Illegal immigrants targeted for auto insurance sales!
Posted on Sunday, June 17 @ 13:22:01 EDT
Topic: Crimes Scenes illegal immigration laws
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 Illegal immigrants find legal insurance with local firm
By Jim McLain (Contact)
Sunday, June 17, 2007
Chuck Kirman / Star staff Jeff Weiss, an independent auto damage
appraiser for insurance companies, does an appraisal for Alliance
United in Ventura, which sells insurance to people who don't have
driver's licenses, often illegal immigrants.
When the Wall Street Journal quoted him in a front-page story on
companies that sell automobile insurance to illegal immigrants, Brian
Duffy got a call early the same day from a producer who works with
conservative TV commentator Bill O'Reilly.
It was an invitation to appear that night on Fox News's "The
O'Reilly Factor." The producer wanted him to debate the merits of his
business one-on-one with the show's outspoken, often bombastic host. He
said no in a heartbeat.
"I said thanks, but no thanks," said Duffy, 65, of Ventura. "I
didn't respond. He would have eaten me alive. It is what it is. I don't
presume to have the answer to this."
Topics: Illegal Immigration, illegal immigrants, illegal aliens, Bill O'Reilly, Brian
Duffy, Alliance
United in Ventura, Alliance United, illegally, California, lucrative opportunity, driver's
licenses, buy insurance, Armando Botello, undocumented, Jennifer Kerns, California Department of Insurance, Jose Cataño of La Puente, fraudulent claims, California Insurance Commissioner Steve Poizner, Progressive, Farmers
Duffy is president and CEO of Alliance United, a Ventura-based auto
insurer that provides coverage to what the industry calls "nonstandard
drivers." That mostly means people with too many tickets or accidents.
But it also extends to unlicensed drivers, and that group is
increasingly made up of illegal immigrants.
It isn't a major chunk of his business probably a little over 5
percent but selling coverage to drivers who cannot get a license
because they are in the country illegally is increasingly important and
lucrative to Alliance United, as well as about 40 other California auto
insurers.
The practice is legal.
And though some politicians and immigration policy critics complain
companies like Alliance United are profiting by catering to people they
contend are a burden on schools, hospitals and other tax-funded
resources, Duffy has a message for them: "I am not the license police."
"Now, would you prefer to be hit by somebody with insurance, but
without a license," he said, "or somebody who doesn't have a license
and also doesn't have insurance and you don't know who he or she is?"
Legal, lucrative opportunity
Duffy and three partners launched Alliance United in 1996 as a
wholesaler of other companies' insurance. When they determined a few
years ago that selling auto insurance to undocumented immigrants was a
legal and potentially lucrative opportunity, they bought a small Iowa
insurer, moved it to California and began pursuing a piece of the
state's $2.5 billion market of nonstandard drivers early in 2004.
Today, they have about 70,000 policies covering some 50,000 drivers, perhaps 2,500 of them illegal immigrants.
That's miniscule in California. where there are 23.2 million
licensed drivers with more than 33 million registered vehicles,
according to the Department of Motor Vehicles. But Duffy and his
partners, David Mandel, the chairman, and Kjell Austad, vice president
of sales and marketing, say Alliance United is growing fast.
The company has 105 employees at offices in Ventura and Chatsworth,
with premiums expected to total $40 million to $50 million by the end
of the year. About 375 independent agents with 600 offices sell an
average of 300 Alliance United policies every day, Duffy said.
They mostly focus on the Hispanic market with the average customer
paying less than $1,000 annually for the minimum coverage the law
allows.
Many clients don't qualify as good drivers under California law and
pay 20 percent above normal rates. Barred from obtaining driver's
licenses, illegal immigrants are in that group automatically.
Though driving without a valid license is illegal, it is often not
punished if the driver is insured and his registration is current.
Nothing in the law says illegal immigrants cannot buy insurance.
Some people think such coverage protects immigrants by not having
to involve police when a minor accident occurs and benefits other
drivers who can collect after a mishap.
"The car is the thing that is being insured," said Armando Botello,
a DMV spokesman. "So it is not against the law for someone who doesn't
have a driver's license to own a car and have it insured. There are
many cases of people not even falling into the undocumented category
who have cars but don't have driver's licenses, disabled people, some
of the elderly, etc."
