||Home | Volunteer | Donate | Subscribe | FTCR Websites | Books | Site Map|
home / insurance / press releases
Sep 14, 1998
Insurance Industry Makes Big Push for Higher Insurance Rates Under Cover of Clinton Scandal
U.S. Senate to Vote Wednesday onWhile the country is pre-occupied with the details of President Clinton's infidelity, the insurance industry is taking advantage of this national distraction to make a final push for a national "no fault" auto insurance system in the United States Senate.
Deceptively named the "Auto Choice Reform Act," Senate Bill 2454 by Sen. Mitch McConnell (R-KY) would essentially force every state in the country to adopt a "no fault" auto insurance scheme. The insurance industry supports no fault knowing that the system will overflow their coffers with increased premiums.
"If Senators are interested in lowering auto insurance rates, they would advocate for the repeal of no fault," said Philip Roberto, Research Director for the Proposition 103 Enforcement Project. "This is a proposal that could only pass in the confusion of a Presidential scandal. For the majority of the nation's drivers, who are not covered by no fault, this bill is a recipe for raising their rates 25% faster."
Beleaguered motorists in no fault states have seen their insurance premiums increase an average of 45.6% between 1989-95, according to an analysis of insurance industry data by the Proposition 103 Enforcement Project, a Santa Monica, California-based consumer advocacy organization.
The Project found that the average no fault premium nationally rose nearly one-fourth faster than the average rate of growth of the average premium in non-no fault states.
The data analyzed, from the National Association of Insurance Commissioners (NAIC), show that:
"Good drivers will end up paying for negligent and reckless drivers if this no fault bill passes," said Roberto. "There will be no incentive for insurance companies to properly investigate traffic accidents since, under no fault, each driver's insurance company pays their claim. In fact, insurers do have an incentive to find their own policyholder at fault ñ so they can raise their rates afterwards," warned Roberto.
"Choice" Bill Is Really No Choice At All
Finally, the Project pointed out that the McConnell "auto choice" bill is really no choice at all. If a person who "chooses" traditional liability coverage is hit by a "no fault" driver, the liability driver looses their rights and is stuck in a no fault system.
"After nearly twenty-five years of experimentation with no fault throughout the country, the only conclusion that can be drawn is that the system is an absolute failure," said Roberto. "The NAIC data suggest that the best way to lower insurance premiums is to institute stringent regulation of the insurance industry and, in the case of no fault states, to repeal no fault," concluded Roberto.
back to top
©2000-2004 FTCR. All Rights Reserved. Read our