HEARINGS AND PRODUCTION OF DOCUMENTARY EVIDENCE SEC. 5. (a) For the purpose of carrying out the provisions of this joint resolution the Secretary, or on the authorization of the Secretary any officer or employee of the Department of Transportation, may hold such hearings, take such testimony, sit and act at such times and places, administer such oaths, and require, by subpena or otherwise, the attendance and testimony of such witnesses and the production of such books, papers, correspondence, memorandums, contracts, agreements, or other records as the Secretary, or such officer or employee deems advisable. (b) In order to carry out the provisions of this joint resolution, the Secretary or his duly authorized agent shall at all reasonable times have access to, and for the purposes of examination the right to copy, any documentary evidence of any corporation, business firm, institution, or individual having materials or information relevant to the study authorized by this joint resolution. (c) The Secretary is authorized to require, by general or special orders, any corporation, business firm, or individual or any class of such corporation, firm, or individuals to file, in such form as the Secretary may prescribe, reports or answers in writing to specific questions relating to the study authorized by this joint resolution. Such reports and answers shall be made under oath or otherwise, and shall be filed with the Secretary within such reasonable period as the Secretary may prescribe. (d) Any of the district courts of the United States within the jurisdiction of which an inquiry is carried on may, in the case of contumacy or refusal to obey a subpena or order of the Secretary or such officer or employee isssued under subsection (a) or subsection (c) of this section, issue an order requiring compliance therewith; and any failure to obey such order of the court may be punished by such court as a contempt thereof. (e) Witnesses summoned pursuant to this section shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. TERMINATION SEC. 6. The authority of the Secretary under this joint resolution shall terminate ninety days after the submission of his final report under section 1(b). APPROPRIATIONS AUTHORIZED SEC. 7. There are hereby authorized to be appropriated, without fiscal year limitation, such sums, not to exceed $2,000,000, as may be necessary to carry out the provisions of this joint resolution. EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., March 22, 1968. Hon. HARLEY O. STAGGERS, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your request of December 19, 1967, for the views of the Bureau of the Budget on H.J. Res. 958, a joint resolution "To authorize the Secretary of Transportation to conduct a comprehensive study and investigation of the existing compensation system for motor vehicle accident losses, and for other purposes." H.J. Res. 958 would implement, generally, the President's proposal for a comprehensive study of the problems relating to automobile insurance as set forth in his Consumer Message of February 6, 1968. In testimony before your Committee on this measure, the Secretary of Transportation recommended certain amendments relating to the time required to complete the proposed study and the necessary authorization for appropriations. We concur in the views expressed by Secretary Boyd and recommend favorable consideration of H.J. Res. 958 with the amendments he suggested. Enactment of this legislation would be in accord with the program of the President. Sincerely yours, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, Hon. HARLEY O. STAGGERS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This letter is in response to your request of December 19, 1967, for a report on H.J. Res. 958, a bill "To authorize the Secretary of Transportation to conduct a comprehensive study and investigation of the existing compensation system for motor vehicle accident losses, and for other purposes." The joint resolution would authorize the Secretary of Transportation, in cooperation with other Federal agencies, to conduct a comprehensive study and investigation of all relevant aspects of the existing motor vehicle accident compensation system. Such study and investigation would include (1) the inadequacies of existing compensation system in theory and practice; (2) the public policy objectives to be realized by such system, including an analysis of the costs and benefits, both monetary and otherwise; and (3) the most effective means for realizing such objectives. The Secretary would be required to submit to the Congress interim reports and a final report not later than eighteen months after the date of enactment of this legislation. The final report would contain a detailed statement of the findings and conclusions of the Secretary, together with his recommendations for legislation and other action the Secretary deems necessary to carry out the objectives of this joint resolution. The joint resolution would also provide that the President shall appoint an Interagency Advisory Committee on Compensation for Motor Vehicle Accident Losses consisting of the Secretary who shall be Chairman and one representative each of the Departments of Commerce, Justice, Labor, Health, Education, and Welfare, and Housing and Urban Development, the Federal Trade Commission, the Interstate Commerce Commission, and the Securities and Exchange Commission, and other Federal