Getting a true handle on how many uninsured drivers are on the road is difficult. Nationally, about one in seven goes without car insurance, according to data compiled over the past decade by the Insurance Research Council.
If you're wondering why you should care whether other drivers are buying auto insurance, consider this: When an uninsured driver causes an accident and can't pay for the damage, the injured parties shoulder the burden.
What to do?
Central to lifting the burden from the rest of us is each state's system for rooting out the scofflaws.Some states use random sampling, meaning they send a list of vehicles to insurance companies and ask whether they are insured, says Loren McGlade, the chairman of the Insurance Industry Committee on Motor Vehicle Administration, a group of carriers and trade associations. Other states require insurance companies to provide their entire "book of business" -- a giant list of current customers.
Still other states use databases that are updated weekly or monthly with insurance companies' customer lists.
"We had 26 states with some electronics methodology and 26 different ways of doing it," McGlade says. For insurance companies, keeping up with all these systems is a nightmare, and you can bet that policyholders pay the price through higher premiums.
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So when Charles Smith gets a letter from the state asking him why he doesn't have car insurance, he'll get angry and call his insurance company to find out why it messed up. Insurance companies end up fielding calls from angry customers, all because a state's database can't match vehicle registrations to insurance records.
On an initial data load, at least 20% of the data will mismatch, McGlade says.
Enter the Internet
About half of states use no electronic reporting system to track who's driving uninsured, McGlade says.Instead, they rely on insurance identification cards, which can be gamed easily, according to Alex Hageli, the director of personal lines for the Property Casualty Insurers Association of America, a trade group. Many scofflaws buy car insurance and then cancel it or let it lapse.
Among states that rely on electronics, most use databases. But such systems vary widely, and databases have proved problematic and expensive, critics say.
McGlade says these systems don't reduce the number of uninsured drivers, because they tell a state who has insurance, not who doesn't.
"The insurance industry has no idea who's uninsured," he says.
Uninsured drivers are a moving target, adding to the difficulty of identifying them. The number of uninsured fluctuates daily depending on when premium payments are due, vehicles that get traded, the issuance of new policies and the lapsing of old ones.
McGlade and Hageli both see potential in online verification, often referred to as "Web services." This would allow a police officer to find out whether a driver he has just pulled over is currently insured.
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In a nutshell, Web services provide dynamic "event-based" queries rather than static libraries of names. McGlade draws an analogy to going to a restaurant and presenting a credit card to pay for your meal.
"There's no need for the restaurant to keep everyone's bank credit card information," McGlade says. "They look it up to see if it's valid."
A handful of states, including Montana, Oklahoma and Wyoming, have adopted legislation based on the credit card model, and other states have pilots under way. But no one has used Web services enough to measure any real difference in reducing the number of uninsured drivers.
Florida officials experimented successfully with Web services on a limited, in-house basis (the program wasn't available to law enforcement in the field) for about six months, but that was three years ago. They put the program on hold to work out accuracy issues, according to Laura Rogers, a program manager with the Florida Department of Highway Safety and Motor Vehicles.
Continued: The problem is lack of enforcement
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For those that pay for uninsured motorist coverage: I've been informed by Insurance Companies, IF you or the authorities don't or can't catch an uninsured, your insurance does not or will not pay for damages to you or your vehicle OR to your passenger(s).