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INSURANCE, TO THE SUBCOMMITTEE ON ANTITRUST AND MONOPOLY The American Trial Lawyers Association believes that the driver of an automobile has freedom of choice, whether he observes the rules of the road or disobeys them and must remain responsible for the choice he makes. The activity of driving an automobile safely does not require an unusual amount of strength, agility, reflex speed or coordination, nor does it demand a rare degree of judgment.

Persons of all ages, all occupations, all races, and both sexes manage to drive with reasonable regard for the rights of others provided that their highways and automobiles are reasonably safe and that they are in fair health, are awake and attentive, and are not suffering impairment from alcohol, drugs, medications, or severe emotional distress. Accident statistics prove that although the total number of accidents is very large, the proportion of injuries to vehicle miles driven is quite small.

There are more than 100 million licensed drivers in the United States about half the population. There are nearly 100 million registered vehicles—about one vehicle per licensed driver. These drivers and vehicles travel just about one trillion miles each year on the streets and highways; and average approximately 10,000 miles per driver.

The death rate from motor vehicle accidents runs about 55,000 per year, which approximates one death for each eighteen million driving miles. There are over 1392 million collisions each year which cause minor or major damage to fenders, bumpers, glass, body and engines. It has not been emphasized, in the debate over automobile reparation systems, that more money is paid out an. nually for damage to automobiles than is paid out for people injured by automo biles.

In 1967, for example, the sum of $2,580,000,000 was paid out by casualty insurance companies on bodily injury claims. In the same year, $2,011,000,000 was paid out on auto collision, fire, theft and comprehensive coverages, and an additional $1,224,000,000 on property damage automobile liability claims, for a total of $3,235,000,000 in property damage or loss claims. (Source: Statistical Abstract of the United States, 1969, Table 828, based on the Property Liability Insurance Index.)

Any plan which abolishes all liability and all payment for property damage claims, such as the plan of the American Insurance Association, can easily promise a lower liability premium rate. Obviously, the abolition of benefits results in lower costs.

How many injuries are caused by automobile accidents? Published statistics are in serious disagreement. "Accident Facts," 1969 Edition, published by the National Safety Council, states that the total non-fatal injuries in motor vehicle accidents in 1968 were 1,150,000 urban and 850,000 rural, for a total of 2,000,000. For the same year, 1968, the Statistical Abstract of the United States cites a total of 4,400,000 injuries, based on "The Travelers Book of Street and Highway Accident Data." Both sources give approximately the same number killed (55,000) but differ by more than two to one on the total number of injuries.

If the National Safety Council's number is correct, one driver in 50 was injured in 1968. If the Traveler's Insurance Company's estimate is correct, then about one driver in 23 was injured. To put it another way, the average driver could drive his average mileage of 10,000 miles per year for 23 years without being injured in an automobile accident.

It must be remembered that the automobile accident produces a relatively small percentage of the total injuries in the United States. For 1967, the last year in which published data permit direct comparison, "The Travelers Book of Street and Highway Accident Data' estimated 4,200,000 persons injured by motor vehicle accidents, while the Department of Health, Education and Welfare's Vital and Health Statistics, Series 10, No. 43, estimated 10,300,000 injured at work ; 22,800,000 injured at home; and 21,000,000 injured outside the home or work, including the automobile accident victims. About one injury in 12, then, is produced by a motor vehicle. There is reason to doubt whether the automobile injury problem is so distinctive it must be treated differently from all other injuries.

The most certain method of reducing insurance premiums and accident cost is to reduce the amount of injury to persons, reduce the damage to vehicles, and reduce repair costs.

There are two different methods of accomplishing this. One is to reduce the total number, or at least the relative number, of accidents. The second is to reduce the extent of injury, and also the cost of car repair, given the same number of accidents. (This subject will receive more detailed discussion in a separation section of this paper.)

The fact remains that with the best of highway design, the best of licensing examinations, and the best of automobile designs, there will be drivers who pass at the crest of the hill, who pass across the solid yellow line, who speed beyond control, who crash the stop sign, who follow too fast and too close, or who drive badly while drunk.

There will be accidents, and there will be injuries, so long as people drive a trillion miles a year. What is the best system to deal with the losses? The "best' 'is not necessarily the cheapest.

