SOMEWHERE ALONG THE WAY through each Congress, those who would do nothing about America's automobile insurance mess manage to beat back those who would like to do something about it by enacting a federal no-fault insurance law. But, somehow, the bipartisan champions of the beleagured auto-owners and premium-payers manage to keep coming groggily back to the struggle. One reason, we suspect, is that the consumers, in no mood to give up the fight for a better system, are intensifying their pressure. And they have received some useful reinforcement: The Department of Transportation has just sent Congress a report underscoring the success of various no-fault insurance programs already in effect.
This latest DOT report is based on the experience of 16 states with no-fault insurance programs, through which insurance companies pay for losses without regard to who caused the damages. The states' experience "would appear to confirm the basic soundness of the theroy and the feasibility of the theory's implementation," says the report, adding that varying programs "are widely seen as successes . . . No-fault automobile insurance works."
As more and more Americans are finding out, a disproportionate amount of their car-insurance dollars is wasted on a system that doesn't really protect them the way it should. Instead of getting swift, direct compensation at a justifiable cost, they are running into needless, time-consuming litigation, red tape and unfair payoffs.
A survey made by DOT 10 years ago concluded that 1) the tort liability system compensated only about one-sixth of the economic losses of individuals in serious auto accidents, 2) more than half of the people injured in such accidents received no tort compensation at all and 3) the tort system overcompensated people with minor claims and undercompensated those with severe economic losses. While a similar survey for victims under no-fault systems has not been done, according to DOT, the new report says the existing research "does appear to constitute a strong case that no-fault is compensating more accident victims more completely and more equitably for their economic losses than did the tort liability system. The report also cites evidence that no-fault benefits are being made "in a much more timely fashion than are insured tort liability benefits." While the DOT report stops short of endorsing federal no-fault legislation, the proposals pending in Congress would merely incorporate the benefits of no-fault in a uniform national pattern.
Opponents of the legislation will no doubt revive their argument that the congressional no-fault bills - S. 1381 in the Senate and H.R. 6601 in the House - would "federalize" insurance systems in the states. But that's not what the bills propose. They would merely offer a framework of minimum standards under which each state could proceed to enact a no-fault insurance program ensuring immediate compensation for the economic losses of auto-accident victims. States would still regulate insurance, set rates and oversee procedures for claims and litigation.
This approach has been studied long enough. In the Senate, hearings are scheduled for next month; in the House some hearings have been held and another session may be conducted in July. We believe that the protection afforded by automobile insurance in this country is grossly uneven and inequitable, and that the pending legislation would do a lot to improve it. And that, we think, ought to be reason enough for responsible members of the Senate and House to do something about getting it passed during this session of Congress.