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Mississippi has for many years had one of the highest rates of uninsured motorists in the nation. A recent study by the Insurance Research Council indicates 23.7 percent of drivers in Mississippi are uninsured, surpassed only by Florida at 26.7 percent. After several years of effort (and a Gubernatorial veto), legislation aimed at reducing the rate of uninsured motorists in Mississippi was passed and signed into law in 2012. [1] The Public Safety Verification and Enforcement Act mandated that an online verification system be installed and operational not later than July 1, 2012. [2] Over five years later, the verification system launched in late 2017.

For the past several decades states have attempted to identify uninsured motorists through the use of databases. Evidence suggests that some of these state reporting programs have not met their main objective of reducing the rate of uninsured motorists and are costly, difficult to implement, hard to maintain, and a burden for insured drivers. [3]

As an alternative to reporting databases, the Insurance Industry Committee on Motor Vehicle Administration (IICMVA) developed a model for web services or online insurance verification that connects state agencies directly with insurers thereby eliminating the need for states to collect and store coverage information. The development of web services and Internet-based transaction processing provides insurance companies with the capability to provide real time confirmation of insurance coverage with increased accuracy and at less cost than traditional reporting systems. Mississippi’s law requires that its verification system comply with the specifications and standards of the IICMVA model.

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The following is an edited summary of my discussions with Mississippi Commissioner of Insurance Mike Chaney and Alex Hageli, Director of Personal Lines for Property Casualty Insurers Association of America and current Chairman of the Insurance Industry Committee on Motor Vehicle Administration, regarding efforts to implement Mississippi’s online verification system, including the system’s possible uses and desired benefits.

Robert House: The purpose of online verification is simple – to verify compliance with compulsory automobile insurance laws. Full compliance does not seem realistic, but certainly there is room for improvement. What are your goals for this new program?

Commissioner Chaney: This is a legislative step in the right direction in helping bring auto and UM rates under control. There are so many factors involved and it will take a joint effort to bring rates under control. According to our statistics as many as 34 percent of all Mississippi drivers are uninsured and they pass the cost to those that are insured.

Many are uninsured because they can’t afford a policy because rates are too high. To help bring rates down to affordable levels we need to address some of the factors driving the high rates such as the fact that 51 percent of the roads and 21 percent of the bridges in the state are in “poor condition” which contributes to an increase in accidents. We need stronger laws in regards to texting and driving and distracted driving and those laws need to be enforced. The rising cost of auto repairs in the state needs to be considered as well. Auto repair rates have risen 16 percent in the last three years.

Alex Hageli: [4] The national average rate of uninsured motorists is about 13 percent. There’s no reason why this new program can’t drive Mississippi’s uninsured rate down closer to the national average, if not below it. Alabama implemented a similar system a couple of years ago, and it resulted in a decrease in its UM rate. I expect the same to occur in Mississippi.

You are a subject matter expert on insurance verification systems. What has been your involvement in verification systems?

Hageli : I have served as PCI’s representative to the IICMVA since 2008, and currently serve as chair. The IICMVA is an industry advisory group that was formed in 1968. It acts as the liaison between the insurance industry and Motor Vehicle Departments regarding implementation and maintenance of compulsory insurance and financial responsibility laws. PCI hopes to standardize much of how states track uninsured motorists as well as those who have to file SR-22s. I’ve had the pleasure of serving on several state advisory boards tasked with studying and solving the uninsured motorist problem. I’ve also been involved with implementing verification systems in Alabama, Nevada, Tennessee and West Virginia to name a few.

How does Mississippi’s effort to crack down on uninsured motorists compare to other states?

Hageli : There is a long and colorful history of efforts by states to reduce uninsured motorists. Impounding of uninsured vehicles, plate pulling … you name it, states have tried it. The Mississippi program actually is cutting edge and I expect it will only be a matter of time until all states that have a program have something similar.

Did you think it would take this long for the system to be up and running?

Hageli : Establishment of a successful online verification system is complex and requires effort by multiple parties. The timeframe in the original legislation likely was too optimistic given how many agencies were involved. The vendor bidding process took longer than anticipated and there were some systems limitations that added to the delay, but in the end I think this system is going to work pretty well.

Who is responsible for the verification system?

Commissioner Chaney : When the Legislature passed the bill that created the insurance verification system they gave the oversight and responsibility for the program to the Department of Public Safety. My role and the role of the Department of Insurance is one of cooperation and assistance when necessary. And we have done that. Since adoption of the act, the Department has issued three bulletins on the verification system for the purpose of keeping carriers informed of developments; furthermore, members of my staff were very involved with the advisory group assisting with developing the system.

[Editor’s Note: The Mississippi Department of Public Safety is charged with administering and enforcing the Public Safety Verification and Enforcement Act and with making rules for the administration of the online verification system. At the time this article was submitted for publication, no rules or regulations had been promulgated. Representatives of the DPS declined to participate in these discussions.]

What has been the most difficult part of setting up the verification system?

Hageli : Coordinating between the agencies, without a doubt. We don’t appreciate how difficult it is for state agencies to come together and coordinate on a project. Each has their own considerations, from personnel to systems limitations. Once the vendor was selected, it was pretty smooth because insurers already work with this type of program in other states.

