RSSAuto insurers marketing to illegal aliens [Progressive]
Carolyn Hileman - The Voice | May 9, 2008
Many states are cracking down on illegal immigrants by denying them driver’s licenses.
But auto insurers are increasingly targeting those unlicensed drivers as a lucrative market.
For decades, many states with big immigrant populations, like California, routinely issued driver’s licenses to foreign citizens, regardless of their immigration status. But when those states and others began tightening up their requirements amid a backlash against illegal immigration, many illegal immigrants couldn’t renew their licenses – and their car insurance was automatically canceled.
Some auto insurers, however, were quick to see a golden opportunity. California law, for example, doesn’t bar companies from selling insurance to unlicensed motorists. So, insurers, including some major ones like Progressive Corp., are covering illegal-immigrant drivers, often charging them premiums above the normal market rate.
‘‘When we figured out it was legal, and we weren’t going to get punished, we went into the market within a short while,’’ says Brian Duffy, chief executive of Alliance United, a closely held auto insurer based in Ventura, Calif. ‘‘We are exploding with growth.’’
The situation is another example of how illegal immigration and the purchasing power of the nation’s estimated 12 million illegal immigrants are influencing public and private policy in sometimes contradictory ways. While some politicians and others complain that illegal immigrants place a burden on state and local resources, businesses ranging from banks to retailers are lining up to cater to them.
Earlier this year, for example, Bank of America Corp. began offering a credit card for people who lack a Social Security number and a credit history, a category that mainly includes undocumented immigrants. Smaller businesses have sprung up to help illegal immigrants file tax returns.
In tapping this new market, auto insurers are addressing a big concern for residents in many states: the potentially costly prospect of getting into an accident with an uninsured driver. Undocumented immigrants without insurance have been known to flee the scene of an accident, even abandoning their vehicles. They also sometimes plead with the other driver to let them pay for any damages in cash, to avoid being exposed as uninsured. In New Mexico, which passed legislation allowing illegal immigrants to obtain driver’s licenses in 2003, police say that the state’s roads are now safer.
Though critics say that insurance companies are legitimizing the presence of illegal immigrants by offering them insurance, some law-enforcement officials and immigrant advocates argue that many undocumented workers will drive to reach their jobs anyway, and that having insured motorists protects the public at large. Though driving without a valid license is illegal, it often goes unpunished if the driver’s car registration and insurance papers are in order.
Amid the national debate over immigration and security in the wake of the Sept. 11, 2001, attacks, a growing number of states started requiring applicants for driver’s licenses to show proof of lawful residence. States with large illegal-immigrant populations like Texas, California and Arizona don’t issue drivers licenses to illegal immigrants. In 2005, California Gov. Arnold Schwarzenegger, citing security concerns, vetoed for the second time a measure passed by the state’s lawmakers to explicitly allow undocumented immigrants to obtain a driver’s license.
In Illinois, legislators are considering allowing people without Social Security numbers to obtain a driver’s certificate, a proposal that has polarized the state’s voters.
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