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Insurers are wary of regulators' direction on uninsured motorists.

Efforts by state regulators to create a national uniform system to track uninsured motorists are raising concern among insurer advocates, who fear it would amount to a "Big Brother" approach.

The industry meanwhile is piloting an online insurance verification system that would allow state motor vehicle administrators to access up-to-the-minute information on an insured during the registration process.

The system that's slated to begin pilot testing in Florida was created by the Insurance Industry Committee for Motor Vehicle Administration, a coalition of insurers and insurer trade groups. The system came about as the IICMVA worked with state officials to find an alternative to the current state system, which IICMVA said it considers to be "costly and difficult to implement, hard to maintain and a burden for insured drivers."

Dan Kummer, who was chairman of the IICMVA in 2005, said other states are preparing to come on board. Legislation to allow such a system is pending in Wyoming, Oklahoma and Montana. Kummer, who is also the director of auto insurance at the Property Casualty Insurers Association of America, said other states, such as South Carolina, are putting out feelers as well.

Kummer said that among other advantages, the IICMVA system doesn't have the types of confidentiality issues that seem to go along with proposals the National Association of Insurance Commissioners is considering. "It's a Big Brother issue," Kummer said. "It raises privacy concerns to have a national database like this. This is not an approach we, as an insurance industry, are going in."

Key to the concern is the charge of the NAIC's Uninsured Motorists Working Group, which is to develop standards for a state-based approach to reducing the number of uninsured motorists. This seems to contradict the final draft of a white paper produced by the NAIC's Property and Casualty Insurance Committee and adopted at the NAIC's Spring National Meeting in Orlando, Fla., insurer advocates say.

Dave Snyder, vice president and assistant general counsel for the American Insurance Association, said while he believes a uniform approach is desirable, he doesn't believe the working group intended to continue pursuit of a national database within the NAIC.

A "project history" attached to the white paper states that items of controversy--including the notion of the NAIC creating a national database--were discarded during the debate and revision process. The history suggested an NAIC subcommittee consider whether the NAIC should enter a business relationship with vendors or with the American Association of Motor Vehicle Administrators.

Eleanor Kitzman, chairwoman of the Uninsured Motorist Working Group and South Carolina's insurance director, said the database still is on the table, noting the group plans to host presentations at the NAIC's Summer National Meeting on the matter.

Finding a solution might result in a positive revenue stream for the NAIC and the AAMVA, according to the project history, which says it also would benefit the insurance industry by providing a boost in premium revenue as the number of uninsured drivers is reduced.

Under the plan that's been years in the making by the IICMVA and is about to launch in pilot form, the cost to insurers would be minimal, Kummer noted.
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Comment:Insurers are wary of regulators' direction on uninsured motorists.
Publication:Best's Review
Geographic Code:1USA
Date:Jun 1, 2006
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