You were part of the advisory group that weighed in on implementation issues. Who were some of the other participants and how did this compare with start-up activities in other states?

Hageli : The group contained representatives from the Department of Insurance, Department of Public Safety and Department of Revenue and industry representatives ranging from companies, agents and trade groups. Initially we made progress, but then we ran into some of the limitations I mentioned. There was a reset to the process, and a new vendor came in and set things up in pretty short order. I’ve been impressed with their work and, based on my experience with other states’ systems, I think the system is going to work well. Overall, it was similar to start-up activities in other states.

Who is the vendor for the system?

Hageli : DPS awarded the contract to PASCO, a company out of Hudson, Ohio. It does business as Validati and administers systems in California and New Mexico. I don’t know the details on what happened, but DPS subsequently contracted with HDI Solutions, LLC. HDI is located in Auburn, Alabama, and it has administered the West Virginia program for the last several years. I understand that the contract with HDI runs through June 30, 2018.

How much does the system cost and who pays for it?

Hageli : That is an interesting question. Maintenance costs have been estimated to be approximately $1.33 million per year. [5] In fact, costs associated with creating and maintaining a system were cited several years ago by former Governor Haley Barbour in his veto of prior verification system legislation. Vendors generally propose that fees generated by the system will more than cover the costs of operations. I don’t know what the vendor is charging because I have not seen their contract. But the Mississippi Legislature did appropriate $237,000 to be paid to the vendor.

[Editor’s Note: The contract with the vendor should be available for review on, but a search of that website did not reveal the contract.]

How much revenue might be generated by the verification system?

Hageli : Given Mississippi’s high rate of uninsured motorists the fees could be substantial. It has been reported that at least one bidding contractor projected the system would lead to fines of more than $150 million per year. The initial notice of award indicated a three-year lifecycle revenue of $464.9 million. That seems high to me, but verification systems are indeed net revenue generators. But remember, the more effective the system is at reducing the rate of uninsured motorists, then potentially less funds would be generated by way of fines and penalties.

What are some of the verification system specifications and standards of the IICMVA?

Hageli : Without getting too deep into the weeds, probably the most important is that the system utilize web services, which simply means that the system has a live connection between the state and the insurance company to ensure the information is as current as possible. Other standards include processing the request within a matter of seconds.

There has been a lot of discussion within the insurance industry regarding “book of business” reports and these have been somewhat of a concern for insurers. Is this still an issue for insurers?

Hageli : Book of business reports are simply a periodic reporting of policies by insurers. The jurisdiction takes that information and matches it with registered motorists. When someone with the state seeks to determine if a driver has valid insurance, the system pulls information and sends it to the insurance company to ensure it’s still an active policy. The industry originally wanted to eliminate book of business reports with the move to web services. States balked at the alternative of collecting insurance information directly from motorists, and instead simply required companies to continue reporting. So, in the end, Mississippi ended up with a hybrid approach, if you will, that I think works pretty well.

From a regulator’s standpoint, how would you say carriers have performed in connection with implementation of the system?

Commissioner Chaney : All insurance companies licensed or authorized to write motor vehicle liability insurance in the state have been very cooperative in providing the necessary information to verify liability coverage for a motor vehicle insured and registered in the state. I have been very pleased with this cooperation and am confident that the spirit of cooperation will continue throughout the duration of the system.

How current is the data in the system?

Hageli : There is always going to be lag time with any system. When a policy is sold, the application has to be processed and uploaded to the insurer’s system. Usually that happens fairly quickly, but it does create the possibility that a new policy won’t be in the system. However, law enforcement officers generally can exercise discretion in writing tickets in these types of situations. If you show current paperwork, maybe you won’t get a ticket.

How does the system work?

Hageli : It starts with a traffic stop. The officer inputs the license plate number into the National Law Enforcement Telecommunications System (NLETS) to obtain information about the driver. Once the vehicle registration information is accessed, the VIN is matched against the state’s database of insurer books-of-business records. If there’s a match, the system submits four data elements, or tokens, to the insurer of record. The insurer receives that query and searches its own database to either confirm that the policy is still valid, or send an unconfirmed response. An unconfirmed response can mean a couple of things. That the policy is no longer valid because of cancellation, or that the insurer can’t validate all of the tokens. There may be a mismatch in VIN or policy numbers between what was submitted in the query and the insurer’s records. The system does provide reason codes that explain an unconfirmed response.

There’s also the possibility that no match is found during the initial search of the books-of-business records. In that case, the system sends a broadcast, or unknown carrier request, to all insurers in the state asking if they insure that particular vehicle. Coverage is confirmed if an insurer finds the VIN in their system as a covered vehicle. If there is no response, then it is treated as unconfirmed and the motorist will most likely be ticketed.

This entire process plays out over the course of one or two seconds and the officer knows before he or she even steps out of their vehicle, if there is valid insurance on the vehicle.

Do drivers still need to have insurance cards with them for any reason?

