Feb. 20--HELENA -- About 15 percent of Montana drivers are uninsured, or slightly higher than the national average of 13.8 percent, a state insurance official told a legislative committee Friday.

All of Montana's neighboring states have lower rates of uninsured motorists, said Mari Kindberg, property and casualty actuary in the state Auditor's Office. North Dakota's rate is at 5 percent, South Dakota's is 7 percent, and Idaho and Wyoming are at 9 percent.

The Revenue and Transportation Interim Committee is studying the issue of uninsured and underinsured motorists under a 2009 resolution by Sen. Roy Brown, R-Billings.

Kindberg said Montana already has laws requiring drivers to have vehicle insurance and penalties for those caught driving without insurance.

In July 2011, Kindberg said a 2009 law by Sen. John Brueggeman, R-Polson, takes effect. It creates an online motor vehicle liability insurance verification system and provides law enforcement with access to the verification system electronically. In addition, the law requires drivers to carry liability insurance to purchase or renew license plates.

The Auditor Office suggested amending the state credit act to help consumers keep their current insurance policies and make insurance more affordable during an "extraordinary event." An insurer, upon the request of an insured person or other applicant, already can make underwriting or rating exceptions to lower rates for consumers who have faced catastrophic injuries or illnesses, temporary loss of employment, death of family members or identity theft.

Kindberg said the Auditor's Office advocates expanding "extraordinary event" to include divorce or interruption of alimony or support payments and military deployment overseas.

There are a number of other options to address the uninsured driver issue, such as tougher laws and low-cost auto insurance programs, but Kindberg made it clear the Auditor's Office wasn't endorsing any of them. These include:

--No-fault insurance. "Everybody buys their own policy," Kindberg said. The insurance company pays the damage, regardless of who was at fault. If drivers are hurt in an accident, their own insurance company picks up the costs.

Kindberg said no-fault insurance may increase compliance. However, she said it may create an incentive for victims to inflate their injury claims. New York switched to this system but has seen increased costs, she said.

--Pay at the pump. Kindberg said this amounts to a gas tax added onto other fuel taxes to pay auto liability coverage or uninsured motorist coverage. It would force the purchase of liability insurance but would require the setting up of a collection and distribution system.

It would reward those who use less fuel or have a more fuel-efficient vehicle.

--Pay by the mile. Under this system, drivers would pay premiums based on a set mileage, which Kindberg said would encourage driving fewer miles and might make insurance more affordable.

She said it would require the use of high-cost tracking mileage with on-board devices, which would raise privacy concerns because they also could monitor speed, location, braking and other things.

However, Kindberg said insurance premiums already are partially based on mileage and vehicle use.

Joe Schmidt of Laurel, watching the meeting on television, called the committee to put in a pitch for pay-by-the-mile insurance. Schmidt called himself a low-income senior citizen.

"I only drive 25 to 40 miles a month," he said. "My latest insurance is $65 a month. In my opinion, that's extortion."

Texas has a pay-by-the-mile system that doesn't require an expensive on-board system, he said. The Web site of the company he mentioned requires customers to submit periodic digital photos of the speedometers in their vehicles. The Texas company charges 4 to 5 cents a mile for insurance, far less than he pays now, Schmidt said.

Schmidt urged the committee to recommend the repeal of mandatory auto insurance, contending it was driving people into poverty.

"Somehow they have to pay the extortion money to these greedy insurance companies, and they don't have money to buy food," he said.

A committee member asked Bruce Spencer, a Helena lawyer and insurance lobbyist, whether insurance-by-the-mile is legal in Montana.

Spencer said he's not aware of any Montana law prohibiting that kind of insurance. These companies determine what products to offer in states based whether they are viable economically, he said.

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