In short, the overthink many companies engaged in as they sought out the "good risks" gave the impression that they really wanted to write insurance only for those who were likely never to file a claim.

The result was frustration of the system-with an estimated 20 percent uninsured cars on the road whose drivers offered little hope of compensation to their victims.

Perhaps the second most frequent complaint about insurance is the cost. Well it might be. From 1960 to July 1970, the cost of auto insurance went up 65 percent-compared to 39 percent for auto repairs, 28 percent for tires and 15 percent for gasoline. See tables 6 and 7. That 65 percent insurance hike came as take-home pay for nonsupervisory and factory workers went up only 40 percent.

In dollars, that 65 percent insurance hike means consumers in our 20 most populous cities are paying premiums ranging from $193 in Memphis to $617 in New York City to cover the average car. In San Francisco, the rate is $430; in Chicago, $352; Detroit, $285, and Washington, D.C. $298.

Those are the base rates-which too many consumers have learned climb with surcharges for 3 years after minor accidents.

Further, those rates are climbing daily. For example, a major insurer recently raised its rates in Michigan by an average of 17.6 percent. That was the average increase. But, reportedly, a high risk driver in Detroit will find himself paying 39 percent more after the price hike.

One of the reasons for the high charges for auto insurance is the built-in expenses of handling each applicant on an individual basis. See chart 1 and table 1. Long ago, we learned that selling accident and health insurance on a group basis-with all members treated the same-cuts the selling price.

But, in about 36 States today the same type of sale of auto insurance as well as other forms of property and liability insurance is prohibited by regulations or law.

One of the bills I introduce today, the Property and Liability Group Insurance Act, would overturn this prohibition and allow group auto insurance.

The other insurance bill would amend the Internal Revenue Code by having group property and liability insurance treated the same as group accident and health insurance. This would encourage group auto insurance sales by allowing employees to get the same tax benefits from employers' contribution to auto plans as they do now with group accident and health plans.

This, I feel, is necessary since the savings of group auto are significant only when the vast majority of employees participate in the plan. Otherwise, the group might contain many drivers who would be surcharged on the open market-forcing the rate for the group too high.

One estimate is that simply converting to a group auto insurance plan-without any employer contributions-could save the average dirver 15 percent each year. Obviously, the savings would be much greater if the employer contributes-as many do with group accident and health.

The nonrefusal provisions and the encouragement of group plans, I suspect, are the aspects of this package which will most easily catch the attention of the public. This is because each person can identify with those situations.

However, the most significant change I propose today is the move away from the "fault" liability system of insurance.

Few consumers realize-until the accident happens-that the present insurance system will pay the bills caused by personal injury and death only if the driver of the car is totally free from blame for the accident. This is so in all but a handful of States which have adopted "comparative negligence" laws. Under these laws the errant driver may receive at least some compensation.

Those of us who are honest with ourselves know how many times in the shortest trips we avoid accidents more through dumb luck than driving skill. As one study pointed out, the driver must make 200 observations and 20 decisions each mile he drives. The potential is so great that it would be natural for even the most careful of drivers to make errors in judgment. In fact, the same study estimated that the average driver does make errors-one per each two miles driven.

The 1970 causation and culpability and deterrence study done for DOT explains that

"A substantial but largely unmeasurable number of violations and crashes occur which involve generally competent drivers who are suffering temporary lapses from their normal adequate levels."

Yet these errors are the "outs" for the insurance companies under the present system-making it possible that passengers in neither car will be compensated because both drivers may have contributed to the accident.

And deciding who is to be paid-if anyone becomes a "who shot John" finger-pointing contest which burdens our legal system, ties up our courts and keeps money out of the pockets of victims when they need it.

A study by the Federal Judicial Center points out that motor accident litigation requires 11.4 percent of judge time in Federal district courts and approximately 17 percent of judge time in State courts of general jurisdiction. Impact of motor vehicle accident litiagion on the courts varies widely among States. In Iowa County, Iowa, it is 3 percent. In Wayne County, Mich., it is 40 percent.

Chief Justice Burger has warned that we have clogged our courts so much that justice in this country is more myth than reality. He suggests caution in passing new laws which would bring more cases to court.

I share his concern over the clogged courts. But it seems more rational-and fair to reserve the courts for matters which merit adjudication by freeing them from problems that could be handled better under another system. Furthermore, we could free our doctors for more profitable uses such as improving emergency accident treatment-rather than sitting in courthouses or otherwise being tied up in the fault-finding process.

