California insurers targeting illegal drivers

California has been attempting to cut down on levels of illegal immigrants by denying them driver’s licenses but auto insurers are now increasingly targeting unlicensed illegal immigrant drivers as a potentially lucrative market.

For decades, California routinely issued driver’s licenses to foreign citizens regardless of their immigration status. But, when it began tightening up its requirements amid a general backlash against illegal immigration, many illegal immigrants found that they couldn’t renew their licenses - and so their car insurance was automatically canceled.

Some auto insurers, however, were quick to see a huge opportunity. California law doesn’t bar companies from selling insurance to unlicensed motorists. So, insurers, including some major ones like Progressive Corp., are covering illegal-immigrant drivers, often charging them premiums way above the normal market rate.

Jose Catano, an independent agent with five locations in Southern California, uses Spanish-language radio in order drum up business with illegal immigrants, using a slogan that refers to Gov. Schwarzenegger: ‘‘Arnold won’t give you a license, but Catano will give you insurance.’

It seems an apparent contradiction but, for now, the insurance companies are very happy about it...