Calif. Commissioner to Address Danger Uninsured Vehicles from Mexico Pose to Calif. Motorists

April 8, 2005

Seeking better coordination of insurance programs so that people on California and Mexican highways are protected, Insurance Commissioner John Garamendi announced Friday he will lead a delegation to Mexico on Monday to participate in trilateral negotiations with Mexican and Canadian authorities.

The Commissioner is the co-chair elect of the Tri-National NAFTA Working Group of the National Association of Insurance Commissioners. He was joined at a news conference Friday by Eric Serna, New Mexico Superintendent of Insurance and co-chair elect of the working group, and Armando Freire, Treasurer of the California Truckers Association.

“Conflicting and uncoordinated insurance requirements in our three countries have a damaging impact on the flow of trade, and create damaging situations for California, Mexican and Canadian motorists,” Commissioner Garamendi said. “Policies sold in one country can be worthless once you cross the border, so many truckers simply drive without insurance. This confused regulatory state is a ripe environment for fraud to thrive.”

The Commissioner noted that on Thursday the Department held a hearing concerning a Cease and Desist order it issued to AEA Insurance Group (licensed in the British Virgin Islands). A Department investigation found that the company, which is not licensed to operate in California, sold travel insurance policies to Mexican nationals and Californians doing international business. This put both Mexican and California motorists at risk. The ongoing investigation has resulted in the filing of 30 felony counts against three corporations and three individuals in San Diego.

During his Mexico trip, which will build upon principles announced during the recent meeting between President Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin, the Commissioner and Superintendent Serna will also discuss the problem of cargo insurance to protect against all too frequent hijackings. Presently there is no insurance product that covers cargo as it crosses the Mexico/U.S. border. “We need to find a way to allow these truckers to get cargo coverage from the beginning of the trip to the end,” Commissioner Garamendi said.

The Commissioner and the delegation will also look at solutions to the problem of policy sharing. Trucking companies have been known to buy 10 insurance policies to share with a fleet of 20 or more, merely swapping photocopied certificates to pass inspection or register vehicles.

In addition, many Mexican drivers who cross over into California have no workers’ compensation coverage, and often no medical coverage. If they are injured, the state’s already strained safety net health care programs could end up footing the bill. The delegation will offer solutions to this problem.

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