agencies as are designated by the President. The Advisory Committee would advise the Secretary on the preparation for and the conduct of the study authorized by this joint resolution. Other provisions in the joint resolution would authorize the Secretary to obtain assistance in carrying out his functions from private organizations and from other governmental agencies. This Department is in accord with the purposes of this legislation and would have no objection to its enactment. Since the primary responsibility for conducting the proposed study would be vested in the Secretary of the Department of Transportation, we would defer to the views of that Department as to the adequacy of the administrative and appropriation provisions of the resolution. We are advised by the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely, WILBUR J. COHEN, Acting Secretary. Hon. HARLEY O. STAGGERS, OFFICE OF THE DEPUTY ATTORNEY GENERAL, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in response to a request for views concerning H.J. Res. 958, to authorize the Secretary of Transportation to conduct a comprehensive study of the compensation system for motor vehicle accident losses. Based on a Congressional finding to the effect that the existing system of compensation for loss and suffering due to motor vehicle accidents is inequitable and inadequate, the resolution would authorize the Secretary, in cooperation with the heads of other relevant federal agencies, to conduct a study of all aspects of the existing motor vehicle accident compensation system. For the purpose of the study the Secretary would be authorized to hold hearings and would be required to submit to the Congress a report containing his findings and his recommendations for legislation. Under the resolution the President would be directed to appoint an Interagency Advisory Committee on Compensation for Motor Vehicle Accident Losses composed of representatives from federal agencies to advise the Secretary. H.J. Res. 958 would implement, generally, the proposal for a comprehensive study of the problems relating to automobile insurance set out in the President's Consumer Message on February 6, 1968. With respect to the specific details of the bill the Department of Justice defers to the Department of Transportation. The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the Administration's program. Sincerely, WARREN CHRISTOPHER, Deputy Attorney General. Re H.J. Res. 958, 90th Congress. Hon. HARLEY O. STAGGERS, SECURITIES AND EXCHANGE COMMISSION, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: In response to your letter of December 22, 1967, requesting the Commission's comments on H.J. Res. 958, we have examined the resolution and determined that it does not appear to affect the Commission's administration of the federal securities laws. Accordingly, we have no comment on the resolution. If the resolution is adopted, we will of course cooperate to the best of our ability in discharging any responsibilities that may be assigned to us. Sincerely, MANUEL F. COHEN, Chairman. Mr. Moss. Before recognizing our first witness today I wonder, Mr. Keith, if you have any observations you would like to make at this point. Mr. KEITH. Thank you, Mr. Chairman. I have had a great interest in this subject for a long time. Massachusetts which was the earliest State to have compulsory automobile insurance, has seen the cost of this coverage go skyhigh. It is a very great problem for the people of Massachusetts and for the other States of our Nation. It is a very healthy development that this committee, the Congress and the Department of Transportation are going to try to shed light on this subject. I hope that the companies and the States will not use this study as a basis for delaying action that they might take to solve the problem in the interim period. Once again, as was the case last week when we heard from the vice president of the Equitable Life Assurance Society, I advise you of my previous and present interest in the life insurance industry. I might say that I am a part owner of a general insurance agency; when my brother died, I purchased his share of the business. As I stated before, I will use the personal information that I have of this business to further help the public interest in this problem. I feel certain that there will be no conflict in that relationship. Instead it will make a contribution to a resolution of this very difficult. problem which plagues not only the public, but the various and sundry companies and agencies who try to service the public in this area. Thank you, Mr. Chairman. Mr. Moss. Thank you, Mr. Keith. As I observed on the occasion of the previous hearings, I think it is appropriate, it is in accord with the opinion I have formed of you over the years that we have worked together, that your statement disclosing your interest is a measure of your personal integrity. I believe that I reflect the views of the committee in expressing our appreciation for your statement. As is our custom, we shall hear first from Members of Congress. This morning we have several distinguished colleagues, the first of whom is the Honorable George M. Rhodes. Please proceed Mr. Rhodes. STATEMENT OF HON. GEORGE M. RHODES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA Mr. RHODES. Mr. Chairman, I appreciate the opportunity of making known to your committee my views on House Joint Resolution 958. A study by the House