PIFC, NAII Counter DMV’s Proposed Rate Hike for Records Access

June 20, 2002

A public hearing June 18 at California’s DMV headquarters to discuss proposed Department of Motor Vehicles (DMV) regulations to raise fees to access public drivers license information heard strong opposition from five insurance trade association representatives. The representatives testified that the proposed regulations would force large and small businesses statewide to pay an unconstitutional, hidden tax.

“Automobile insurance companies are required by statute (adopted by initiative in 1988) to base their rates primarily on a driver’s safety record (Insurance Code Section 1861.02(a)(1)),” explained Jeff Fuller, president of the Association of California Insurance Companies. “It is imperative that insurers have access to the DMV database, which contains a driver’s motor vehicle record (MVR). Doubling of the fee charged for each individual report from $2.00 to $4.00 will result in millions of dollars (perhaps as much as $50 million) of increased costs for insurers and their policyholders, who will ultimately bear the cost.”

Tim Naccarato, attorney in the Livingston and Mattesich Law Corporation, stated, “The DMV fails to demonstrate that any need exists to increase the fee to fund the driver record information system. The regulation is inconsistent with the statute authorizing the fee and excessive fees charged for services, are, in effect, taxes that can be imposed only by a two-thirds vote of both houses of the Legislature and not by an agency like DMV,” he said.

“In 1997, a California State Auditor’s report established that every electronic record request costs the DMV about 50 cents to process. Recent information disclosed by the DMV through a public records act request reveals that its cost is actually 13 cents per request. The facts show that the DMV is already overcharging for MVR’s, so raising the amount charged to commercial requesters to $4.00 makes it a hidden tax,” Naccarato added.

“The trade associations have also filed a petition in Superior Court to stop the DMV from implementing the regulations,” noted Michael Gunning, senior legislative advocate for the Personal Insurance Federation of California (PIFC). A hearing on the petition will be conducted on June 21 in Department 11, California Superior Court, in Sacramento. The Superior Court will hear the merits of why the increase should not be allowed,” he said.

Sam Sorich, vice president of the National Association of Independent Insurers (NAII), added that, “Every day insurers access thousands of DMV reports in order to set proper auto insurance rates as mandated under Proposition 103. If the new fee increase goes into effect permanently, it would have an immediate impact of millions of additional dollars in monthly costs to insurers. This is unjust and an abuse of power by a state agency. We urge the court to issue a permanent injunction against the DMV from raising the fees.”

Topics Carriers California Legislation Pricing Trends

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