Washington--The insurance industry came under fire Thursday as acongressional subcommittee debated whether it needs to passlegislation to stop so-called "title washing" of cars damaged byHurricane Katrina.

In fact, one witness suggested creation of a new database toensure that the information necessary to end the practice ispromptly available, and suggested that the "privatesector"--probably the insurance industry--be made to pay forit.

The issue came up at a hearing before the Subcommittee onCommerce, Trade and Consumer Protection of the House Energy andCommerce Committee.

The subcommittee is considering how to deal with up to 600,000cars damaged "beyond usefulness" in the hurricane. Owners of thecars were paid off by their insurance companies and the vehiclessupposedly were scrapped.

Fraud occurs when titles of flood-damaged cars are altered orduplicated to give a car a clean title history.

"Among these things lost to the storm were hundreds of thousandsof automobiles and trucks, possibly as many as 600,000," Rep. JoeBarton, R-Texas, said. He is chairman of the full committee.

The problem stems from the fact that Congress established theNational Motor Vehicle Title Information System (NMVTIS) in 1992,but it has not been fully implemented. Several of the witnessesargued the program needs additional funding in order to create anationwide database.

But Rachel Weintraub, director of product safety and seniorcounsel for the Consumer Federation of America, told thesubcommittee that much of the necessary information already existsbut is not available.

"The insurance industry has not provided information to NMVTISand the Department of Justice hasn't written the rules yet abouthow to act to obtain that information," Ms. Weintraub said.

"Disclosure is the factor that I think we can all agree on,"said David Regan, vice president of legislative affairs for theNational Automobile Dealers Association.

Mr. Regan expressed concern that NMVTIS can't provideinformation to the general public in an adequate way. He called fora new database, suggesting that the private sector could bear thecost.

"We want to totally reconfigure this model so that thepurchasers have available information before they make a purchase,"Mr. Regan said. "Our concern is how soon can consumers get the infoand how soon can NMVTIS get the information."

Another witness, Glenn Turner, chief of staff for the FloridaDivision of Motor Vehicles, said progress has been made on theNMVTIS database, with 28 jurisdictions now involved. But toincrease that number would "take some funding," he said.

Mr. Turner noted that 52 percent of automobiles in the countryare currently covered in the database and the program is close toachieving 81 percent coverage. He added that a fully functionalNMVTIS database would provide real-time data from insurancecompanies as well as other states.

"What I'd like to know is why practices like 'title washing' arestill a major problem in a world that is so networked withreal-time information," said Rep. Cliff Stearns, R-Fla., chairmanof the subcommittee.

"It seems to me that the problem of title fraud is one that canbe solved, or at least greatly reduced, by allowing greater andmore immediate access to information about a car's history,including when that car is damaged by flood or other means, as wellas creating more uniform standards nationwide for title brandingdesignations, like 'salvaged' or 'flood damaged.'"

"Most of those vehicles were damaged beyond usefulness," Mr.Barton said. "But it seems inevitable that a few bad actors willseek to spread the misery of the hurricane by shining thesevehicles up and selling them to gullible buyers in states far fromthe Gulf of Mexico."

"This is a financial issue for consumers and the industry, butit is also a very serious public safety issue," said U.S. Rep. JanSchakowsky, D-Ill., ranking minority member of the subcommittee."Currently, there is no way to tell if a car that is on the usedcar lot should be on the scrap heap instead."