Mississippi Lawmakers Consider Online Auto Insurance Checks Again

By JEFF AMY | March 1, 2012

A proposal to set up online computer checks to make sure drivers have auto insurance is again moving forward in the Mississippi House. A similar measure was vetoed last year by then-Gov. Haley Barbour.

According to 2009 numbers from the Insurance Research Council, Mississippi has the highest share of uninsured motorists in the nation, at 28 percent. That’s twice the national level of uninsured motorists found by the council, which is an arm of the property insurance industry.

The measure, sponsored by House Insurance Committee Chairman Gary Chism, R-Columbus, calls for the Department of Public Safety to contract with a company to provide the service.

The idea behind an online verification service is to keep someone from buying insurance, getting an insurance card, and then cutting off the policy.

“People buy the insurance, let it lapse after a month, and they still have the card for five more months,” Chism said.

The bill would impose a fine of $300 for someone caught driving without insurance, rising to $400 on the second offense and $500 on the third offense. Currently, someone without insurance is fined $500, but the fine can be lowered to $100 if a person buys insurance before a court date.

Chism said the fines have to be high, or otherwise people will pay fines instead of buying insurance.

The bill would also require county tax collectors to check someone’s insurance status before allowing them to renew their license plates.

Charles Pecchio, chairman of MV VeriSol, which provides the service, told lawmakers that more than 30 states have online verification. He said a similar system in South Carolina cut its share of uninsured motorists by as much as 80 percent. But he said he can’t predict that premiums charged to cover insured motorists against those who lack coverage will necessarily go down.

Pecchio demonstrated the system that his company runs for Wyoming, instantly checking the status of a particular license plate.

Projections say Mississippi would have to pay about $1.33 million a year to a vendor, equal to about 50 cents a year for each of Mississippi’s 2.66 million registered vehicles.

The same projections, produced by a legislative committee, estimate the measure would raise $7.54 million in fines. The system would be more than paid for by the fines, and the bill directs any surplus to paying for a previously-passed reduction in car tag fees “so everybody gets the benefit of it,” Chism said.

Chism said the estimate should answer Barbour’s stated reason for the veto, which is that the system would cost money the state didn’t have. However, Clay Johnson, information technology director for the Department of Public Safety, said Tuesday that the department is still worried about being able to afford startup costs. Public Safety would take bids from vendors and oversee the system.

Chism has a long history of sponsoring bills to enforce Mississippi’s 60-year old law requiring people to buy auto insurance and to raise the minimum amount of coverage they’re required to carry. The lawmaker is the co-owner of Columbus Insurance Services, an agency that sells auto and other kinds of insurance. He says the goal of the bill is to get more people to buy auto insurance, which could increase his own income.

He defended his involvement with the subject, though House rules say “no member shall vote on any question in the result of which he is pecuniarily interested.”

“People can say that, but that’s just like lawyers,” Chism said, saying that sometimes legislators write bills that increase business for their law practices.

State ethics law also says that officeholders can’t use their office to gain financial benefits for themselves, their families or their businesses. Officials can’t vote to send money directly to their business, but it may be legal for them to take regulatory actions that benefit their industry in general.

Tom Hood, executive director of the Ethics Commission, said Chism’s actions are in a “gray area.” He said that it’s common in many states to have lawmakers who work in an industry appointed to the committee that oversees that industry, even though their actions can influence their business.

Chism said he met Pecchio at a convention hosted by the American Legislative Exchange Council, and that the bill is based on a model circulated by that group. The council has been slammed by critics for circulating corporate-sponsored bills to lawmakers who get trips to council meetings paid for by corporations.

Chism said the bill was written to allow multiple vendors to bid, although he referred to Pecchio when asked about details of the legislation. MV VeriSol provides the service in South Carolina, Wyoming, Montana and the District of Columbia. Pecchio said at least two other companies were providing the service in other states.

The bill is House Bill 480.

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