The worst part of this clogging of the courts is the delay in payments for victims of accidents. A DOT study showed that victims with losses over $2,500 averaged a 19-month lag before they received any payment.

In Wayne County, the site of Detroit, a claimant must wait 4 years for trial. Unfortunately, rehabilitation expenses do not wait. So the seriously injured person has two choices: go without rehabilitation when it would help or risk bankruptcy to finance it. He faces similar problems with rent, food and clothing costs.

The Uniform Motor Vehicle Insurance Act seeks to overcome these hurdles and to guarantee a "sufficient, fair, and prompt" payment system. Under the bill, injuries are divided into short and long-term.

Out-of-pocket expenses of injuries generally would be compensated on a first party, no-fault basis-in the manner of hospitalization policies.

The driver's own auto insurance policy would cover the net economic loss due to such injury or death-which is not covered by other sources.

Making the auto policy the "book balancer," as it were, would eliminate the need for consumers to pay the several billion dollars years they are now spending for coverage which duplicates what they may have-say in hospitalization plans or sick leave.

The bill provides that the victim would be made economically whole for his entire medical, hospital and rehabilitation costs. Incidental expenses-such as transportation for treatment or in-the-home assistance-also would be covered. Lost income would be reimbursed-up to $1,000 a month for 30 months. An amount up to $30,000 would be paid for fatalities of wage earners. The death payment seeks to put ready cash in the hands of families who have lost their wage earner. Survivors of nonwage earners and those suffering economic loss in excess of $30,000 may still sue under the tort system.

The time limit on protection of income was set to assure that about 97 percent of all accident victims would be rehabilitated and back at work within its span. The other victims who are injured would have ample time for calm determination of ways of replacing the income lost due to permanent disability.

Those who are permanently disabled-or disfigured-and survivors of fatalities in other words, the catastrophic injuries-under this bill would still be free to recoup damages over and above economic loss reimbursed by the bill by suing under the tort system. They could sue for all economic loss not reimbursed under the bill as well as for "pain and suffering."

Under the bill, a person committing a felony, using the vehicle with the specific intent of causing injury or without the permission of the owner, would not be compensated for his injuries and would have to reimburse any insurer for damages paid due to an accident.

Drunk drivers, as well as those under the influence of drugs, would be compensated for their injuries but would have to reimburse an insurer for damages paid to others. Alcohol-related accidents caused an estimated 25,000 deaths and 800,000 crashes in the United States each year, according to the DOT 1968 alcohol and highway safety report. Auto manufacturers are working on devices that would make it impossible for a drunk driver to start a car and the DOT plans on requiring these devices on cars by 1975. This, I think, is the most realistic way to treat the problem of the drunk driver—that is, to prevent him from being on the road.

Payments for economic loss under the "no fault" section of the bill would be made as the loss occurs- -eliminating the lengthy waits for settlements.

Pedestrians would be covered by the insurance on the car which hits them. Because this basic insurance must be sold to any licensed applicant, there would no longer be need for assigned risk plans now in existence.

However, there would be cases where the victim would have no insurance company to turn to for payment-such as with hit and run victims. Therefore, the bill creates an "assigned claims" plan. Insurance companies in each State would share in these plans based on the percentage of business they write in that State. Each would pick up the tab for a percentage of uninsured losses.

The bill also recognizes the realities of the road in making special provisions for truck-car accidents. Because of the disparity of weight between the vehicles, passengers in the autos incur that most severe harm in such accidents.

In 1968, only 16 truck drivers were killed in truck-auto accidents. But, 1,017 auto passengers lost their lives in the same accidents. Truck driver injuries were 1,222 with 12,304 auto passengers injured. Trucks colliding with passenger autos accounted for almost one-half of all moving vehicle accidents involving trucks.

Therefore, the bill provides that the Secretary of Transportation will assign each vehicle larger than a passenger car a percentage of responsibility for net economic loss sustained in a collision with cars.

While the bill, as a general rule, foresees that the auto policy would pick up the economic loss left over after other sources are drawn upon, it does offer the consumer the option of making the auto policy primarily responsible—or the choice of duplicate payment.

This provision is included to increase the consumer's options and to make it possible for him to tailor an insurance package best suited to his needs.

