Spotlight on Trends: Non-Standard Auto Coverage for Mexican Nationals

April 5, 2012

Spurred by economic opportunity, an influx of Hispanic emigrants has contributed to more than one half of the growth in the total US population between 2000 and 2010. During that same period, more than half resided in Califoia, Texas and Florida. 

This emergent Mexican national population in the Southwest is providing personal lines auto insurers with a growing market niche. In order to address the needs of this market and to better identify and price for the unique potential exposures, non-standard auto providers will need to underwrite this expanding market thoroughly and appropriately. 

Matricula Consular (CID)

Issued by the Govement of Mexico through its consulate offices, a CID is a form of identification provided to Mexican nationals living outside of Mexico. It includes a photo and address of the individual to whom it was issued, but it is different from a foreign driver’s license. It is accepted in more than 10 states, 100 cities and by more than 900 police and sheriff departments. 

In addition to providing proof of identification for obtaining a state-issued driver’s license, the CID can be used in some states as a viable form of identification suitable to open bank accounts in some US national banks, accessing available social services and as approved ID for air travel.

Key Issues

The most notable issue with the CID is the relative degree of security. Opponents state that the CID is relatively easy to obtain; this includes illegal aliens and other individuals looking to mask their identities. Notable examples of identification abuse include 18 out of the 19 9/11 terrorists possessed either state-issued or counterfeit driver’s licenses, and/or ID cards, which enabled them to board the planes.

Proponents of the CID state that since 9/11, the card has undergone a number of enhancements including digitalized photographs, SRE ultraviolet logos, codified fixed texts, and expiry dates. All of which make it more difficult to duplicate and purportedly more secure that a driver’s license. In addition, since 2003, the Mexican government has invested in a centralized database designed to eliminate duplications and ensure better monitoring. 

Underwriting Considerations

Due to the nature of the non-standard auto market, insurers provide only regulatory minimum limits on terms up to six months. Feedback from cedants who provide coverage and accept the CID in obtaining state driver’s license, indicate that historic results are better than their mainstream book. Contributing factors include higher rate levels and reduced loss frequency.

These facts, as well as continued superior economic and social opportunities in the U.S., indicate that this niche will likely continue to grow, but there are some underwriting considerations for non-standard auto writers to reflect on.

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