Several insurance experts claim that insurance mandates and sweeping changes to insurance policies are often rendered useless and punitive without the full support of the public and policyholders. Analysts are now shedding light on the full impact and effect mandatory insurance laws and revisions have on the presence of uninsured drivers across the U.S.
According to sources from the insurance industry, too much emphasis has been given on government regulations designed and implemented to control industry practices in favor of car owners and motorists. As a result of the misplaced focus, they point out, states with tougher regulations and comprehensive provisions suffer from high uninsured driver rates compared to states that offer more options to their residents.
Some specialists familiar with the auto insurance industry argue that requiring car owners to have insurance is not an assurance that motorists would comply. Even laws created to bring down the cost of auto insurance have failed to encourage drivers to purchase coverage. For instance, experts argue, the state of California is struggling to curb the rising number of uninsured drivers. California, they explain, is one of the few states that have comprehensive laws and provisions whose main objective is to make auto insurance easier for car owners to purchase.
One example of these provisions and legislative solutions was Proposition 103, which was passed by Californians in 1988. The provision required insurance providers to seek the approval of an elected insurance commissioner before imposing an increase in insurance rates. The same provision also created a new mechanism by which policyholders could air their grievances when faced with premium hikes. Aside from these, the law also prohibited insurers from basing insurance premiums on ZIP codes, making the state one of the premier states when it comes to the protection of motorists’ rights.
Two decades after Proposition 103, the Consumer Federation of America reported that the provision resulted in some $62 billion of savings for Californians. Analysts are also seeing tougher competition among providers, leading to lower rates and premiums. Despite this, the number of uninsured Californians on the road has increased dramatically in recent years. Estimates suggest that as much as 18 percent of all motorists in the state are without insurance. Insurance officials have even admitted that the numbers could breach the 20-percent mark in the near future.
Analysts say that the best way to ensure lower rates would be to provide more transportation options for Americans. In comparison with California’s high uninsured drivers rate, only one percent of drivers in Massachusetts have no insurance. New York state has five percent, while New Jersey has eight percent.