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October 23, 2014

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The Legislature:

Bill would hand DMV contract to one company

State’s bidding process would be cast aside, department director says, preventing competition

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Richard Perkins

Former Assembly speaker and current lobbyist Richard Perkins is pushing a bill that would require the DMV to contract with a private company to verify motorists’ automobile insurance.

Under the legislation, an amended version of Assembly Bill 504, only one company would qualify for the contract, according to Perkins and Department of Motor Vehicles officials.

That company, Michigan-based InsureNet, has hired Perkins as its lobbyist.

DMV Director Edgar Roberts said he had strong concerns about the legislation because it would circumvent the state’s bidding process, which is intended to guarantee that taxpayers get the best deal.

If AB504 passes, “the department would be obligated, by law, to contract with that company,” he said. “That circumvents the request-for-proposal process.”

DMV officials acknowledged the department’s system for verifying that registered cars have insurance, as required by law, is slow and inefficient. It can take up to 45 days for the department to become aware of a lapse in insurance.

The DMV considered contracting with a private company to improve the insurance check system, but decided to develop one in-house. In September the state’s Interim Finance Committee approved $377,000 in overtime and other expenses so the department could develop technology to more quickly conduct the checks.

The DMV “is in the process of redesigning its insurance verification program,” Roberts said.

Robert Feldman, head of the Nevada Insurance Council trade group and head of the governor’s task force on the DMV, said he questioned at first the department’s decision to develop its own system.

“Originally, I thought they should contract with a third-party vendor. But they felt they had the qualifications to do it all on their own, and save themselves millions in current and future costs,” he said. A number of states, including Utah, Florida, Texas and New Mexico, contract with companies to perform insurance verifications. Were the state to hire a private company, it could choose from among several firms, Feldman said.

Roberts questioned InsureNet’s qualifications and experience. “As far as we can tell the company that would be the sole provider has no track record of providing its services to other departments of motor vehicles,” he said.

Calls and messages to InsureNet requesting comment for this story weren’t returned.

Carole Vilardo, president of the Nevada Taxpayers Association, said if the state is going to use a contractor, it should allow as many competing bidders as possible. “You want legislation written broadly, for the maximum number of bids, so you can evaluate not only the pricing, but the specifications of what you want,” Vilardo said.

Perkins, a former Henderson police chief, said the company is the only one with access to a multistate insurance information network, the National Law Enforcement Telecommunication System, or NLETS, which police officers in the field use to check whether out-of-state drivers have insurance.

“InsureNet is the only company currently associated with NLETS, but others could be,” Perkins said. “They have intimate knowledge of the industry and credibility with law enforcement.”

Asked whether the state would be at a disadvantage during negotiations, since only one company could qualify under the bill, Perkins said: “The state isn’t going to give away the store ... The last thing I want is to cost the state a lot of money.”

Roberts said he was concerned that, according to news accounts of proposed contracts InsureNet has entered elsewhere, the company would take 30 percent of commissions on fines issued for insurance lapses. For the last fiscal year in Nevada, that would mean $5 million “going to a private company instead of into state coffers,” Roberts said.

The bill would require the company to gather photos of license plates and check whether the vehicles are insured. Perkins said this would bring the state more revenue.

AB504 was introduced to allow red-light cameras in North Las Vegas. “The bill wasn’t going anywhere,” so he asked for the amendment, Perkins said.

Assemblyman Kelvin Atkinson, D-North Las Vegas and chairman of Assembly Transportation Committee, entered the amendment. But he said he was never told only one company would qualify under the bill.

“DMV never expressed that to me,” he said.

The bill passed the Assembly Transportation Committee and was referred to Assembly Ways and Means. The bill has not yet been scheduled for a hearing.

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