ATL believes that any system must be judged against the natural sense of what is fair and just. The concept of justice is inherent in the moral sense of the American public. The cheapest system would be to abolish all liability, all recovery, and all insurance systems. Every loss would then be allowed to remain exactly where it fell, and there would be no cost at all incurred in any process of shifting or redistributing the loss. We do not believe that the citizens in this country would tolerate such a system, nor should the government attempt to force them to do so. Economic efficiency is no substitute for the fair treatment of each individual.

There are a very limited number of choices as to how losses can be shifted. One choice, as noted, is to let each loss remain on that victim where it happens to fall. A second choice is to shift some or all of the losses to other individuals. The third choice is to shift some or all of loss to the state, representing the whole of society or at least the tax paying part of it. Every system in the world deals with some combination of these three alternatives. Every system which shifts losses entails costs, which must be paid by the victim, or by other individuals in a limited class (such as motorists) or by all the state's taxpayers.

Our present system, based on the law of torts, or the law of right and wrong, allows some losses to remain where they fall and shifts some losses in full. It does this by making a determination which driver was in the right, and which driver was in the wrong. The driver who is at fault is responsible for making good the whole loss he inflicts on the innocent victim by his defective driving.

If the injured person was himself at fault, if he was in the wrong, then he is not entitled to demand compensation from the man who was driving carefully and properly, nor is he really entitled to demand compensation from society. The community, or the state, may desire for reasons of its own to bind up his wounds and ease his economic losses. The state may decide to pay for all medical and hospital care, to pay for rehabilitation, and to pay for wage loss during disability. But this payment to the man who has wrongfully injured himself and others would be made only because it served the best interests of the community.

If the state wishes to have all automobile accident victims paid medical, hospital, and disability benefits as an additional form of security for each member of society, then it is very difficult to rationalize the decision to pay only the one accident victim in twelve who is injured by the automobile. The eleven victims out of twelve who are injured by other means would seem to have the same need for security, and the same kind of claim against the conscience of the state.

If there is any justification for paying a form of social security benefit to accident victims only when a motor vehicle is involved, then a distinction should still be made between the innocent victim who was driving properly on his own side of the road and the reckless, irresponsible driver who careens over the center line to smash into him.

The essential vice of the Keeton-O'Connell Plan, the American Insurance Association Plan, the Cotter Plan, and all the variants of the Non-Fault Plans, is the fact that they pay exactly the same benefits to every driver and passenger, right or wrong, drunk or sober, law abiding or law defying.

The reason the Plans do this is obvious enough: it would cost too much to pay full compensation to everyone. It is cheaper to pay the same amount to everyone by taking away part of the recovery the driver in the right is entitled to, and giving it to the driver in the wrong.

When fault exists in fact, it is raw injustice to postulate that it does not exist in law. The mythical word "Non-Fault” cannot change the reality that fault does We concede that the automatic, limited compensation plans can be designed to be cheap, depending on how much is taken away from deserving cripples and widows, but this does not make them fair.

In a poverty-stricken, struggling society, where the pressing problem is survival, it may be that the economic system cannot afford elementary justice. The world has seen societies where the sick were allowed to die without treatment, and the maimed were turned out from the tribe to starve. No one supposed this was fair to the individual who perished, even though it might have been necessary for the preservation of the remaining members of the tribe.

The American economic system would seem to be strong enough to give fair treatment to each individual. There is no compelling group-survival reason for taking away the natural rights of any wrongfully injured citizen. Indeed, the glory of America has been that the rights of each person are preserved and enlarged.

We used to believe in this country that government and business should serve the rights of the individual, rather than design the rights of the individual to serve the needs of government and business.

There is strong evidence that the American community still believes that there is a difference between right and wrong in the simple task of controlling an automobile, and that any reparation system should recognize that difference if it claims to be fair and just.

State Farm Mutual Insurance Co. has recently completed an opinion survey of its three million policy-holdersa survey which is far and away the largest sample of motorists ever polled on their views of the fault system. The results were published in many newspapers on December 15, 1969. On the proposition“The driver who causes an accident, or his insurance company, should pay for the losses of the other people in the accident"_94% of those responding in the survey agreed.

A corresponding proposition was: “Who causes the accident should have nothing to do with who should pay for the losses of other people in the accident." This proposition is the basic theme of the Keeton-O'Connell Plan, the A.I.A. Plan, the Cotter Plan, and all the variants of the non-fault schemes. It is significant that only 11% of all those responding to the questionnaire agreed with that proposition.

