No-Fault Insurance
Your April 19 headline and story on the passage of the no-fault automobile insurance legislation (AB 354) suggested that this was just a big win for the insurance industry (“Panel Approves Insurer-Backed No-Fault Bill,” Part I, April 19). Actually, any benefits to insurance companies should translate into benefits for the consumer. Proposition 103 enacted strict oversight rules which will make any cost savings for the insurance companies into lower rates for consumers.
At the hearing, the companies and the author of the bill (Assemblyman Patrick Johnston, D-Stockton) pledged to add a strong prior approval regulatory system to the measure, if the court declares Proposition 103’s protections invalid. (That, in and of itself, was news since the companies have never agreed to support any strengthening of California’s insurance regulatory system.)
Trial lawyers won’t benefit from passage of the bill since the measure is designed to take small cases out of the clogged and costly court system. That’s why the California Trial Lawyers’ Assn. is devoting significant resources to defeating the bill.
Payment of pain and suffering for minor injuries in the average fender-bender is eliminated under AB 354. That change will put some heavily advertised trial lawyer firms out of business.
Consumers will benefit. When Consumers Union and Johnston’s staff drafted the bill, we matched it to New York’s auto insurance system. There is guaranteed full and prompt payment for the medical costs and wage loss associated with most injuries.
Further, the New York system has kept the rates in that state relatively stable. Rates have only increased about 4% per year there, much less than the astronomical increases in California in the same time period.
These are all subtle, but important, differences in the usual trial lawyer versus insurance company battle. The subtleties, though, are what made this bill pass where all insurance industry versions of no-fault auto insurance have failed. The news is that the Legislature is acting on a solution for California drivers.
JUDITH BELL
Director of Special Projects
West Coast Regional Office
Consumers Union
San Francisco
