Bill to Toughen Auto Insurance Law Is Killed

Legislation to strengthen enforcement of California’s mandatory auto insurance law was killed for the year Monday, a development that the Department of Motor Vehicles said threatens the basic law adopted last year.

One DMV official predicted that the concept of realistically enforcing mandatory insurance may fade away.

The bill by Assemblyman Ted Lempert (D-San Carlos) would have required insurance companies to file electronic reports to the DMV on who carries auto insurance. The information would be used to determine whether individual annual auto registrations would be renewed.

The proposal had the support of the DMV, Gov. Pete Wilson and Insurance Commissioner Chuck Quackenbush, all of whom contended that the current law’s provision that each driver submit his or her own proof of insurance has led to a flood of unverifiable information.

The bill, AB 651, was opposed by a rare combination: leading insurance lobbyists and the state’s two most politically powerful consumers groups, Consumers Union and the Proposition 103 Enforcement Project.

They contended that the DMV’s poor record of handling computerized information meant that millions of innocent motorists might lose their registrations through mistakes.

On Monday, state Sen. Patrick Johnston (D-Stockton), chairman of the Senate Appropriations Committee, stopped the bill.

Johnston said he will refuse to call a hearing on the Lempert bill and will put it over until next year.

He explained that, with the Legislature in its final week of the 1997 session, “we don’t have the time to figure out whether the DMV will function accurately enough to be fair to all motorists.”

Lempert accepted Johnston’s decision. Neither Wilson nor Quackenbush had immediate comment.

But Bill Cather, the DMV’s assistant director for legislation, expressed disappointment.

Noting that the original mandatory insurance law, by former Assemblywoman Jackie Speier (D-Burlingame), will lapse in 2000, Cather said:

“This revision is going to be much more difficult to pass next year, because the industry will argue that there will only be a year before the Speier law ends, and then the whole thing can be reevaluated.”

Under those circumstances, he said, the Legislature may be very slow to act.

Cather said the DMV has found itself in an impossible situation in dealing with submissions of proof of insurance.

He said the agency had found that many people were canceling their insurance immediately after submitting proof and that the DMV had no means of finding out who really had insurance at any given moment.

Other motorists simply were forgoing re-registering their cars. The DMV reported that registrations slipped 3.1% after the Speier law went into effect, costing the state millions of dollars.

With immediate electronic updates from the insurance companies, the DMV could have started enforcing the law, he said.

Many states have found that enforcing mandatory insurance laws is difficult, and in California the problem has been monumental.

Although the state has long had laws requiring all motorists to carry insurance, the statutes had few teeth in them.

Speier wrote her measure--requiring police to check for proof of insurance when they stop traffic violators; the DMV to require proof before re-registration, and heavy first-offense fines--after her husband was killed in a collision with an uninsured motorist.

But many of the state’s courts have refused to implement all of the fines called for, and the DMV said it had no authority to check on the proof it was receiving.

The DMV estimated in January that, when the law went into effect, between 28% and 33% of the state’s drivers, or as many as 8.6 million, were uninsured.

Now, after eight months of the Speier law, the DMV says it cannot verify how many motorists have bought insurance and kept it. The Department of Insurance has indirect statistics, however, indicating that the uninsured rate may have dropped to as low as 15%.

Lobbyists with the Assn. of California Insurance Companies and the Personal Insurance Federation said Monday that they are willing to work with the DMV and legislators to fashion tougher enforcement next year.

But they also said that mandatory insurance may not really be feasible unless the state goes to no-fault insurance.