COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE HARLEY O. STAGGERS, West Virginia, Chairman SAMUEL N. FRIEDEL, Maryland JOHN JARMAN, Oklahoma HORACE R. KORNEGAY, North Carolina FRED B. ROONEY, Pennsylvania W. S. (BILL) STUCKEY, JR., Georgia WILLIAM L. SPRINGER, Illinois 10 Correspondence between Hon. John E. Moss, Senator Warren G. Magnu- son, and Hon. Alan S. Boyd, Secretary, Department of Transportation, Boyd, Hon Alan S., Secretary, Department of Transportation____ Cahill, Hon. William T., a Representative in Congress from the State Conard, Prof. Ålfred, law school, University of Michigan. Dingell, Hon. John D., a Representative in Congress from the State Dove, Roger, vice president, National Association of Independent Farbstein, Hon. Leonard, a Representative in Congress from the Green, Hon. William J., a Representative in Congress from the State Holderman, F. A., manager, legislative branch, American Mutual Lemmon, Vestal, president, National Association of Independent Mackey, M. Cecil, Assistant Secretary for Policy Development, Department of Transportation. - Meiklejohn, Kenneth, legislative representative, AFL-CIO__ Miller, Hon. George P., a Representative in Congress from the State Murphy, Hon. John M., a Representative in Congress from the State Nangle, John, counsel, National Association of Independent Insurers.. Sargent, David J., professor of law, Suffolk University, Boston, Mass. Smith, Wallace M., branch manager, American Mutual Insurance Additional material submitted for the record by AFL-CIO, Industrial Union Department, letter from Jack Beidler, legislative director_ Page 149 American Automobile Association, letter from George F. Kachlein, Jr., executive vice president, submitting resolution of the executive committee.. 146 American Insurance Association: Statements of T. Lawrence Jones, president, American Insurance Associa- Fred H. Merrill, chairman of the board, Fireman's Fund 101 105 H. Clay Johnson, president, Royal-Globe Insurance Co's... 110 111 113 American Mutual Insurance Alliance: "Epitaph for a Deadly Driver," article from the Journal of 127 Supplementary statement replying to questions posed by Con- 122 Communications Workers of America, letter from Joseph A. Beirne, president, submitting statement of executive board.. 149 Insurance Co. of North America, statement of Bradford Smith, Jr., Moss, Hon. John E.: Article from New York Times magazine, August National Association of Insurance Agents, letter from Danforth National Association of Insurance Commissioners, statement of Average rates as of November 16, 1966, for private passenger 139 Bodily injury liability rates at 10/20 limits per month, nation- 139 Press release, Texas State Board of Insurance, December 28, 140 State financial restrictions and funds, supplementary information on_... Uninsured motorist laws, summary of (table)_. Comments on summary of uninsured motorist laws___. National Association of Mutual Insurance Agents: Letter dated January 26, 1968, from Frank K. Baker, president, 137 136 137 57 Statement... 54 National Governors Conference, statement of Hon. Ronald Reagan, 59 49 Appropriations and expenditures necessary to carry out study 19 Biography of M. Cecil Mackey, Assistant Secretary for Policy 28 AUTHORIZING A STUDY OF THE MOTOR VEHICLE ACCIDENT COMPENSATION SYSTEM TUESDAY, MARCH 19, 1968 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE AND FINANCE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 10 a.m., pursuant to notice, in room 2322, Rayburn House Office Building, Hon. John E. Moss (chairman of the subcommittee) presiding. Mr. Moss. The committee will be in order. Today, the Subcommittee on Commerce and Finance of the Committee on Interstate and Foreign Commerce begins 2 days of hearings. on House Joint Resolution 958. This legislation was prepared by the chairman of the Senate Commerce Committee, Senator Warren G. Magnuson, and myself, after an exchange of correspondence with the Secretary of Transportation which began on June 26, 1967. House Joint Resolution 958 was introduced on December 14, 1967, and so that the record will be complete, I am asking unanimous consent that this exchange of correspondence be inserted at this point in the hearing record. Is there any objection to the request? Hearing none, it is so ordered. (The correspondence referred to follows:) Hon. ALAN S. BOYD, Secretary of Transportation, Department of Transportation, Washington, D.C. CONGRESS OF THE UNITED STATES, DEAR MR. SECRETARY: We have become increasingly concerned at evidence of major flaws in our national systems for compensating motor vehicle accident victims. Our attention was first drawn to the serious problem of insolvencies among so-called "high risk" automobile insurers. But such insolvencies appear to be symptomatic of fundamental defects, both in automobile insurance underwriting and in our underlying common low and statutory system of fault liability. Sharp underwriting practices, including arbitrary cancellations and failures to renew, geographical, racial and economic blackouts in coverage, and discriminatory, escalating premium rates equally demand appropriate reforms. Last year, Congress addressed itself to the need for preventing and limiting the severity of motor vehicle accidents. Your Department is now charged with responsibility for carrying out the comprehensive programs of motor vehicle and highway safety which we then authorized. Now we are equally concerned with the just and efficient compensation of those victims whom prevention has not spared. Broadly viewed, the enourmous costs to individuals, as well as to society, of the still increasing traffic toll are costs which must be allocated to our system of ground transportation. It is for these reasons that we request that you undertake a comprehensive study of compensation for motor vehicle accident losses. We have prepared, based upon our preliminary investigations, the enclosed outline of those subjects which should properly be encompassed by such study. Are you now in a position to undertake such a study with reasonable dispatch so that Congress might have the benefit of your efforts in determining the proper course of action? I. Analysis of present U.S. system of compensation for vehicle-induced accident losses: A. General description of present system. B. Extent of loss incurred: Number of events ("accidents"). Character of loss: medical care, economic (foregone income), additional expense, other extent of loss: property, personal injury. Nature of events: kinds, places, causes, human factors, other circumstances. C. Compensation for losses incurred: Extent of compensation: aggregate, micro (What proportion of what types and scales of accident-incurred losses was compensated?). Sources of types of compensation: Insurance Type contractural party; Employer; Public (Government compensation, Treasury via tax deduction as casualty loss). D. Features of existing system for providing compensation: Character. Concepts of fault, contributory negligence, etc. Efficiency (time, etc.). Public investment (physical court facilities, personnel including judges and other participants). Nature of the decision-making system. Role of insurance carriers. Role of the injured. Role of other parties to event. Role of others in system: lawyers, doctors. E. Appraisal of existing system for providing compensation: In terms of: efficiency, equity, time, other factors. As it effects: the injured, the legal system, the wrongdoer, the insurance carrier, the public generally. F. Implications of the existing system for traffic safety and overall transportation efficiency. II. Examination of existing public supervision of auto insurance: A. General description. B. Formal role of government: Federal, State. C. Character of present State regulation: (1) Notation of basic differences in types of State regulation; classification of States by type, if possible. (ii) Economic regulation: An appraisal: Requirements for rate filing, prior approval, hearings, etc. Supervision of overall rate of return as reflected in earnings from: premium income, investment income, related income. Supervision of carrier administrative and operating expenses. Supervision of premium rate structure. Supervision of premium classification definition, insurance eligibility criteria, cancellation criteria. |