Auto-Insurance Bill Should Get Green Light

But the accident coverage available to most Americans today provides none of these critical elements. Operating on a tort-liability basis, it consumes vast amounts of time and resources through litigation that seeks to fix blame, while victims struggle with medical bills and the impact of lost income.

The lure of fat payoffs from insurance companies or businesses causes rampant auto-insurance fraud, both organized and individual, tied to exaggerated or even fictitious injury claims.

The idea that insurance premiums for bodily-injury coverage go mostly to compensate victims for medical expenses and lost wages is itself a form of fiction. Only 14.8 percent of such payments are disbursed for that purpose. The outlay for attorneys' fees is nearly twice as high-28.4 percent. And fraudulent and excessive claims, at 12.6 percent, come close to matching the economic-loss outlays.

After reviewing the current system, the Joint Economic Committee of Congress said it "results in the worst possible combination: high costs and low benefits."

Fortunately, the means for change is at hand. It is the bipartisan Auto Choice Reform Act This eminently sensible measure would deal with the major shortcomings of the present system and reduce annual premium costs an average of 27.5 percent for commercial and 22.8 percent for noncommercial vehicles. Savings would average $184 per year per vehicle and total $193 billion over five years, the committee estimates.

Under the act, vehicle owners could continue with coverage similar to what they presently have or purchase a new type of policy known as personal protection insurance 

The holder of a PPI policy could neither sue nor be sued for damages based on claims of pain and suffering, the principal force driving the auto tort litigation that is pushing up premiums. States could exempt themselves from the PPI system.

The vast majority of the business community is solidly behind the reform movement. Lawrence B. Kraus, president of the U.S. Chamber Institute for Legal Reform, says, "It's time to tackle the problems of lawsuit abuse and move forward with a sensible auto-choice law that allows consumers to choose and to benefit from lower premiums.

There is no justification for continuing to impose a failed, excessively costly system on consumers when a workable, equitable, and economical alternative can be put in place quickly Congress should expedite passage of the Auto Choice Reform Act.