HD19 - Desirability and Feasibility of Requiring All Virginia Licensed Drivers to Carry Liability Insurance
Executive Summary: House Joint Resolution 189 (1996) requested the establishment of a joint subcommittee to study, among other issues, the desirability and feasibility of requiring all Virginia-licensed drivers to carry liability insurance. This report is in response to a letter received from The Honorable Thomas W. Moss, Jr., Speaker of the House of Delegates, dated April 29, 1996. In this report, DMV addresses one issue raised both by HJR 189 and by Speaker Moss in his letter, a compulsory or mandatory motor vehicle liability insurance requirement. In January 1995, DMV formed an inter-industry task force to study liability insurance issues. The task force was established based on recommendations from the Governor's Commission on Government Reform (the Blue Ribbon Strike Force). The Strike Force requested DMV to assess whether the Commonwealth should continue to offer motor vehicle owners the option .of voluntarily paying an uninsured motorist fee; raise the uninsured motorist fee to a more appropriate level; or require mandatory insurance. The task force included insurance industry representatives from GEICO; Nationwide Insurance Company; State Farm Insurance Company; and select DMV staff. Meetings of the task force throughout 1995 culminated in recommendations that Virginia should continue to offer motor vehicle owners the option of voluntarily paying an uninsured motorist fee. Further, rather than requiring mandatory insurance, the task force recommended that we enhance enforcement of our current financial responsibility requirements, to include a joint DMV/insurance industry electronic insurance verification process. In Appendix "A" to the report, the insurance industry comments on compulsory insurance. Included are letters from the Insurance Industry Committee on Motor Vehicle Administration (IICMVA) and from Sands Anderson, Marks &Miller, representing Nationwide Insurance Company. The recommendations of the task force resulted in a legislative proposal, House Bill 524, and Senate Bill 554, (both bills were identical) passed by the 1996 General Assembly. (*1) The electronic verification process is scheduled to be operational on the effective date of the legislation, January 1, 1997. Since the bill's passage, DMV has met three times with insurance company representatives, and will continue to meet with industry, to ensure that the new electronic verification process fulfills its function; reducing the number of uninsured motorists on Virginia highways. Compulsory insurance appears at first glance to be the right answer. Indeed, based on a report published by the National Association of Independent Insurers (NAII) in 1994, forty-three states have now adopted compulsory or mandatory insurance requirements. The task force concluded, however, that compulsory insurance is not the solution to the problem of uninsured motorists. Instead of reducing the number of uninsured motorists, compulsory insurance requirements have prompted citizens, who are trying to circumvent the state's insurance requirements, to acquire short-term policies that are canceled as soon as the vehicle is registered or, obtain a fraudulent insurance card that is shown at time of registration. No state has successfully eliminated uninsured motorists. Several compulsory insurance states have even estimated their uninsured motorist populations to be as high as 40% of all motor vehicles registered. The key to reducing the number of uninsured motorists operating in a state lies in how the state enforces their financial responsibility requirements. Thus, the adoption of compulsory or mandatory insurance is not recommended. This report does recommend, however, continuing DMV's current initiative, which should enable the Commonwealth to reduce the number of uninsured motorists while minimizing the impact on the majority of law abiding citizens. ______________________________________ (*1) Patrons of House Bill 524: Chief Patron: The Honorable William S. Moore. Jr. The following Delegates were Co-Patrons: The Honorable David B. Albo; The Honorable I. Vincent Behm, Jr.; The Honorable Vincent F. Callahan, Jr.; The Honorable Eric I. Cantor; The Honorable Whittington W. Clement; The Honorable Julia A. (Judy) Connally; The Honorable Flora D. Crittenden; The Honorable L. Karen Darner; The Honorable V. Earl Dickinson; and The Honorable Thelma S. Drake; The Honorable Allen W. Dudley; The Honorable H. Morgan Griffith; The Honorable Raymond R. Guest, Jr.; The Honorable Phillip A. Hamilton; The Honorable Frank D. Hargrove. Sr.; The Honorable Robert E. Harris; The Honorable William J. Howell; The Honorable Robert D. Hull; The Honorable Joseph P. Johnson, Jr.; The Honorable Jay Katzen; The Honorable Robert E. Nelms; The Honorable James (Jay) K. O'Brien, Jr.; The Honorable Harry J. Parrish; The Honorable Harry (Bob) R. Purkey; The Honorable John (Jack) A. Rollison, III; The Honorable Frank M. Ruff; The Honorable James (Jim) M. Shuler, The Honorable A. Victor Thomas; The Honorable Leo C. Wardrup, Jr.; and The Honorable Peter T. Way. Vote History - Passed House on 2/2/96: 98 Yes and 1 No, • Passed Senate on 2/26/96: 39 Yes and 0 No·• Signed by the Governor 4/1/96·• Chapter 489 - effective 1/1/97 Patrons of Senate Bill 554: Chief Patron: The Honorable Frederick M. Quayle; Co-Patrons: The Honorable Warren E. Barry; The Honorable Jackson E. Reasor, Jr.; The Honorable Kenneth W. Stolle; The Honorable Walter A. Stosch; The Honorable Malfourd W. Trumbo; The Honorable Charles L. Waddell; and The Honorable Martin E. Williams - Vote History - Passed Senate on 2/5196: 39 Yes and 0 No • Passed House on 2/23/96: 93 Yes and 4 No • Signed by the Governor 4/1/96" Chapter 474 - effective 1/1/97 |
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