Insurance chief
favors mandatory
car insurance law

Repeal could double the
number of uninsured
drivers, an expert says

By Mike Yuen
Star-Bulletin

Don't expect the state to repeal its requirement that every isle driver carry automobile insurance.

That's the conclusion of state Insurance Commissioner Rey Graulty.

It came yesterday after the three-member panel Graulty chairs heard state actuary Marty Simons testify that the repeal of mandatory auto insurance would simply shift costs to the state's prepaid health-care program and welfare system.

Given the economic troubles the state is experiencing, Graulty said, "It is difficult for this idea to see the light of day."

Simons told the auto insurance task force that repeal of mandatory coverage could likely double the percentage of uninsured drivers in the state from 15 percent to 30 percent.

It was a recent study by the Hawaii Insurers' Council that pegged the isles' uninsured drivers at 15 percent.

"The prepaid health-care system would automatically cover -- with a co-payment provision -- many of the claims that were previously covered by (personal injury protection)," Simons said.

Simons added that repeal of mandatory insurance could increase uninsured motorist coverage rates by as much as 50 percent for those drivers who decide to have coverage.

Graulty said that even if uninsured motorists were barred from having the state prepaid health-care system pick up the cost stemming from injuries sustained in auto accidents, that cost would most likely end up being paid by the welfare system since few uninsured drivers would be able to pay for the medical expenses on their own.

And Simons said there's a grave implication for tourism, Hawaii's leading industry, if mandatory auto insurance is lifted: Hawaii could become like Mexico.

Americans visiting Mexico, where many drivers are uninsured, find that their auto insurance policies have a clause that excludes coverage there, Simons said.

So if mandatory auto insurance is lifted in Hawaii, tourists to the isles, like visitors to Mexico, will have to buy separate auto insurance if they want to rent a car in the state. "The impact on tourism in Hawaii could be extremely adverse," Simons said.

Graulty's panel is studying ways to further reduce the cost of auto insurance. It is scheduled to issue a report to state lawmakers before next year's Legislature convenes.