The Department of Insurance does not estimate the number of illegal
immigrants who have automobile insurance. Neither do the companies that
sell it. California began barring illegal immigrants from obtaining
driver's licenses in the mid-1990s by requiring a Social Security
number as proof of legal residency, the DMV's Botello said.
A few years ago, the rule was expanded to include renewals for
those who had obtained a license before the Social Security rule was
implemented.
Citing potential security problems, Gov. Arnold Schwarzenegger has
vetoed two bills allowing illegal immigrants to obtain driver's
licenses even though backers argued most drive to work every day
anyway.
A third bill passed the Senate on June 4, but it hasn't been
scheduled for a vote in the Assembly. Schwarzenegger has not said
whether he will sign it if it passes. Most large insurance companies
won't sell automobile coverage to illegal immigrants because they don't
cover unlicensed drivers.
Free to sell'
"There is no law in California that prohibits an insurance company
from selling insurance to an illegal immigrant," said Jennifer Kerns, a
spokeswoman for the California Department of Insurance. "Insurance
companies are free to sell to a variety of clients, including illegal
immigrants."
Alliance United's agents earn 10 percent to 15 percent a year on
each policy they sell. Doing business with illegal immigrants can be
very lucrative, independent insurance agent Jose Cataño of La Puente
said, because they rarely report minor accidents to avoid contact with
authorities.
According to the Wall Street Journal, Cataño advertises heavily on
Spanish-language radio using the slogan: "Arnold won't give you a
license, but Cataño will give you insurance."
Duffy described Cataño as one of Alliance United's busiest agents.
Troy Sathers, long-time owner of Sathers' Insurance Service in
Ventura, said his younger customers like Alliance United because it
provides minimum coverage at modest rates. They rarely complain about
the company, which accounts for 8 percent to 10 percent of his agency's
business.
Sales to illegal immigrants are probably only 3 percent of his
business today, but Sathers said he expects that category to top 10
percent in about two years.
Alliance United is hardly alone in aggressively marketing its
services to undocumented immigrants. Numerous banks tapped into the
purchasing power of the country's estimated 12 million illegal
immigrants a few years ago when federal laws were changed to allow
people with foreign identification cards to open bank accounts.
Earlier this year, Bank of America Corp. began offering a credit
card to people without a Social Security number or credit history, a
group that includes mostly illegal immigrants.
Alliance United's competitors for illegal immigrants' business
include major insurance companies like Progressive Corp. and Bristol
West Holdings Inc., which agreed in April to be acquired by Farmers
Group Inc. Bristol accepts a Mexican matricula consular card as a
driver's license substitute.
Fraud target
Because Alliance United specializes in selling the minimum
allowable coverage, its customers include many people with low incomes
and flawed driving records, Duffy said. Many are transient,
periodically starting then stopping coverage, then starting again. Most
of them pay by the month because they cannot cover the upfront costs of
six months or a year of premiums.
All auto insurance companies are targets for fraudulent claims,
Duffy said, but companies like his tend to be hit more often because
their customers are poor and see insurance companies as easy marks.
Alliance United has had cases where someone involved in an accident
buys coverage, then claims the collision occurred after the policy was
purchased. People try to collect for accidents that never happened, he
said, or say eight people in a car were hurt when police reported only
six at the scene. One person reported a fatality in a crash in which no
one was hurt.
California Insurance Commissioner Steve Poizner said recently that
fraud adds about $500 annually to every California driver's auto
insurance premium.
Often, Duffy said, it is committed by organized crime rings in
patterns of multiple phony collisions and fender-bender mishaps. His
company investigates every accident report for possible fraud.
"Because we're selling coverage contracts and because we're trying
to keep low prices, we're pretty vigilant about that," Duffy said. "We
will report those to the District Attorney ... We want to stop that
because it raises great consternation for you, me, and everybody. I
don't want to be defrauded."
Still, Duffy is keenly aware that providing insurance to
undocumented immigrants is the most controversial part of Alliance
United's business. He understands some people don't like the practice,
but he will not apologize for it.
"I don't have the answer to the problem. I run a business and I'm
trying to earn a retirement for shareholders, including myself," Duffy
said. "I'm not trying to exploit anybody."
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