Arkansas cut its percentage of uninsured motorists in half over the last three years, thanks to new software that monitors coverage in real time
By HUNTER FIELD | Arkansas Advocate
Instead of checking a driver’s insurance only at registration, during a traffic stop or after an accident, state DMV officials deployed an instant verification system in 2020.
When insurance coverage lapses, owners receive an automatic letter and must pay a $100 reinstatement fee.
After three years, Arkansas’ uninsured motorist rate has dropped from 16% in early 2020 to 8.7% currently, according to the Department of Finance and Administration.
“We anticipated the new system would help reduce the uninsured rate when it was implemented. However, it has exceeded expectations,” said Scott Hardin, a DFA spokesman. “Simply by informing Arkansans of the penalties and potential for a canceled vehicle registration related to an uninsured status, Arkansans have taken action to obtain coverage.”
Arkansas became the 17th state with an instant verification system, according to the American Property Casualty Insurance Association.
Since the system’s deployment, the state has collected more than $9.9 million in “insurance non-compliance fees,” according to the Finance Department.
In Arkansas, vehicle owners must carry liability coverage at a minimum. The policy must cover $25,000 per person for bodily injury, $50,000 per accident and $25,000 to cover property damage.
Arkansas’ enforcement mechanism is one of the strictest in the U.S., constantly checking insurance status in real time. Many other states only check once a month.
The Natural State has bucked recent national trends, which have seen uninsured rates increase slightly. The most recent national uninsured motorist rate was 12.6%, with Mississippi posting the highest rate (29.4%) and New Jersey the lowest (3.1%), according to the Insurance Research Council.
In Arkansas, vehicle owners receive a letter and reference number and are directed to a website when the system detects a lapse in coverage.
There, they can navigate the site and potentially avoid the fine if it’s determined the penalty was issued in error or insurance coverage wasn’t necessary, like cars that were inoperable or in storage.
The Department of Finance and Administration wasn’t able to provide the number of times fines had been rescinded since the new system was implemented.
Policymakers also hoped the instant verification system would help drive down car insurance premiums. Arkansas, like the rest of the country, has seen steady increases in premiums across insurance sectors due to weather changes, inflation and natural disasters, according to the state Insurance Department.
Industry experts said that doesn’t mean that reducing the uninsured rate hasn’t had a beneficial effect on auto premiums.
Paul Tetrault, senior director, personal lines and counsel at the American Property Casualty Insurance Association, said Arkansas has seen greater benefits from its verification system than other states with similar systems.
Beneficial changes to rates can take time, he added.
“What [lowering the uninsured rate] means is you’re spreading out the risk better because more people are paying for their own insurance,” Tetrault said.
“Things can take a while to play out in the numbers.”
Categories: Region & State