Judiciary Committee has revealed that a majority of State laws covering automobile insurance are either not enforced or are implemented only on a routine basis. The study revealed that arbitrary and unfair cancellations of policies and the refusal to renew policies are entirely too frequent. I have received numerous letters from citizens who have paid premiums for as long as 20 years to one company, only to find that their policy could not be renewed at age 65, or their premium was raised to the extent that they could no longer afford the insurance. Many of these policyholders were never involved in an accident. My own State of Pennsylvania has been lax in taking steps to stop this practice, which has victimized many good citizens. The arbitrary cancellation of policies seems to be a practice which hits the elderly who, because of age, are no longer considered preferred risks. However, I do not believe age alone is sufficient cause for cancelling a policy. I fully support the legislation before this committee. I hope it will result in legislation at the State and national level to protect policyholders from the unscrupulous practices of some companies. Mr. Moss. Thank you for your brief statement Mr. Rhodes. If there are no questions, we shall hear next from our colleague from New York, the Honorable Leonard Farbstein. STATEMENT OF HON. LEONARD FARBSTEIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK Mr. FARBSTEIN. Thank you, Mr. Chairman, for inviting me to appear before your very active and effective Subcommittee on Commerce and Finance. All America knows of your efforts to protect the little man in our society from the great forces of industry and business over which he, as an individual, can exercise very little influence. These hearings today focus upon the need for a comprehensive study by the Department of Transportation on automobile insurance practices in the United States. As you know, Mr. Chairman, this is a subject in which I personally have been extremely interested for some years, and in January of 1967, together with four of my colleagues in the House of Representatives, I introduced a bill to create a Federal motor vehicle insurance guarantee corporation, and for other purposes. This corporation would protect policyholders and injured persons against insurance company failures. Lack of such protection is one of the most inexcusable weaknesses of the present insurance sys tem. At the same time, on the floor of the House, I called for a broad and thorough congressional review of the present practices of American automobile insurance companies. Sixty years ago, the automobile was a luxury, a curiosity, a conversation piece. No one depended upon it very much for getting to work, for taking the sick to a doctor, or for transporting foodstuffs and other staples to the home. Society, in fact, depended very little upon motorized transportation, and the laissez faire practices of the autobile insurance industry were quite equal to the task of that day and age and for some years thereafter. Today, however, America is motorized to an amazing degree. An automobile is an absolute essential to the great majority of Americans. Approximately 80 percent of American families own a car, and 25 percent own two or more of them. The safety problems attending the spectacular growth of the motor industry are equally awesome. We now average 50,000 deaths and 4 million injuries on the highway each year. Obviously, the motorists' need for insurance protection is very great indeed in our highly urban, industrialized society of 1968. Regrettably, the management of America's automobile insurance companies has too often failed to provide the services legitimately expected by today's motoring public. The bill of particulars against them is long and impressive: 1. The cost of insurance is rising at an alarming rate, in spite of record returns to the industry from reinvested premiums; 2. Policies are often canceled, or simply not renewed, on an arbitrary basis and with no reason furnished to the policyholder; 3. Both young and old drivers are discriminated against solely because of their ages; 4. Surcharges are often added to the premiums due to very minor traffic violations, or due to two minor accidents occurring within a short period of time; 5. Many firms refuse to write insurance in low-income areas; 6. Amputee or paraplegic veterans may find their policies have been canceled despite no change in their situation from the time the contract was issued; 7. Such diverse factors as one's marital status, occupation, and employment of spouse may make a driver ineligible for coverage; 8. In a number of instances, private persons have had to hire lawyers to get a fair and prompt settlement of worthy claims from insurance firms; and 9. Between 1960 and 1966, 73 automobile insurance companies went bankrupt leaving an estimated 300,000 policyholders and injured victims to attempt to recover $600 million in claims from combined company assets of only $25 million. In 1945, Congress gave the power to regulate insurance to the individual States and some of them have done a creditable job overall. But today, the problem of automobile insurance is too complex to be left to the separate action of 50 individual State governments. In my opinion, decisive congressional action is essential to bring order out of the confusion and apprehension that characterizes the automobile insurance situation today. |