NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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(Parenthesis ( ) Indicate Expenditure Decreases)

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

Public Regulation Commission (PRC)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

The bill proposes the creation of a new "drivers insurance policy" to cover an individual for liability for bodily injury, wrongful death or property damage caused by the operation or maintenance of a motor vehicle by the insured. The drivers insurance policy would be renewable on an annual basis.

The secretary of TRD would contract on a competitive basis, for a maximum of four years, with an insurance carrier to issues the drivers insurance policy while providing reliable minimum liability policies for the most drivers that would otherwise remain uninsured.

The drivers insurance policy could be suspended or revoked for exceeding a 75 miles per hour speed limit. Additionally, speeding over 75 mph is the only moving violation the insurance carrier may site to cancel or refuse to renew a policy, or use in the calculation for increasing insurance rates pursuant to the provisions of the bill.

Significant Issues

The bill proposes creation of a mandatory driver liability insurance system as opposed to a mandatory motor vehicle liability insurance system.

FISCAL IMPLICATIONS

The bill proposes that TRD would sell drivers insurance policies where drivers' licenses are issued at a price to be determined by the department and based on the minimum liability per class of driver.

The TRD would be permitted to charge a $10.00 processing fee per sale of each drivers insurance policy and distribute these fees into the motor vehicle suspense fund to defray operating costs.

ADMINISTRATIVE IMPLICATIONS

The TRD indicates it would require a large amount of training funds, FTE at every MVD office, and a new computer tracking system to implement the bill. The TRD employees processing the insurance policies would probably require insurance agent licenses.

The TRD indicates it "will be unable to administer this personal insurance scheme any better than [it has] been able to administer the current vehicle-based insurance system."

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

SB568 relates to HB348 which proposes sale of minimum liability policies by TRD.

TECHNICAL ISSUES

The TRD indicates the bill should be amended to exclude drivers of commercial motor vehicles because under the federal Intermodal Surface Transportation and Efficiency Act (ISTEA), states are required to implement a base-state insurance registration scheme for commercial motor vehicles.

RAE/gm