New Insurance Initiative

The rationale of Rosenfield’s proposed new automobile insurance initiative is that a state insurance company somehow would be more efficient than the free enterprise kind.

I wonder where he gets his evidence for this conclusion in light of what has been happening in Eastern Europe, and, indeed, in the Soviet Union itself when an industry is nationalized. Within California, Rosenfield might check out the competitiveness of the State Compensation Fund against the private insurers of workers’ compensation insurance. The State Compensation Fund is not a monopoly, as it appears Rosenfield envisions for auto insurance, but many governmental bodies and agencies, by law, must insure with the fund. Nevertheless the fund has managed to eke out only a 25% share of the total California workers’ compensation insurance market.

Actually, there are at least two other basic scenarios for Rosenfield’s plan besides a great big happy family of policyholders: (1) higher rates to cover the state-owned company’s inefficiencies, or (2) if rates are held below costs of the state-owned company, then Californians, as taxpayers, will have to subsidize Californians automobile insurance costs.

FLOYD A. OLIVER

Los Angeles