Oakley Insurance Center

Strategies for Reducing the Rate of Uninsured Motorists Put Forth by Property Casualty Insurers Association of America

CHICAGO ? January 21, 2009

When dealing with the issue of a sharp rise in the uninsured motorist rate as predicted by the Insurance Research Council (IRC), the approach of the Property Casualty Insurers Association of America (PCI) is to encourage policymakers to look into comprehensive solutions that may help them to bring down the cost of their insurance.

A report recently released by the Insurance Research Council (IRC), Uninsured Motorists, 2008 Edition, includes within it an estimate that the numbers of uninsured motorists decreased nationwide, from 14.9 percent as of 2003 to 13.8 percent reported for 2007. With the advent of the recent economic downturn however, this number is expected to rise up by 2010 to 16.1 percent. A strong correlation however, was found by the IRC to exist between the unemployment rate and the percent of uninsured motorists. The report suggests that for every increase in the unemployment rate of one percentage point there is an associated increase in the uninsured motorist rate that comes to more than three-quarters of a percentage point.

The Property Casualty Insurers Association of America's director of personal lines for PCI Robert Passmore says that he knows of no simple answer for reducing the number of uninsured motorists. He adds however, that as economic times constrict everyone?s budget, it is increasingly important for property and casualty policymakers to keep away from costly uninsured motorist proposals that may only yield marginal results. He says that along with the stringent enforcement of financial responsibility insurance laws, the association believes that the most successful strategy policymakers should assume when addressing this problem take into consideration changes that affect the factors that are influencing the rate of insurance costs.

PCI has found, over the years that promoting competition in the marketplace is by far the best way to keep insurance costs from getting too high. By nurturing competition through introducing changes into the regulatory system through for example, flex rating laws, policymakers help to make insurance coverage increasingly available as well as affordable for the consumer.

Passmore adds that insurance legislation policymakers can also bring about a positive impact with respect to costs through the rejection of proposals brought forth by special interest groups that only function to drive up the cost of auto insurance. He says that in recent years, in many states a legislative agenda has been put forth by auto body repair shops with the ultimate design of increasing repair costs. With the advent of these increased insurance rates it because necessary for the consumer to pay more for his/her insurance. It is also the possible role of legislators who want to help by resisting these proposals as well as efforts to increase minimum limits and to mandate additional coverages examples being medical payments. Often times depending on the individual circumstances of the consumer, there may not be a need for such coverage.