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June 22, 2007
Contact: Don Cookson

Secretary of State Matthew Dunlap Thanks Lawmakers
For Repealing Insurance Cancellation Notification Law

“This law failed to improve the safety of Maine motorists”

Augusta- Secretary of State Matthew Dunlap today praised lawmakers for repealing Maine’s so-called insurance cancellation notification law. “This law was aimed at reducing the number of uninsured motorists on Maine’s highways,” Dunlap stated. “It never did that, so it failed to improve the safety of Maine motorists as intended.”

The law required insurers to notify the State when someone’s insurance policy lapsed or was cancelled. Registrants were then required to notify the State when a new policy was put in effect. The State had to receive either notice of a new policy or an explanation why no new policy was issued. Failure to comply resulted in suspension of a person’s registration.

“This seemed like a solid approach when the law was enacted,” Dunlap remarked, adding that he had supported the law as a legislator. Application of the law, however, never achieved the desired results. He continued “In practice, the law actually created a number of problems- for Maine consumers, automobile insurance companies, and the Bureau of Motor Vehicles. The simple fact is that there are a variety of very legitimate reasons for a person to cancel an insurance policy- selling their car, changing insurance providers to secure a better premium rate, and so on,” explained Dunlap. “This law had no method for sorting those reasons out from the ones the law was initially aimed at: drivers who go without insurance simply because they refuse to pay for even the most basic coverage mandated by law.”

Repealing this law also creates a savings of nearly $300,000 dollars annually. Dunlap says the savings come from elimination of postage and manpower expenses. “It was originally estimated this law would result in approximately 100,000 cancellation verification letters being mailed to affected motorists annually. In reality, it was more like 280,000 letters going out each year. The vast majority of these letters were totally superfluous. Thanks to the repeal of this flawed law, the resulting hassles have now been eliminated.”

The repeal of this law was part of LD 781, "An Act Making Unified Highway Fund and Other Funds Allocations for the Expenditures of State Government and Changing Certain Provisions of the Law Necessary to the Proper Operations of State Government for the Fiscal Years Ending June 30, 2008 and June 30, 2009". Part M in the bill states “This Part repeals the requirement that a company insuring a motor vehicle registered in this State notify the Secretary of State when that insurance is cancelled, terminated or lapses.”

The bill was signed into law by Governor Baldacci on June 19. Since the legislation carried an emergency provision, it is effective immediately.