurer would be used by state departments to suspend the driver’s license and registration linked to that vehicle in the database once the department is notified of a policy’s termination.

Drivers in the Volunteer State who can’t prove coverage face license suspension until they can show evidence of a policy. Showing proof of coverage later still brings a $100 fine for motorists and also requires an examination to reacquire their license.

The idea behind the proposal seems like a practical solution to uninsured driving, but the sticking point of a coverage-verifying database may be how much it costs to set up and maintain. The DOS estimates it needs $18,100 to modify its system so it can integrate a database. Other estimates include $2 million to develop the database and $200,000 annually to maintain it as well as increases in local expenditures for administrative and court costs.

The bill, passed unanimously in the Finance, Ways and Means Committee earlier this month, is on today’s state Senate calendar but may not see action until later. If passed, the proposal would become active January 2013.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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