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OTHER FINDINGS

IS.

Economic Distribution of Losses

The survey developed data on economic loss, including collateral sources of recovery for all persons injured whose claims for bodily injury were settled during the survey under liability, medical payments and uninsured motorists coverages

The percentage of total economic loss by kind is indicated below:

% of Total Medical

55.4 Income

40.0 Other Out-of-pocket

4.6

100.0% The total economic losses of all persons who recover in tort represents only 42% of their total recovery for bodily injury liability, however.

The survey inquiry with respect to collateral sources elicited information indicating that at least 27% of economic loss was also compensated by sources outside the auto insurance system. Broken down by type of economic loss, the collateral sources were:

31.5% of Medical Loss

23.8% of Income Loss Available collateral sources appear to be equal to at least 11% of total recoveries in tort under the present system. Personal Status of Injured Persons

Of those injured in the policyholder's car 79% were related to the policyholder (including the policyholder himself). Of those, 45% were income producers. Of those not related to the policyholder, 41% were income producers. Of all income producers injured in the policyholder's car, 80% were related to the policyholder. Relationship of Economic Loss to Total Recovery

The survey confirms that the total amount paid to settle a bodily injury claim under the tort liability system is on the average 2.4 times the amount of economic loss. However, the ratio is much higher where the economic loss is small, and it becomes smaller as the amount of economic loss increases. (See Exhibit X.)

The lawyer's role in producing a consistently better recovery is apparent in the ratios of bodily injury settlements to economic loss with lawyer involvement. However, the survey was not able to determine whether claimants fared better in their ultimate recoveries, net of legal fees. Relationship of Reckless Driving to Accidents and Injuries

Less than 10% of the injuries in one-car accidents are associated with serious traffic violations. (See Claim Survey Form I, Section II for listing of serious traffic violations.)

Less than 5% of the injuries in multi-car accidents are associated with serious traffic violations.

Average economic loss from injuries associated with serious traffic violations was almost twice the average economic loss from all injuries.

While the average ratio of economic loss to total tort recovery is 2.4, the tort recovery for injuries associated with serious traffic violations is on the average 2.9 times the eco nomic loss resulting from such injuries. Effect of Certain Kinds of Injury

The survey identified certain kinds of injury to permit a determination of their effect on tort recoveries and their impact on economic loss.

10% of the injuries reported in the survey resulted in scarring, disfigurement, loss of limb or sight or permanent impairment of bodily function. Persons suffering such injuries sustained economic loss 350% higher on the average than other injured persons (not including death cases).

A comparison of the ratios of recovery in tort to economic loss indicates that at each level of economic loss, the ratio of total recovery to economic loss is higher for those persons who sustained the serious injuries described in the above paragraph than for those sustaining other injuries (not including death cases). 98% of these serious injuries for which claim was made resulted in a recovery in tort.

Death Cases

Almost 0.9% of the injuries in the survey resulted in death. Average economic loss in such cases was reported as $2,734. Average recovery in tort was $7,036. 96% of the injuries resulting in death for which claim was made produced a recovery in tort. Property Damage

The claim survey covered property damage totalling almost $3,500,000, of which $95,500, or 2.7% was damage to property other than vehicles. The average cost of repair or replacement of vehicles was $330.

Property damage liability claims were settled for $227 on the average. Collision claims for $366.

For automobile property damage claims settled on the basis of tort liability, recoveries were 95% of repair or replacement costs.

9% of property damage liability claims were in the hands of attorneys at the time of settlement.

Subrogation rights were asserted in about 10% of the property damage liability claims.

The average deductible amount applicable to collision insurance claims was $77.

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THE INSURANCE INDUSTRY

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160.26

$143.12

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-145

- 45%

Modified
Keeton -
O'Connell

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Personal Injury
to 10/100 with
Ros.Liab. to 15/30
(Statutory, Out-of
State & Optional

In-Stata)

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Coverage

Statutory Sub-Total

to

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Personal

Injury Total

P.D. Non-Auto. Liability

Sane as

$ Premium Saving

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169.14

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Notas:

-15

For Statutory Coverage, the average conts under No Pault Systems are derived using thibit I, Sheet 2 results.

ar b) Por Optional In-State Residual Liability Coverage to 15/30 under Modified K. &0.. 217. 172 x 1.50 1.19 (

thet 1. Shoat 3).