Hageli : Yes. The card carry law is still in force. Also, if an officer is not able to verify insurance through the system, he is instructed to check the insurance card. Again, law enforcement officers have certain discretion in issuing tickets. And in Mississippi and several other states insurance cards may be kept by electronic image on your phone.

Can law enforcement use the verification system to stop a driver?

Hageli : No. Law enforcement officers may not use the system to stop a driver solely for operating an uninsured vehicle. Only upon reasonable cause of a traffic violation or that a vehicle is unsafe or not equipped as required by law may an officer utilize the system in order to verify insurance. But the system can be used at roadblocks to verify coverage.

What can consumers do to ensure the system contains accurate information?

Hageli : Only authorized individuals have access to the actual system, but motorists generally can check whether their state’s system shows they have insurance.

Does the system apply to all motor vehicles?

Hageli : No, it does not. Vehicles with commercial auto coverage, those qualified for a fleet registration, those exempted from the proof of insurance requirement, and those with a gross weight of 16,000 pounds or greater are exempt. Insurers must furnish commercial auto coverage customers an insurance card marked with the identifier “Commercial Auto Insurance” or “Fleet” or similar language. Upwards of 30% of vehicles are covered by a commercial policy, and there is no way to tell that just by looking at the vehicle. So the insurance card is still very important for commercial purposes.

What are the penalties for not having minimum liability insurance coverage?

Hageli : The penalties are pretty severe, but some might say not severe enough. The act requires the suspension of the operator’s driving privilege (license) and civil penalties of $300 for a first violation, $400 for a second and $500 for a third and subsequent violations. Once suspended, driving privileges will not be reinstated until the owner has in place liability insurance in at least the minimum amounts required by Mississippi law and has paid the civil penalties imposed.

Will someone without vehicle liability insurance be able to purchase or renew a tag?

Hageli : That is a good question. Originally, the statute provided that every owner of a vehicle must have the minimum amounts of liability coverage before he could receive or renew a registration (license plate or tag). This was to be accomplished by county tax collectors having access to the verification system through the existing title/registration system. This proved to be very controversial, especially with certain tax collectors. Also, there were questions of computer software capabilities at both the county and state levels, but I understand a new system for tags and titles has been implemented so I would think this should no longer be a problem. This provision was removed from the statute in 2015. Some people strongly favor preventing registration of vehicles without proof of insurance. In fact, bills to reenact this provision are pending before the Mississippi Legislature.

[Editor’s Note: House Bill No. 1024, as introduced in the 2018 Regular Session of the Mississippi Legislature, would require county tax collectors to verify minimum liability coverage before issuing annual renewal registrations. At the time this article was submitted for publication, due to push back from county tax collectors the bill had been revised to require that tax collectors only notify vehicle owners of the minimum insurance requirements.]

Are there any states that do utilize their systems to verify coverage at the point of registration?

Hageli : Most of them do. But a lot of them also allow for a grace period for verification, meaning they understand that a newly purchased vehicle might not show insurance coverage because the owner has not yet informed his insurer of the purchase. The grace period allows time for processing, and states will then re-run the vehicle 30, 60 days later to check for coverage.

Red-light cameras and toll enforcement cameras are common in certain jurisdictions. Do you anticipate cameras being used in conjunction with verification systems to catch uninsured drivers?

Hageli : It’s already here. Two parishes in Louisiana issue tickets based on license-plate scanner results, and we expect that to spread to the rest of the state. Oklahoma also passed a law authorizing such a system, but it is contingent upon some systems changes and hasn’t been deployed. Similar legislation has been proposed in Rhode Island the last couple of years and looked like it was going to pass but in the end it did not. I expect this will spread to other states in time, but if you ask me checking for insurance at the point of registration seems more efficient.

Are you hopeful this new program will begin to change the culture in Mississippi that it is OK to drive without insurance?

Commissioner Chaney : It is the Department’s hope that this program is a step in the right direction in changing that mindset. There is still much work to be done; however, this program helps close a loophole in current Mississippi law. We will continue to work closely with the Legislature to determine what laws should be created and amended to benefit Mississippi consumers.

Will the online verification system result in fewer uninsured motorists on Mississippi roads?

Hageli : Without a doubt. The only question is by how much. And for that, we’ll have to wait and see.


[1] 2012 Miss. Laws ch. 504 (Senate Bill No. 2361), codified at Miss. Code Ann. § 63-16-1 et seq.

[2] Id . at § 2.

[3] See Uninsured Motorists, 2011 Edition, Insurance Research Council. According to this report, three of the top five states with both the highest (Florida, New Mexico and Oklahoma) and lowest (Massachusetts, New York and Pennsylvania) rates of uninsured motorists had reporting programs. Since that report, Oklahoma has implemented an online verification system and based on the recent study referenced above, its rate of uninsured motorists has dropped to 10.5 percent.

[4] The observations and views expressed herein by Mr. Hageli do not necessarily reflect the opinion of PCI.

[5] See Insurance Journal at A bill similar to Senate Bill No. 2631 was passed by the Mississippi Legislature in 2011, but was vetoed by Governor Barbour citing the costs associated with creating and maintaining such a system.