The benefits provided for in the Uniform Motor Vehicle Insurance Act are basic. Consumers may buy any additional coverage they want.

Mr. President, there is one other significant section of the bill which I wish to comment on specifically today. This is the provision for meaningful price information so the consumer may shop intelligently for insurance.

In requiring that insurance companies sell a no-fault policy to any licensed driver who applies to them, we are, of course, leaving it to the company to set a rate which it feels will make that policy profitable.

We also are opening up a whole new world for most consumers-one where they do not take what they can get in auto insurance, but take what they want. In order to know which company offers the soundest deal, a consumer must know not only the prices for his classification but the claims-paying practices of the company, Therefore, the bill provides that such information be reported to DOT. The Secretary, in turn, will make it available to the public.

Mr. President, my proposal that we reform the insurance system is not meant― and I hope will not be taken as a criticism of companies now in the business. As we were told by several of their representatives during our hearings, the industry has been supplying the protection they thought consumers wanted. Many members of the industry are aware that the present system no longer serves the public well-and have been proposing changes. They seem to agree that updating is needed and are willing to change if they have some guarantee that the public truly wants these changes. I think it is clear that the public does want change. "No-fault" auto insurance is hardly a household word-and the public in general has not been made aware of its potential. Yet, a University of Michigan study showed that 44 percent queried were in favor of claiming damages from their own insurer and foregoing payment for pain and suffering.

But, no one company can turn this system around by itself. Nor, in fact, could many sizable ones working together.

If consumers are to be offered protection more than promises, economy more than inefficiency, then the industry reformers need an assist from government. These bills are offered as that assist.

They seek to smooth the road, to knock down the barricades, to set fair and uniform rules so each company can offer consumers the most for their money in the best way it knows how.

In short, we would inject a note of competition-beneficial to all auto insurers and consumers—in an industry that has drifted away from this basic free enterprise theory.

If we accomplish that, the consumers and the industry will be better off. Of that, I am positive.

Given the sweep of these objectives, and the complexity of the subject area, I want to be the very first to say that these bills, although reflecting many reworked drafts, can and will be refined as hearings and discussion on them go forward. I invite all who are involved and concerned to join me in the search for the very best answer to a problem shared by all of us.

Because the need is great, I propose that hearings be scheduled on the Uniform Motor Vehicle Insurance Act in the next few weeks.

Mr. President, I ask unanimous consent that the three bills be appropriately referred and the bills and tables and charts accompanying them be printed at this point in the Record.

The PRESIDING OFFICER (Mr. Saxbe). The bills will be received and appropriately referred; and, without objection, the bills, charts, and tables will be printed in the Record.

The bills, introduced by Mr. Hart, were received, read twice by their titles, referred as indicated, and ordered to be printed in the Record, as follows: To the Committee on Commerce:

S. 4339

A BILL TO regulate interstate commerce by requiring certain insurance as a condition precedent to using the public streets, roads, and highways, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SEC. 1. That this Act may be cited as the "Uniform Motor Vehicle Insurance Act".

DECLARATION OF PURPOSE

SEC. 2. The Congress finds that—

(1) The great number of motor vehicles operated within the channels of interstate commerce upon the public streets, roads and highways of the States; (2) The substantial amount of injury and death resulting therefrom;

(3) The insufficient, unfair distribution and untimely availability of monies under the present motor vehicle liability insurance system for the adequate rehabilitation and compensation of accident victims;

(4) The absence of uniform and sufficient requirements for—

(A) Insurance among the States as a condition to using the public streets, roads, and highways;

(B) Guaranteeing the continued availability of motor vehicle insurance supplied by private enterprise; and

(C) Meaningful price information to promote rational buying decisions and thus stimulate beneficial competition; and

(5) The failure to promote the general welfare by not recognizing sufficiently the plight of motor vehicle accident victims while promoting the national policy of accelerating the construction of the Federal-Aid Highway Systems;

obstruct the free flow of such commerce by increasing unnecessarily the hazards of travel within such channels and otherwise affecting such commerce.

It is the purpose of this Act to provide for the general welfare by requiring a system of motor vehicle insurance which will be uniform among the States, which will guarantee the continued availability of such insurance and meaningful price information; and which will provide sufficient, fair and prompt payment for rehabilitation and losses due to injury and death arising out of the operation and use of motor vehicles within the channels of interstate commerce, and otherwise affecting such commerce.

