One problem facing insurers who write commercial automobile coverage is that in states with mandatory auto liability reporting, also known as ALIR, carriers must report policy changes and cancellations electronically to state Dept. of Motor Vehicles (DMV).
The function of ALIR is that it enable states to better detect uninsured and underinsured motorists--many of whom must submit to fines and surrender their vehicles.
Speaking November 16 during a session at ISOTech 2004, Loren McGlade, vice president of business process planning for New York-based AIG, discussed several issues keeping ALIR from being as effective, and accountable, as possible.
ISOTech, a technology conference sponsored by Jersey City, N.J.-based Insurance Service Office (ISO), was held Nov. 14-16 in New Orleans.
During a session titled "Leery of ALIR?" McGlade noted that AIG receives about 300 commercial license suspensions per day in conducting business with state DMVs. The insurer requires a dedicated staff of individuals to process these suspensions in conjunction with state DMVs.
The trouble is, this process is often performed in a paper-based environment because various state bureaus are not properly equipped with the technology to support electronic submittal.
McGlade noted inroads are being made, albeit gradually: Some states have increased their investments in electronic data interchange (EDI) technology that would enable them to communicate with insurers such as AIG either in real-time or within a 24-hour batch relay to identify, process and account for uninsured and underinsured motorists--many of whom only serve to drive up insurance costs for carriers and policyholders.
McGlade remarked that not enough states have accelerated their efforts to improve electronic submissions. In the future, McGlade pointed out that the deployment of Web services technology such as XML, along with technology such as bar coding and digital identification, will better shore up accountability as it relates to the ALIR process.
McGlade added that the dilemma is such that the cost of uninsured motorists is not decreasing despite the fact that law enforcement in many states are doing their job by nabbing scofflaws. The problem is that these motorists continue to drive despite losing their driving privileges, which ends up imperiling legitimate drivers.
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