Ill. Toughens Penalties Against Uninsured Motorists

July 22, 2003

By Kevin B. O'Reilly

Illinois drivers cited three times by police for driving without proof of the mandated auto liability policy will now have their drivers' licenses revoked, while uninsured motorists involved in an accident that injures the other party will have their vehicles seized by authorities.

The two separate measures went into effect in July 2003, according to the Chicago Tribune.

The latter measure, signed into law by Democratic Gov. Rod Blagojevich earlier this month, also allows police to seize the vehicles of those who drive without a license.

Illinois passed its mandatory auto liability insurance law in 1990, but the Insurance Research Council estimated in 2001 that 13 percent of the state's drivers are uninsured. The group also said that Illinois was only one of six states whose number of uninsured motorists had increased.

The new law sets a minimum $500 first offense fee and suspension of vehicle registration until proof of insurance along with $100 is provided to the state.

A common complaint previously had been that since offenders were often charged with other moving violations along with not having the mandated insurance, judges asked for leniency set aside the insurance fine and simply required proof of insurance before the court date and the reinstatement fee.

The second offense will mean the vehicle registration is suspended for four months. Those driving with a suspended vehicle registration would face a $1,000 fine.

At least one agent said the new measures are not enough.

"If you're talking about three times [before the license is revoked], then it could take three years or even five years before you really catch up with somebody," Rebecca Korach Woan, principal at Active Insurance Agency in Chicago, told Insurance Journal.

Korach Woan also spoke at two hearings in June and July on the matter of uninsured motorists and released a white paper suggesting various reforms. In the white paper, she advocated revoking an uninsured motorist's driver's license as well as vehicle registration on the first offense.

"A suspended vehicle registration is inadequate to deter uninsured motorists from driving," the white paper says. "Drivers will in some cases continue to drive the vehicle, or they will simply drive another car, sell their vehicle, or re-register the vehicle with a family member. A valid driver's license is far more important than a valid vehicle registration because the driver's license is used as a primary form of identification and is now verified as part of job application and credit checks."

Korach Woan said Illinois should try a "no pay, no play" policy, which she said California and Louisiana have already put in place.

Such a policy would bar uninsured motorists from suing for pain and suffering damages.

"That's a big deal if you lose your right to pain and suffering," she said. "Impounding the vehicle is just not that punitive. If it's an older vehicle they'll just dump it and buy a new one."

Ill. Agents Hail Approval of Credit Scoring Bill
May 9, 2003


The Professional Independent Insurance Agents of Illinois said in a statement it approves of the state Senate's yes vote on HB 1640 Osmond (Jacobs) Insurers Use of Credit Scoring. The bill, which passed the Senate May 6 will now be sent to the governor for his consideration. The Senate approved the measure on a vote of 57-0.

HB 1640 represents a culmination of a process begun by the late Tim Osmond, a state representative and independent agent from Antioch, Ill.. Osmond sought to put together a piece of model legislation through the National Conference of Insurance Legislators (NCOIL) which could be adopted by state legislators throughout the country, restricting how insurers use credit in personal lines rating and underwriting.

However, due to Osmond's untimely death last December, the legislation's status was in doubt. His wife JoAnn, appointed to fill his seat, picked up the legislation and garnered over 70 cosponsors and won unanimous approval in the House. Senate Committee Chair Denny Jacobs then sponsored the bill in the Senate.

HB 1640 establishes several limitations on insurers use of credit in underwriting and rating personal lines insurance. Among the more significant provisions, the bill prohibits insurers from basing rates or denying, canceling or non-renewing coverage solely on the basis of a credit-based insurance score. It also prohibits insurers from treating applicants with no credit history negatively.

Insurers must re-underwrite and re-rate at renewal if requested by agent or insured.
 

AIA Lauds Ill. Insurance Dept. Director

NU Online News Service, March 3, 12:10 p.m. EST—J. Anthony Clark, a Chicago-based attorney who specializes in insurance issues, has been named the new director for the Illinois Department of Insurance by Gov. Rod Blagojevich.

The appointment has also been applauded by Washington, D.C.-based American Insurance Association, a trade group which represents more than 424 major insurance companies.

When confirmed by the state senate, Mr. Clark will be in charge of the 400-employee agency responsible for regulating the insurance industry in Illinois.

Prior to establishing his own private practice, Mr. Clark served as counsel for Montgomery Ward Life Insurance for 10 years.

"Part of my effort to reform our state government is to bring in accomplished professionals, like Mr. Clark, from the private sector who have expertise and experience to make our system work better," said Gov. Blagojevich in a statement. "Mr. Clark's background in insurance law and his extensive civic involvement will be a tremendous asset to state government in general and the Department of Insurance in particular."

Paul Blume Jr., vice president of AIA's Midwest region, also welcomed Gov. Blagojevich's decision to tap Mr. Clark.

"Illinois' regulatory environment, which has fostered the nation's most competitive insurance marketplace, is routinely held up around the country as a model for other states," said Mr. Blume. "AIA and its member companies congratulate Mr. Clark on his new position, and we look forward to working with him to ensure that consumers and insurers alike continue to reap the benefits of robust competition."

Mr. Clark would succeed Arnold Dutcher, who has been the department's acting director since Jan. 24 when Nathaniel Shapo resigned from the post to go into a private law practice, said the insurance department's spokesperson.