It seems abundantly clear that the architects of the non-fault schemes have been designing systems that nine people out of ten believe to be unjust.

The non-fault plans are designed, not for people, but for the stock insurance companies which seem unable to compete profitably under the present system. The plans set up restricted, unfair benefit systems that deny full recovery to innocent victims of bad driving. But these partial benefits, which will be paid to all drivers, right or wrong, are easy to predict on the actuaries' computer and will allow a rate to be set to guarantee an underwriting profit to the least efficient, highest cost, insurance companies.

A brief review of what the plans propose to do will demonstrate their basic disregard for individual rights.

THE AMERICAN INSURANCE ASSOCIATION PLAN Assume a reckless, irresponsible driver crashes a red light, runs a stop sign, or attempts to pass in a no passing zone, and causes a violent collision. He mutilates the driver and passengers in a vehicle which was proceeding properly, and makes the car itself a wrecked total loss. Under the AIA Plan, the wrong driver is not at fault. He is not to blame. He is not liable at all. He is not responsible for the medical bills of his victims, nor for the repair bill or loss bill for the car. He cannot be sued, for any amount. The persons he injures can make no claim against him in any court.

In short, every traditional right of the innocent victim of a wrongdoer is totally abolished-provided only that the instrument of harm in the wrongdoer's hands is a motor vehicle.

A prudent man, knowing he could never recover from the reckless driver under the no-liability plans, might wish to buy health and accident insurance to give himself and his family some protection.

This Plan gives him no choice. He must buy, whether he wishes to or not. He will be compelled to buy from a private insurance company, at a cost dictated by the company to its captive market, a health and accident policy which contains a set schedule of benefits.

He will receive a percentage of his lost wages, provided he is earning any wages at the time, and provided he is not earning too much. There are upper limits on wage losses. Medical and hospital bills will be paid. Even though he may have full medical coverage from other sources, nevertheless he must buy the Plan's medical coverage.

He will recover nothing for the property damage to his car. He will recover nothing for loss of sight, loss of limb, disfigurement, disability, or the agony of torn flesh.

The Plan requires each driver to carry a form of low limit compulsory life insurance for himself and his passengers, so that modest death benefits can be paid in the event of fatal injury.

The American Trial Lawyers has heard no arguments that the AIA Plan is fair or just. Its proponents say it will be cheap. It should be. It would be even chea per if the government funded the Plan and eliminated a substantial part of the sales expense and the private profit.

The AIA Plan is simply a form of Social Security for automobile occupants, with compulsory coverage regardless of individual responsibility or individual need.

All such systems can be operated more economically by government agencies. The American Trial Lawyers opposes the AIA Plan, but adds that if any such scheme is to be imposed on the American public then it ought to be funded by the federal or the state government and not mandated for the private benefit of the health and accident insurers.

THE COTTER PLAN The Cotter Plan is essentially the AIA Plan, with the addition of a withered cherry on top of the little cake. The innocent victim will still have no right to recover from the wrongdoer, but all drivers will be compelled to purchase an additional policy from the private insurer to provide some benefits for pain and suffering.

The benefits will have no relationship to the actual pain the victim endures. It postulates that the value of the misery suffered is exactly equal to one-half the medical expenses, but excluding the cost of x-ray from the medical expenses, if the expenses are less than $500. Pain is supposed to equal expenses over $500.

It is fallacy to suppose there is a fixed relation between the cost of medical services and the real suffering.

It would seem logical that given the same injury, the most extensive and expensive hospital, medical and nursing care should reduce the actual pain, suffering and disability, but this would increase the benefits.

The Cotter Plan's formula payment of an extra half of the medical bills is simply an actuary's easy device to fix an extra benefit, and an extra premium, but it has little connection with reality.

THE KEETON-O'CONNELL PLAN The Keeton-O'Connell Package calls for compulsory health and accident insurance, with a fixed schedule of benefits to repay part of the economic loss. The automobile driver can buy additional optional coverages, for additional optional premiums, just as he can today.

In addition the driver in the right can bring his traditional tort action against the driver in the wrong, and can recover a judgment for his full damages, although he cannot collect them.

