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No-Fault Insurance

June 30, 1991

Thank you for the support you gave to SB 941, the no-fault auto insurance reform bill. The measure was defeated in the Senate Judiciary Committee on May 28 by a vote of 5 to 5 with one abstention. Six votes were needed to pass the bill.

The case we made was straightforward:

* Auto insurance rates are high and headed higher even with Proposition 103 in effect.

* While there are many causes for rising rates (fraud, medical costs, repair shop billing practices, fragile auto bodies), the most explosive costs are associated with lawsuits for pain and suffering.

* To drive down the cost of insurance, lawsuits should be limited to serious injuries and accident victims should be paid quickly for out-of-pocket costs (medical bills and wage loss).

This proposal guaranteed a basic policy for $220 per year. The Department of Insurance's actuary costed out the reforms for people who would buy greater coverage and found most would save money--a lot of money in urban areas.

Senators who opposed the bill wanted to retain the right to sue after every accident and they wanted more savings for middle-class drivers. They will find it difficult to do both.

For now the focus shifts to the insurance commissioner, the Speaker and those senators who opposed SB 941. The burden is on them to offer a better alternative.

The issue will not disappear and so we will continue to work with those consumer groups, such as Consumers Union, Latino Issues Forum and Public Advocates, and insurers who share our belief that the rate regulation of Proposition 103 must be balanced with cost-saving reforms.

PATRICK JOHNSTON, Senate, D-Stockton

FRANK HILL Senate, R-Whittier

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