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Web service could ease auto liability reporting burdens.

Most states compel drivers to have liability insurance. Naturally, the states' motor vehicle departments must rely on insurers to tell them who's insured and who isn't.

And in well over half the states, insurers are subject to mandatory liability insurance reporting programs.

Those reporting programs, insurers say, are costly, cumbersome, and--owing to data mismatches between insurers and motor vehicle departments--sometimes disastrously inaccurate. Uninsured scofflaws can skate free, thanks to lag times between a policy cancellation and the DMV finding out about it.

One solution: Put all that data online, updating liability insurance data in close-to-real-time, thereby avoiding lag times and the possibilities of mismatches among 50 different states' computer systems.

At the National Association of Insurance Commissioners' industry liaison meeting at the organization's quarterly meeting in Chicago, insurance trade groups identified motor vehicle records and their handling as an issue of growing concern and proposed using a Web-based service to fix it.

Mandatory reporting requirements have been around since 1986, beginning in Louisiana, but they are getting more expensive. And insurers have found that mandatory reporting requirements have done little to keep uninsured drivers off the road.

"Although novel when databases were first introduced," according to a presentation given to regulators by the National Association of Independent Insurer's, "these approaches have not significantly reduced the number of uninsured motorist claims and have cost considerable implementation time and large amounts of money."

David Snyder, general counsel with the American Insurance Association, said the problem "contributes to rising costs, it contributes to market problems, it draws thousands of unnecessary consumer complaints, and it impinges on (insurers') ability to provide insurance."

In most states, insurers give state motor vehicle departments their entire book of business on a regular basis, depending on the state. In New York, companies must send confirmation of new business writing to the DMV within a week. Other states collect massive data downloads.

One commercial auto writer Snyder told regulators, devotes S3 million and a staff of 10 merely to deal with the databases.

The problem, said the NAII's Dan Kummer, is that there is a "big, big problem with data matching."

According to data that Kummer gave to regulators, matching errors run in the 20% to 30% range. In Colorado, Kummer said, letters went out to 18% of the state's population, asking them to provide proof of insurance, due to mismatches. More than half the people, assuming the letters were in error because they were insured, threw them out and then found out their licenses were suspended.

Kummer said discussions are now under way with the American Association of Motor Vehicle Administrators to develop an Internet-based service that would contain all the information of an insurance ID card. The system, as now proposed, would see the production of insurance ID cards with watermarks, that, when scanned would contain the Web address of the driver's insurer to determine whether coverage was in place.

It would also mean that insurers would only have to produce one database, rather than deal with reporting requirements from 50 states.

It will take at least another year of discussion to implement, Kummer said, and then another year for major auto insurers to get involved.
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Title Annotation:Technology
Comment:Web service could ease auto liability reporting burdens.(Technology)
Author:Chordas, Lori
Publication:Best's Review
Geographic Code:1USA
Date:Dec 1, 2003
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