Once a jury has determined that his pain, disfigurement and disability is really worth $6,000. The Keeton-O'Connell Plan takes away $5000 and allows the innocent victim to recover just $1,000. The arbitrary deductions of $5,000 from what rightfully should be paid is justified on the grounds of economy. Insurance will be cheaper if $5,000 worth of basic injustice is built into every policy.

PLANS IN OTHER NATIONS The Michigan Legal Studies ("Automobile Accident Costs and Payments" by Conard, Morgan, Pratt, Volta and Bombaugh, 1964) analyzes the system for compensating accident victims long in force in England, France, West Germany, Sweden, and Saskatchewan. To this list should be added the Ontario Plan, which resulted from a massive three-year study by a select commission which reviewed the whole automobile insurance and compensation system there.

The systems in England, France, West Germany, Sweden and Ontario and Saskatchewan are quite similar. In general, hospital and medical expenses are paid without reference to the patient's earning level, savings or fault.

Disability benefits are paid promptly for the period of temporary inability to work, and are not limited to total and permanent disability or dismemberment cases. Disability incurred in the course of employment, in automobile accidents, or in accidents at home, are all treated in the same way. The schedules of weekly payments are limited, but adequate for economic survival.

The source of payment is, generally, a tax supported government fund derived either from gasoline taxes or general taxation. Ontario provides for voluntary loss insurance, with a special registration tax paid by the uninsured driver to create a fund for uninsured claimants.

Not one single plan takes the “No-Fault" approach of abolishing or diminishing the personal liability claim. The innocent victim of the careless driver retains his traditional right of action, which is supplemented by the social and voluntary insurance plans. He is certain to obtain partial compensation, as under KeetonO'Connell and the AIA plans, but is entitled to full and complete restitution if he is in the right.

The unjust take-away provisions of the no-fault proposals are not tolerated. If the innocent victim does recover, then he repays to the state fund the benefits he has received. This prevents a double recovery, and reduces the cost to the fund.

There is another dramatic difference. In England all insurance must be written open-end. There are no upper limits. In Germany and Ontario the minimum limits are much higher—$35,000 in Ontario. Experience has demonstrated that the added cost is insignificant. The case of major, disastrous injury is very rare, but the unfortunate victim of the maiming or paralyzing injury needs far more help than the minimums in any American state, or the provisions of the KeetonO'Connell Plan.

It is hard to justify the proposition that the wealthiest, most affluent nation in the world should tolerate the lowest minimums and the least protection to its citizens.


The American public is concerned over the increasing cost of automobile insurance. Plans which promise to reduce premiums have considerable appeal, even though the lowered cost is reached by cheapening the benefits.

Proposals which would substantially increase premiums will probably be unacceptable to motorists generally.

The one certain way, and the most beneficial way, to reduce premiums is to reduce the level of injuries from automobile accidents.

When a motorist is injured through the fault of another, the damages he recovers consist of hospital bills, doctors and nurses bills, drug bills, lost wages, and compensation for pain, disability and disfigurement.

Hospital costs have risen faster than any other element in the price index. The cost of medical and nursing care, and the cost of prescription drugs has multiplied. Wage levels are at an all time high. The cost index for the items included in damages increasing every year. The fact is that the elements which fix the amount of damages have risen at a faster rate than the premiums for bodily injury coverage.

Obviously, premiums for bodily injury liability could be reduced if hospital rates, doctors' fees, and wage rates were cut in half. It should be equally clear that, even though hospital rates remain high and wages remain high, the total cost of injury can be cut in half if the length of time spent in the hospital and the length of time lost from work is cut in half. This can be done, with the tools at hand, and it ought to be done. All the techniques, all the means for doing this are known and readily available.

The safety engineers insist that with proper use of the safety devices presently mandated for all new automobiles by the National Highway Safety Act, fatalities would be cut in half; serious injuries would be reduced to moderate injuries ; moderate injuries would be reduced to minor injuries, and minor injuries would be eliminated.

The typical urban accident, a rear end collision at less than twenty five miles an hour, should produce no injury at all. This common whiplash injury cannot occur with a properly adjusted headrest at typical impact speeds in city traffic. The padded dashboard helps to reduce head and face injury, but the motorist would be better protected if he wore an adequate shoulder harness so that he would not hit the dashboard at all.

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