BILL NUMBER: S3405
SPONSOR: BRESLIN
 
TITLE OF BILL:
An act to amend the vehicle and traffic law, in relation to establishing
an online insurance verification system for proof of insurance; to
establish an online insurance verification advisory council; and to
repeal certain provisions of such law relating to motor vehicle insur-
ance and funds for a certain pilot database system
 
PURPOSE:
To replace New York State's motor vehicle liability insurance reporting
system.
 
SUMMARY OF PROVISIONS:
Section 1: Entitles the Act as the "New York State fairness for drivers
act".
Section 2: Repeals Paragraphs (a), (b), (c) and (d) of subdivision 2 and
Paragraphs (a), (b), (c), (d), (f), (g), (h), (i) of subdivision 4 of
section 313 of the vehicle and traffic law;
Section 3: Paragraph (d) of subdivision 3 of section 317 of the vehicle
and traffic law;
Section 4: Establishes on online verification (OLV) of insurance system
for automobile liability insurance reporting in New York. Includes,
Report on Effectiveness, requiring that no more than two years after
this act become law, the Department of Motor Vehicles shall report to
the legislature and the governor on the effectiveness of the act;
Section 5: Establishes insurer responsibilities regarding the OLV
system;
Section 6: Establishes an advisory council, chaired by the commissioner
of the department of motor vehicles or his or her designee, and inclu-
sive of insurance industry representatives, to oversee the implementa-
tion of the OLV system.
Section 7: Establishes Department of Motor Vehicle corrective authority
regarding uninsured motorists;
Section 8: Establishes insurer proof of insurance shall be consistent
with Department of Motor Vehicle regulations;
Section 9: Effective date. Section 6 of this act, creating an advisory
council shall take effect immediately, however, sections 2 and 3 of this
act repealing existing provisions of law shall take effect when the OLV
system under paragraph 8 of section 4 has become operational, the
remainder of this act shall take effect one year after it shall have
become a law.
The verification system shall be installed and fully operational eigh-
teen months after this law shall have become law, following an appropri-
ate testing/pilot period of not less than nine (9) months.
 
