Auto Insurance Controversy
The insurance industry’s complaints about the California tort system are justified, so said an Oct. 13, 1988, editorial in The Times. The Times went further to state it would be willing to support some type of cost-saving proposal, perhaps no-fault insurance. In its latest editorial (“Tackling Insurance,” Jan. 30), The Times states that no-fault deserves a second look. The fact is, no-fault is the best solution to the problem of ever-increasing auto insurance costs.
A fair no-fault system can eliminate many of the factors that contribute to high insurance premiums. First, no-fault guarantees rapid compensation for auto accident injuries. Under the insurance industry’s Proposition 104, accident victims would have received guaranteed payments from their own insurance companies, without having to go through a time consuming and costly legal battle. Because of guaranteed payments, victims would be precluded from bringing “pain and suffering” lawsuits unless their injuries were serious and permanent. In other no-fault states without this provision, accident victims tended to inflate the severity of their injuries and seek larger damages. With a narrow definition of serious and permanent, however, states such as New York and Florida saw a significant decline in caseloads and a subsequent decline in premiums.
The Times also considers the benefits proposed under Proposition 104 “stingy.” Yet statistics show that 90% of all personal injury claims in 1986 cost less than $10,000, well within 104’s $30,000 limits. And still, under the no-fault proposal victims retained the right to sue for damages beyond that limit.
No-fault can help offset some of the skyrocketing costs insurers face. Since 1977, auto repair and maintenance costs have increased 56%, while doctors’ fees have risen 107% in the same period. Add to that increased auto thefts and rising insurance fraud and it’s easy to see why costs eat us all.
And as for the myth that insurers somehow keep their books and records out of public view, the truth is insurance companies in California must file annual statements with the Department of Insurance, which are open to public view. These annual statements contain profit and loss information of each company as well as the premiums and loss and expense figures for 32 different lines of insurance.
No-fault insurance is the best compromise available. Accident victims get fair, quick settlements, yet still retain their rights to sue in catastrophic cases. And insurers are able to hold down costs for everybody.
DAVID H. CROCKER
Western Insurance
Information Service
Tustin
