Licensing the Insured: Providing Driver Licenses to Unauthorized Immigrants Has Not Impacted Auto Insurance in California

Abstract

A key argument for providing unauthorized immigrants with driver licenses is that such policies will improve automobile insurance. The paper uses data on auto insurance take-up, claims, and premiums to test this argument in the context of California's Assembly Bill (AB) 60, which was implemented in January 2015. Exploiting cross-county variation in the estimated share of AB60 licenses, we find that even though more than one million licenses have been issued under the policy to date, it had no measurable effects on the rate of uninsured vehicles, uninsured motorists claims, or automobile insurance premiums. Our findings are supported by a power analysis and multiple robustness checks. We suggest that unauthorized immigrants may have already had access to cars and even auto insurance before AB60. In a highly car-dependent society, they had no choice but to drive even when it was illegal before 2015. As such, the effects of AB60 on the insurance market were negligible.