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c) Por Rasidual
C) For Residual ability from 15/30 to 29/32

ability from 15/30 to 25/50, the lir-Stato increment to more equivalent
to the present 20/40 to 30/60 increment (.661.21 -1.15), while the Out of Stato
1 Crement in the present 15/30 to 25/50 percent (.092 - 1.19. 1.09 -1.00):

TOLL NO-Fault Reparations Syate vere to have an orfoot for collateral sources
a) 1 tb Tolal No-Fault Ropara

to that under the Kooton-O'Conneli Plan, the cont of statutory personal loans
coverage (shown in the fourth column) vous bo reduced free $57.26 to 128.70, od
the Indicatos porcentage having would roue.

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Pero Loss Ratio

382 Loss Adj. Deponse Ratio

.073((1) I .19) Gonl. Adria, Azponso Ratio

in 1.000

005 Total

.520 Under the assumption that Production Costo and Taxes, Licenses and toos will remain us Mized porcentages of prendums, the premium savings : 520 + .720 = .722 (-28%) Modified I. &0. B.L. - Mandatory Coverage (excluding Residual Hability to 15/30) Pero Losi Ratio

.550

.662 = 361 Loss Adj. Depense Ratio

105((1) x 19)

007((1) , .075) Genl. VAR, Aponso Ratio

I 1.000 -
Total

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20

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Under same assumptions as 10 I. &0., the premium savings = .456 + 720 = .633
Total No Pault Reparations System B.L.
Paro Loss Ratio

.779

426 Loss w . pense Ratio

.047((1) x Gonl. Adade. Espanso Ratio

1.000 Total

.540

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11)

TO

Under same assumptions as in K. & O., the premium savings • .540 • .720 - .750 (-25%)
Danage to property - Non-Janit Option
Pie

Sertags Factor

( chant IX) Pure Loss Ratio Loss Adj. Expenso Ratio

.0521 (1) 2 .10) Gonl. Addn. bepense Ratio

1.000 :

065 Total

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Onder samo uruptions as 10 X. d 0., the prend un savings = .637 • .720 = .885 (-21%)
Couldog
Pure Logs Ratio
Loso Adj. Apense Ratio

con((1) : 13) *

050((1) „10) Genl. Adada. Apense Ratio

Total

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Under the issumption that the new coverage will bave the same Production cost and Tares, Licenses and tool wlovance as 10 P.D. Lability today, the prend un savings =

.615 . .720 = .854 (-15%) Dongo to Property . Hability Dotton

It is estimated that the Lability Option would cost approximately the same as present
Property Damago Liability Insurance,
Donnte Property. Non-Arto Lability
It was roughly ostilnated that this coverage vould bo offered at $3.00.

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Achibit I

Sheet 3

ALTERNATIVE NO_FAULT SISTEMS - PERSONAL INJURI

Determination of Ratio of Loss Adjustment Expenses to Pure Losses

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19%

Ratio of Loss Adjustment

Esponses to Pure L08808
(112) + (6) + (8)) . (9)) (10)

116

7.5% Notas: a) Loss dollars abovo relate to percentages Tra chibit II.

b) In Total No-Fault Reparations System, it was observed from Tablos 1-2

and P-3 that economic losses on cases with Sorious other factors amounted

to 36.2% of the economic losses in all cases. (36.2% x 72.7 = 26.0). c) Ratias of loss adjustment expenses to losses selected woro:

1)5% for first party cases(considering Accident Insuranco and also tho

obligation to share attorneys' foos); 11/19 for Residual Lability Out of State (current %) and for Sorious Casos; 111)50% for Residual Liability In State (considering the tort exemption

deductions).

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