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home / insurance / in the media

The Daily News of Los Angeles
Sep 14, 2003

by Evan Pondel, Staff Writer

LICENSE LAW'S SAFETY DEBATE; WILL IMMIGRANTS HAVE INSURANCE?

The new law allowing illegal immigrants to obtain California driver's licenses has sparked a debate among auto insurers over whether it will have a big impact on how many uninsured drivers are on the road.

Allstate Insurance, which fully backed the measure after Lt. Gov. Cruz Bustamante met with a top company executive in Chicago, is optimistic about writing new policies and the impact on traffic safety.

But Woodland Hills-based 21st Century Insurance, which initially stood behind the bill signed into law last week by Gov. Gray Davis, now regards it as "too much of a political hot potato, and the company does not feel comfortable commenting further," said spokesman Larry Krutchik.

That sensitivity functions on two levels: Companies do not want to take a stance on illegal immigration, and many are uncertain whether the legislation will actually be a boon for business, according to the Insurance Information Network of California.

"It's just too early to tell," said Pete Moraga, spokesman for the nonprofit organization. "These drivers are now going to be licensed, and safety could certainly improve, but we just don't know how many people are going to purchase insurance."

George Joseph, chief executive officer of Mercury Insurance, would not take a position on the license bill. He said the company obviously welcomes new policyholders, but he is concerned that illegal immigrants may not be dependable.

"So they may purchase insurance, but will they keep it? These immigrants have never had insurance before, or a driver's license," he said.

Allstate spokeswoman Lisa Wannamaker said the new law would improve safety by creating a greater sense of awareness among drivers.

"Also, if more people are licensed, they are registering their vehicles, and that will hopefully lead to better reporting overall," she said.

Before Senate Bill 60, passed, Bustamante visited Robert Pike, executive vice president of Allstate in Chicago, and discussed it with him. Pike then said he was asking the company's legislative counsel to "take a leadership position in mobilizing the industry in support" of the bill.

"I believe that SB 60 is an excellent example of how issues, such as licensing, can be supported by divergent groups for the common good," Pike said in a July 2 letter to Bustamante. "The prospects of even broader insurance industry support should be forthcoming."

The Department of Motor Vehicles remains neutral on the bill, even though the state agency has spent the last 10 years cracking down on undocumented residents. In 2000, the department began verifying Social Security numbers electronically to stop illegal immigrants from submitting fictitious information, according to Bill Branch, spokesman for the department.

"We are well aware that advocates of the bill have taken the position that the more drivers who are licensed, tested and insured, the safer the highways. And the DMV agrees with that," Branch said.

The DMV did not estimate how many illegal immigrants are expected to apply for a driver's license after the bill goes into effect Jan. 1. But Branch said it is generally accepted by state officials that 2 million people should be expected to apply. There were roughly 22.6 million licensed drivers on the road as of January.

The California Department of Finance estimates the license bill will cost the state $5.6 million in the first six months. "Although we anticipate it will be a slight moneymaker in the future, bringing in about $3.5 million a year," said Anita Gore, a spokeswoman.

A majority of that money will be spent on administration adjustments. However, the DMV would not specify what those adjustments entailed.

"There are intensive high-level meetings under way to determine the best way to accommodate the additional customers," Branch said.

The California Highway Patrol issued 191,244 citations for not having valid insurance in 2002, while 82,597 tickets were written for not having a valid driver's license the same year. Tom Marshall, a spokesman for the CHP, said the bill is supposed to improve those figures.

"That was one of the selling points, to encourage more people to have insurance. We'll find out if that happens next year," he said.

The state does not require motorists to have insurance in order to obtain a license, although insurance is required when registering a vehicle.

Harvey Rosenfield, president of the Foundation For Taxpayer & Consumer Rights, said even though illegal immigrants will have access to driver's licenses, they won't necessarily be able to afford auto insurance. He blamed another newly passed law that allows insurers to offer discounts to longtime policyholders.

Rosenfield said the law effectively allows surcharges for motorists for lapses in coverage that would penalize illegal immigrants who get licenses.

Davis signed the measure in August, about a year after vetoing a similar bill just as he did with the driver's license legislation.

"Everything Davis does right now is to please everyone. And that just doesn't work," said Douglas Heller, consumer advocate with Rosenfield's Santa Monica-based organization.

He noted that on Wednesday, Mercury donated $25,000 to the Californians Against the Costly Recall of the Governor coalition.

"This is pure political bribery," Heller said. "Davis may look good byallowing illegal immigrants to get licenses, but he's slapping us with his other hand by allowing insurance companies to add as much as $500 to premiums for those who haven't had insurance before."
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Contact Evan Pondel at (818) 713-3662 or evan.pondel(at)dailynews.com


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