Auto Insurance

The letters published (Jan. 2) in response to my article (Editorial Pages, Dec. 17) on group automobile insurance contain a number of imprecisions.

First, group automobile insurance would lead to savings on the loss as well as expense side because employer purchasers would have an incentive to encourage loss prevention and contain fraudulent claims.

That is exactly what has occurred with group health insurance.

Second, while group automobile insurance premiums are presently taxable income to the employee, they are generally viewed as an ordinary and necessary business expense and therefore tax deductible by the employer. Congressional clarification of federal labor law is necessary, however, to assure that group automobile insurance is an allowable employee fringe benefit negotiable by labor unions.

Third, while there have been some group automobile insurance plans marketed without Insurance Department action in California, the department took the position in the early 1970s that they are not legal. The department viewed the consumer savings as “unfairly discriminatory” because group policyholders are charged less than those with individual policies. Only after a decade of work by Aetna Life & Casualty was group auto insurance finally sanctioned in 1982. Nonetheless, the Insurance Department has apparently recently been telling people that it still considers group auto coverage illegal.

DOUGLAS L. HALLETT

Los Angeles