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Rosenfield on Enforcing Auto Insurance Rollbacks

July 22, 1990

Rosenfield again shows his ignorance of basic economics.

Prop. 103 has not resulted in any auto insurance rate rollbacks since it is impossible to lower a business' prices without also lowering its costs. The only way to lower costs is to crack down on insurance fraud.

As a claims adjuster, I can attest that a large number of auto accidents result in fake injury claims, mostly involving "whiplash" pain to the neck and back. In California, a "fender bender" is not considered an accident, but an opportunity. The best road to lowering rates is to end the free lunch. Insurance companies should only have to pay claims that can be proved. If it doesn't show up on an X-ray, forget it.

The court rulings on Prop. 103 have given insurance companies the alleged constitutional right of "a fair rate of return" of 11.2%. This is absurd. Businesses must make or lose money based on the quality of their products, their ability to make sound financial decisions, etc. With guaranteed profits, insurance companies have no incentive to cut costs.

Finally, insurance rates are high because insurance companies have a captive market. Auto insurance should be voluntary, not mandatory.

Rosenfield's lamebrained idea of a "California Non-Profit Insurance Fund" is his idea of revenge against an insurance industry that evidently has better lawyers than his Voter Revolt group does. Driving private insurance companies out of California will result in incompetence and corruption on a grand scale if insurance is left to the devices of government bureaucrats.



Brown is the Libertarian Party candidate for insurance commissioner.

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