Douglas Hallett's article (Editorial Pages, Dec. 17), advocating group automobile insurance as one means of solving the "automobile insurance problem," fails to recognize one crucial point: extremely few customers will buy such a product under our present tax laws.
Group auto insurance programs were developed and heavily marketed by a number of major insurance companies in the 1960s. Some groups were sold and some are currently active, but not in significant numbers. Hallett's article identifies the principal reason for this: labor unions have not promoted group auto insurance as an employee benefit.
It isn't that labor unions are insensitive to their members' interest in saving money on automobile insurance premiums.
There are some very important differences in the tax treatment of employer-sponsored group life and health-insurance programs and group auto. Group life and health programs are tax-deductible business expenses for the employer and are not taxed as income to the employee. Employee auto insurance premiums paid by the employer are not tax deductible to the employer and are taxable income to the employee. Quite a difference!
Without at least a substantial premium contribution by the employer, drivers who qualify for preferred rates will always be able to buy individual policies for less than their group rate, because the marketing and administrative expense savings of group programs are not substantial enough to offset the difference. Without the type of tax treatment given group life and health programs, few employers are disposed to sponsor such programs.