Flipping through the Register online this morning, I found this story on road rage in the DMV parking lot.
It seems like a good lead in to use for another suggestion that's been running through my mind the last few days: Why doesn't the state sell car insurance?
I see you running for the exits, small government types. Grab a seat for just a moment longer and hear me out on this.
While car insurance probably doesn't cost as much as health insurance (for most of us), it's still expensive, and its price is based largely on three factors:
a) Assumed risk. Car insurance companies are basically betting you won't have an accident. If you do, they pay up.
b) Administrative costs. Claims adjusters, accident investigators, that guy who finds out you got that speeding ticket in Kansas that you were hoping the insurance company wouldn't find out about, etc.
c) Profit. Insurance companies aren't selling you insurance because it's fun. They're out to make a buck. I'm not saying that's a bad thing, it's just the way business works.
Now, what would happen if, instead of your current car insurance company, you bought insurance through the state?
a) The assumed risk would be the same, although the risk pool would presumably be larger.
b) Accident investigators could be replaced by the police that are already on the scene. The police are already there determining fault. Instead of letting two insurance companies bicker over who's to blame, the police report would be the final word. And as for researching your traffic record, the state already has a database in place to track your traffic violations. Therefore, while some administrative costs would obviously remain, the state could eliminate others and reduce costs.
c) The need for profit would be eliminated. The state would need to make enough to pay the bills, no more, no less.
Added benefits of having the state sell car insurance:
Increased compliance with insurance requirement laws. When you renew your registration on your vehicle, you would either show the state your proof of insurance, or purchase insurance on site. Any car on the road with expired registration could be assumed uninsured and pulled over.
Streamlining the process. While no one that I know likes dealing with the DMV (especially when their office is way up in Ankeny), allowing the state to sell car insurance could make the DMV a one-stop shop for licensing and insurance, and eliminate the need to visit two offices to maintain the ability to drive legally.
I'm curious to hear your thoughts.