SEC. 3. As used in this Act

DEFINITIONS

(1) The term "motor vehicle" means any vehicle of a kind required to be registered under the National Traffic and Motor Vehicle Safety Act of 1966, as amended.

(2) (A) The term "insured motor vehicle" means a motor vehicle insured under a policy of insurance which meets the requirements of section 5 of this Act.

(2) (B) The term "uninsured motor vehicle" means a motor vehicle with respect to which insurance provided under section 5 of this Act is not applicable at the time of the accident, or with respect to which the insurer nominally providing such insurance denies coverage, or is financially unable to fulfill its obligation.

(3) The term "owner" means a person who holds the legal title to a motor vehicle under the National Traffic and Motor Vehicle Safety Act of 1966, as amended, or in the event a motor vehicle is the subject of a security agreement or lease with option to purchase with the debtor or lessee having the right to possession, then the debtor or lessee shall be deemed the owner for the purpose of this Act.

(4) The term "person" means any individual, partnership, corporation, association, trust, syndicate, or other entity.

(5) "Operation or use of a motor vehicle" includes loading or unloading the vehicle, but does not include conduct within the course of a business of repairing, serving or otherwise maintaining vehicles unless the conduct occurs outside the business premises.

(6) The term “injury” means any bodily injury, sickness or disease (including death at any time resulting therefrom) arising out of the operation or use of a motor vehicle.

(7) The term "catastrophic harm" means a bodily injury (including death at any time resulting therefrom) which results in a permanent partial or total loss of, or loss of use of, a bodily member, or a bodily function: Provided, however, That such permanent partial or total loss, or loss of use, need not affect earnings or earning power. The term "catastrophic harm" includes permanent disfigure

ment.

(8) The term "economic loss" means in the case of any injury or death; (A) All expenses reasonably and necessarily incurred for medical, hospital, surgical, professional nursing, dental, ambulance and prosthetic services;

(B) All expenses reasonably and necessarily incurred for physical and occupational therapy and rehabilitation;

(C) The amount which would have been earned during the 30 months immediately following such injury or death but for such injury or death could not be earned: Except, That, in the case of injury, such amount shall not exceed $1,000 a month, and, in the case of death, such amount shall not exceed $30,000;

(D) All other expenses reasonably and necessarily incurred as a result of such injury.

(9) The term "net economic loss" means, in the case of any injury or death "economic loss" reduced (but not below zero) by the amount of:

(A) Taxes which would have been payable on the amount which would have been earned but for such injury or death; and

(B) Any benefit or payment received, or entitled to be received, for losses resulting from such injury or death under any provision of law or any insurance or other source of benefits: Except, benefit or payment received, or entitled to be received

(i) in discharge of familial obligations of support;

(ii) by way of succession at death;

(iii) as proceeds of life insurance;

(iv) as gratuities, or

(v) as proceeds of any contract, policy of disability, health and accident, or other insurance or other source of benefits containing an explicit provision making its benefits supplemental to those in accordance with the provisions of section 5(a) of this Act, or making the benefits under section 5(a) deductible from the benefits under such contract, policy or other insurance or source.

(I) If any contract, policy of disability, health and accident, or other insurance or other source of benefits does not provide that its benefits shall be supplemental to those under section 5(a) of this Act, or that the benefits under said section 5(a) shall be deducted from its benefits, economic loss shall be reduced by the amount of any benefit or payment received, or entitled to be received, from such contract, policy or other insurance or source.

(10) The term "without regard to fault" means irrespective of fault as a cause of any injury or death, and without application of the principle of liability based on negligence.

(11) The term "Secretary" means the Secretary of Transportation.

(12) The term "State" means each of the several States of the United States the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone and American Samoa.

CONDITIONS OF OPERATION: REGISTRATION AND FEES

SEC. 4(a). After the effective date of this section, no person shall register a motor vehicle under the National Traffic and Motor Vehicle Safety Act of 1966, as amended, nor shall any person knowingly operate or use a motor vehicle upon the public streets, roads, and highways of any State at any time unless

(1) Such motor vehicle is insured under a policy of insurance which meets the requirements of section 5 of this Act, pursuant to such rules and regulation (including those determining the manner and term of proof of such insurance) as the Secretary shall lawfully prescribe.