JUSTIFICATION:
New York's current system for auto insurance verification relies on old
technology and manual processing for both the DMV and insurance carri-
ers. This results in an increased likelihood of a driver erroneously
being identified as uninsured and can result in being unfairly accused,
ticketed and possible arrested for failure to prove insurance coverage.
Motorists who are charged with driving without insurance can face a
serious misdemeanor charge, have their car impounded, and lose their
license which may result in thousands of dollars in legal fees and court
appearances.
According to an NYU study, African American drivers were more likely to
be stopped by law enforcement. (See,https://www.nyu.edu/
about/newspublications/ news/2020/mayiblackdrivers-m ore-likely-to-be-
stopped-bypolice.html) Other studies have found that African American
drivers were twice as likely to be cited for failing to produce a driv-
ers' license or proof of vehicle insurance. (See,
(http://www.cjcj.org/uploads/cjcj/ documents/Race-based decisions.pdf)
And according to a US Justice Department report, young drivers were more
likely to be pulled over than older drivers. (See,
(https://bjs.ojp.gov/content/pub/ ascii/cdsp02.txt) Based on these
studies, certain under-represented segments of the population may be
adversely impacted more frequently by the limitations of the current
insurance verification system
The "Fairness for Drivers Act" would create an Online Verification
system (OLV). This system allows for real-time verification of automo-
bile insurance and reduces the likelihood of drivers being falsely
accused of driving without insurance coverage. Unlike the current system
the OLV system verifies directly against the insurance companies records
within seconds. In addition, this system can be used by law enforcement
during roadside stops and accident investigations, and the within the
court system. 18 states, including California and Illinois have adopted
a version of an OLV system.
The "Fairness for Drivers Act" would benefit ALL New York motorists. It
would also address an important social equity need - people of color and
young drivers who are more likely to have insurance verified by law
enforcement at a roadside stop. By using current insurance company data,
the OLV system protects insured individuals from being misidentified as
uninsured, reducing the personal and economic impacts. Importantly, an
OLV system also protects drivers' privacy by limiting access to legally
authorized agencies and using the most advanced methods of data
encryption.
In addition to the foregoing social justification for this legislation,
there are technical reasons for its enactment as well. 49 states,
including New York, require that motorists carry liability insurance as
a way of protecting the public from damage and injuries caused by auto-
mobile accidents (See, NY VTL § 310(2)). Furthermore, New York is one of
38 states that subsequently mandate automobile liability insurance
reporting (ALIR) for personal automobile insurance, and one of 18 states
that also mandates ALIR for commercial automobile insurance from insur-
ance companies to a state's Department of Motor Vehicles (See, NY VTL §
313(b), (c); 15 NYCRR, Part 34). ALIR requirements help to ensure that
every motorist and vehicle on the road is properly insured, thus reduc-
ing the risk posed by uninsured motorists.
The Insurance Information and Enforcement System (TIES) is the ALIR
system used by the New York Department of Motor Vehicles (DMV) to moni-
tor the insurance status of the nearly 5 million registered automobiles
in New York State. The current iteration of IIES was created pursuant to
L. 1997, chap. 678, as amended by L. 1998, chap. 509. At the time of
its enactment IIES was known as the "high tech sticker" law as it tran-
sitioned NY from a paper-based insurance verification system, to an
electronic-based verification system. It is a daily transaction central-
ized database maintained by the DMV, requiring insurance carriers to
send and retrieve batch mode transactions to and from the IIES database.
IIES is based on standards for electronic data interchange (EDI) devel-
oped by the Accredited Standards Committee (ASC) of the American
National Standards Institute (ANSI) known as ASC X12. The ASC X12 stand-
ard was first developed in 1979. While ASC X12 is still widely used in
numerous industries, more recently the maintenance of large, centralized
databases has come under scrutiny for being costly, requiring large data
storage, susceptibility to internet bottlenecks, and the need for
constant maintenance. Concerns of this type have arisen in New York
where the DMV estimates that the insurance status of approximately 85%
of registered vehicles in New York are accurately matched to a vehicle
at any given moment in time. This leaves 15% of motorists at risk that
law enforcement may inadvertently claim that a motorist is uninsured
when in fact they are. Accordingly, alternative methods of insurance
verification have developed since the IIES program was established in
the late 20,-h century. One such method is known as online verification
(OLV) of insurance. OLV provides for real-time verification of coverage
on an event-based basis (i.e, at time of registration o r during a traf-
fic stop), as well as ongoing monitoring of coverage to ensure mainte-
nance of coverage. OLV operates by collecting coverage information from
insurers on a weekly basis, which allows for ongoing monitoring of
coverage, while also providing the DMV the ability of confirm coverage
in real time on an event-based basis through web services. This dual
layer of verification provides for state-of-the-art insurance verifica-
tion that minimizes false positives and streamlines the process for auto
insurers. The OLV model has been described as similar to "a credit card
authorization process where the numbers on the card are used as a key to
determine if a purchase can be made. If the key information is not
properly captured and entered into the verification request, the insur-
ers' responses will produce incorrect results. As such, obtaining infor-
mation directly from a customer's ID card or policy declaration page
will yield the best results." (See generally,
https://www.iicmva.com/IICMVA%200LV%20TIPSv1.0.pdf, and,
https://www.iicmva.com/ Making%20V2.l.pdf). The Insurance Industry
Committee. on Motor Vehicle Administration (IICMVA) has developed legis-
lation upon which this bill is based to assist states adopt and leverage
such cutting-edge methods of insurance verification. Currently, 18
states, with others in development, have adopted the IICMVA OLV model
law. One such state is Illinois, which similar to New York has approxi-
mately 4.5 million vehicles registered (See generally,
https://www.ivansinsurance.com/globalassets/ alldocuments/
resources/reports/ivans-alir-state-chart.pdf).
In New York, the automobile insurance verification reporting system,
LIES, is funded by an assessment that the DMV charges insurance carriers
for maintaining the TIES system (See, New York Vehicle & Traffic Law
317). In New York's FY2020 budget maintenance of New York's compulsory
insurance program cost $9,807,000 million (See, S7500C/A9500C, State
Operations Budget Bill, pg. 545). Consequently, this legislation would
not have any fiscal impact on New York State, and may lead to antic-
ipated savings as the cost of maintaining an OLV based ALIR system is
commonly regarded as more efficient that maintaining a centralized data-
base system such as IIES.
 
LEGISLATIVE HISTORY:
2021-22: S.4871B
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, sections two
and three of this act shall take effect when the online insurance
verification system is installed and fully operational pursuant to
subdivision 8 of section 312-b of the vehicle and traffic law, as added
by section four of this act; and provided further, sections four, five,
seven and eight of this act shall take effect one year after it shall
have become a law. Effective immediately, the addition, amendment and/or
repeal of any rule or regulation necessary for the implementation of
this act on its effective date are authorized to be made on or before
such date.

Statutes affected:
S3405: 312-a vehicle and traffic law, 312-a(1) vehicle and traffic law