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THE INSURANCE INDUSTRY

HEARING

BEFORE THE

SUBCOMMITTEE ON
ANTITRUST AND MONOPOLY

OF THE

COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE

NINETY-FIRST CONGRESS

FIRST SESSION

PURSUANT TO
S. Res. 40

Part 18A
AUTO LIABILITY INSURANCE

STATEMENTS AND APPENDIX MATERIAL

Printed for the use of the Committee on the Judiciary

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1971

39-280 O

For sale by the Superintendent of Documents, U.S. Government Printing Office

Washington, D.C. 20402 - Price $3.50

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JAMES O. EASTLAND, Mississippi, Chairman JOHN L. MCCLELLAN, Arkansas

ROMAN L. HRUSKA, Nebraska SAM J. ERVIN, JR., North Carolina

HIRAM L. FONG, Hawaii THOMAS J. DODD, Connecticut

HUGH SCOTT, Pennsylvania
PHILIP A. HART, Michigan

STROM THURMOND, South Carolina
EDWARD M. KENNEDY, Massachusetts MARLOW W. COOK, Kentucky
BIRCH BAYH, Indiana

CHARLES MCC. MATHIAS, JR., Maryland
QUENTIN N. BURDICK, North Dakota ROBERT P. GRIFFIN, Michigan
JOSEPH D, TYDINGS, Maryland
ROBERT C. BYRD, West Virginia

SUBCOMMITTEE ON ANTITRUST AND MONOPOLY

PHILIP A. HART, Michigan, Chairman THOMAS J. DODD, Connecticut

ROMAN L. HRUSKA, Nebraska
JOHN L. MCCLELLAN, Arkansas

HIRAM L. FONG, Hawaii
SAM J. ERVIN, JR., North Carolina
EDWARD M. KENNEDY, Massachusetts

HOWARD E. O'LEARY, Jr., Staff Director and Chief Counsel

(II)

MDS 12 508-12

CONTENTS

-----------

---------

STATEMENTS AND ATTACHMENTS

Page

American Insurance Association ----

12493

American Mutual Insurance Alliance -----

12558

National Association of Independent Insurer

12675

Defense Research Institute

12808

American Trial Lawyers Association -------

13165

Insurance Company of North America -----

13197

Committee for National Health Insurance.

13295

Jeffrey O'Connell, University of Illinois College of Law.

-- 13309

ADDITIONAL INFORMATION SUPPLIED

Letter from Robert E. Keeton, Harvard Law School, January 6, 1970.-- 13316

Letter from Allstate Insurance Co., April 21, 1970.--

13318

Letter from John Fleming, professor of law, University of California at

Berkeley, November 17, 1969.---

Letter from Albert A. Ehrenzweig, University of California at Berkeley,

November 3, 1969---------

13326

APPENDIX MATERIAL

Article: “A Better Comparative Negligence Rule,” by Bruce Parkhill,

American Bar Association Journal, March 1970.-

13328

Article: "What's Wrong With the AIA No-Fault Plan," by Herbert S.

Denenberg, University of Pennsylvania, independent agent, May 1969.. 13331

Compendium: Automobile Indemnification Proposals, by Willis Park

Rokes, professor of business administration, Department of Insurance,

University of Omaha.------

------- 13335

Correspondence relating to compilation of material for subcommittee by

Wharton School of Finance and Commerce, University of Pennsylvania. 13380
Letter from John S. Boyle, chief judge, Circuit Court of Cook County,
concerning court load.------

13380
Report on mass merchandising of auto insurance prepared for subcommittee

by Bernard L. Webb, assistant professor of actuarial science and in-
surance, Georgia State College.--

13427
Article: “Group Auto Seen as Innovation 'Bringing Better Insurance to
Millions,'" by Herbert S. Denenberg, of Wharton School of Finance and
Commerce, Business Insurance, November 4, 1968.-----

13746
Article: “Mass Merchandising Trends," by Herbert S. Denenberg, Whar-

ton School of Finance and Commerce, Best's Insurance News. ------- 13742
Letter to Chairman Hart from Bronx-Westchester Metropolitan Insurance

Brokers Association opposing mass merchandising of auto insurance...
Study: Application of cost-benefit analysis to motor vehicle accidents, by

Department of Health, Education, and Welfare---
Letter from Attorney General of British Columbia with attachments out-

lining British Columbia's auto insurance plan.----
Background on Puerto Rican plan of auto insurance supplied by Frank W.
Fournier, executive director.----

13993
Article: “A Report to the People and to the Government of Puerto Rico

on the Social Protection Plan for the Compensation of Victims of Auto-

mobile Accidents," by Juan B. Aponte and Herbert S. Denenberg----- 14051
Material from Massachusetts Association of Independent Insurance Agents

and Brokers on auto insurance plan the association supports----

Background on proposed auto insurance legislation in Tennessee.--

14081 R

Background on proposed auto insurance legislation in Maryland.-- 14101

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13747

13837

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THE INSURANCE INDUSTRY

STATEMENT OF AMERICAN INSURANCE ASSOCIATION

AMERICAN INSURANCE ASSOCIATION,

Washington, D.C., December 19, 1969. Re Auto insurance investigation. Hon. PHILIP A. HART, Chairman, Senate Antitrust and Monopoly Subcommittee, old Senate Office Building, Washington, D.C.

DEAR SENATOR HART: We are submitting our statement and attachments in lieu of oral testimony that had been originally scheduled for December 15, 1969, at which time Mr. T. Lawrence Jones, President of the American Insurance Association, was to have been our organization's witness. The subject of our statement is the “Complete Personal Protection Automobile Insurance Plan," a program we have put forth to restructure the present automobile insurance reparations system.

The enclosed material submitted for your Subcommittee's record includes the following:

(1) Prepared statement of T. Lawrence Jones, consisting of 25 pages.

(2) A report of the AIA Special Committee to Study and Evaluate the KeetonO'Connell Basic Protection Plan and Automobile Accident Reparations.

(3) The results of a poll compiled by "The Advocates," a television program, following a public television broadcast on November 9, 1969, when a panel discussion about automobile insurance reparations was presented.

(4) Three charts detailing premium income under present and projected conditions, along with a comparative outline of the existing and proposed auto insurance policy.

(5) The statement of T. Lawrence Jones before the Senate Commerce Committee on S. 2236 (Federal Insurance Guaranty Corporation Act).

The American Insurance Association and its member companies appreciate the opportunity to submit the above information for your review and evaluation. The interest of your Subcommittee in the area of automobile insurance and, particularly, in seeking new and responsive programs for adequately compensating auto accident victims, is commendable. We believe you will find our proposal for modification of the reparations system a worthy and solid contribution. Very truly yours,

MELVIN L. STARK, Manager. Enclosure. Attachments.

AMERICAN INSURANCE ASSOCIATION,

Washington, D.C., December 29, 1969. Re auto insurance hearings. Hon. PHILIP A. HART, Chairman, Senate Antitrust and Monopoly Subcommittee, 412 Old Senate Office

Building, Washington, D.C. DEAR SENATOR HART: Please refer to our letter of December 19, 1969, at which time we sent you copies of Mr. T. Lawrence Jones's statement on behalf of the American Insurance Association.

In that connection, we call your attention to an error on Page 3, in Line 4 of the last paragraph. The line begins with "suffered underwriting losses of more than $1.7 billion on bodily liability.” The word “bodily" should be eliminated.

12493

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