Court Records Plus MVRs are the Platinum Standard for Auto Insurance Risk Assessment

Historically, motor vehicle records (MVRs) have been the gold standard for insurers to assess the risk associated with a driver for new violations. However, LexisNexis studies have revealed that a motor vehicle record (MVR) does not always reflect all violations associated with a driver. For example, a driving violation from one state may not be recorded in another state in a timely manner.

Consider the high-profile case of a commercial truck driver who was acquitted of the deaths of seven motorcyclists. As per the Associated Press: “At the time [of the accident], [commercial truck driver] Zhukovskyy’s license should have been revoked because he had been arrested in Connecticut on a drunken driving charge in May 2019. Connecticut officials alerted the Massachusetts Registry of Motor Vehicles, but Zhukovskyy’s license wasn’t suspended due to a backlog of out-of-state notifications about driving offenses. The Connecticut case is pending.”¹

While this example isn’t about insurance coverage, it highlights one of the limitations of MVRs as a risk-decisioning tool. As we will see, latency of updating records is one issue—but it isn’t the only one.

Why is critical data missing from an MVR?

When looking at the world of traffic violations, the violation generally begins in the court. In an ideal world, all traffic violations would be transferred automatically from the court to the state Department of Motor Vehicles (DMV). However, in reality, only a subset of court violations makes it to the DMV.

An MVR may not report all of a driver’s violations for a variety of reasons:

• Latency. There may be a delay between a court sending violation data to the DMV and the violation being reflected on the driver’s MVR. If data isn’t provided in an easily ingestible format, that can exacerbate delays. Further, if manual data entry is required, that can result in processing backlogs and greater risk of errors due to mis-keyed data.
• Reciprocity limitations. Reciprocity agreements intend for violation data to be shared between states. However, just as there is latency between the court and the DMV within a state, there is latency sharing information between states. For example, there may be limited standards for how to share and ingest data, so violations from one state may not be ingestible by another. As in the case with the commercial truck driver, backlogs may mean information is not updated in a timely manner.
• Variations between states. Differences in violation codes may make it difficult for a violation in one state to be accurately recorded in another. Further, not all states enforce violations with the same level of diligence. What constitutes a major offense in one state may be a minor offense in another—and accordingly, may not be transferred to a driver’s DMV.

Is key data missing from a court records-only solution?

One key example would be the process whereby traffic violations are transferred from the court to the state Department of Motor Vehicles (DMV), and the states monitor driver violations using a point system and/or occurrence system to track habitual drivers.   States add points to a driver’s license upon conviction of certain violations.  The point system varies by state and as points are accumulated within specific periods (i.e., 12 or 24 months), the state can suspend or revoke a driver license when the total points exceed the state’s threshold.  Additionally, certain criminal offenses (e.g., DUI, vehicular homicide and driving without carrying insurance) can lead to an immediate driver’s license suspension, cancellation or revocation.  States report these Withdrawals and Administrative Actions on the drivers MVR.

The platinum standard: court data plus MVR data

To be clear, MVRs provide key insights into risk of a driver, but they aren't as comprehensive as many insurers believe them to be. To obtain a more complete picture of risk, insurers need to go beyond the gold standard, to leverage a platinum standard of MVR plus court data.

Internal LexisNexis® Risk Solutions data analysis reveals that combining MVR data and court data uncovers 14% more violations than just referring to an MVR. That includes:

• 4% more DUIs
• 17% more major driving violations
• 79% more minor violations

Notably, minor violations can be more indicative of risk than their name might imply. Our research identified four minor violations with not-so-minor implications on risk and rating. To learn more, download our report Take Control of Driving Risk Changes

Better manage MVR costs—while improving risk assessment with the addition of court data

MVRs can be a significant expense. Nationally, the cost of MVRs has increased from an average of $6.63 in 2005 to $11.10 in 2024. In addition, MVR costs may increase on short notice, creating additional unpredictability that can make it challenging for insurers to balance the budget and assess risk.

In this situation, some insurers may be considering ordering less data: either MVR records or court records, but not both. However, this short-term strategy can have negative long-term consequences. Without a complete picture of risk, insurers may acquire customers they don’t actually want on their books—customers that build out claims and drive-up loss costs down the road.

Notably, market solutions can help insurers get a more complete picture of risk and better manage underwriting budgets. LexisNexis® Driving Behavior 360 searches, aggregates and analyzes driving records from multiple national sources, including MVRs and court data.

With the combination of court data and MVR data, insurers can benefit from the platinum standard of data that provides underwriting insights. That can help insurers:

• Get a more complete picture of risk associated with a driver
• Optimize underwriting budgets with more predictable costs to obtain data for risk decisioning
• Identify previously hidden risks and capture opportunities for more accurate pricing

What you can do about it:

• Understand the limitations of MVRs. While MVRs provide valuable information about a driver’s behavior, they do not reflect the entirety of an individual’s driving history. Importantly, critical information is often not transferred from the court system to the DMV, or between states.
• Consider the long-term consequences of limiting your view of risk. It’s understandable that insurers want to mitigate underwriting costs, and ordering less data may seem one way to achieve this goal. However, short-term savings could come with longer-term consequences, in the form of risky drivers, higher loss costs and subsidies within a book of business.
• Acknowledge the predictive nature of violation data. Speaking of risky drivers, even minor and non-moving violations can be predictors of future claims. Our internal studies show that drivers with two or more violations are 50-70% more likely to have a claim than drivers with no violations. The more violation data that is available for a driver, the better assessment of risk, and the opportunity to price that risk accordingly.
• Leverage the new platinum standard for determining driver risk. Combining MVR data and court data uncovers 14% more violations. With a more complete understanding of a driver’s risk profile, you can better maintain price to risk and mitigate hidden risks that could negatively impact profitability in future. Insurers without this complete picture could find themselves with drivers on their book whom they don’t actually want—as well as elevated claims costs down the road.

¹https://apnews.com/article/new-hampshire-motorcycles-crash-ab3ce88659959edae9a258f52cb8bce3