AUTHORIZATION OF PAYMENTS TO TRUST FUNDS SEC. 5. Section 302(c) of the Labor Management Relations Act, 1947, is amended by inserting immediately before the semicolon at the end of Clause (A) of the proviso to Clause (5) the following: "including group insurance as defined by the Motor Vehicle Group Insurance Act." ENFORCEMENT SEC. 6. (a) Whenever it shall appear to the Attorney General that any person is engaged or is about to engage in any Acts or practices that constitute or will constitute a violation of the provisions of this Act, he shall bring an action in the proper district court of the United States to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted. (b) Nothing in this section shall preclude an insurer or any other person from instituting legal process to enforce their rights under this Act or from using the provisions of this Act as an otherwise valid defense in any relevant legal action brought against them. JURISDICTION SEC. 7. The district courts of the United States shall have exclusive jurisdiction of violations of this Act and of all suits brought to enforce it. To the Committee on Finance: S. 4341 A BILL TO amend the Internal Revenue Code of 1954, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. Section 104(a) (3) of the Internal Revene Code of 1954 (68A Stat. 30) is amended to read as follows: "(3) amounts received through accident or health insurance, or property or liability insurance, for personal injuries or sickness (other than amounts received by an employee, to the extent such amounts (A) are attributable to contributions by the employer which were not includible in the gross income of the employee, (B) are paid by the employer); and" SEC. 2. (a) The heading of Section 105 (63A Stat. 30) is amended by adding after the word "plans" the language "and property and liability plans." (b) Section 105(a) (69A Stat. 30) is amended to read as follows: "(a) Amounts attributable to employer contributions.-Except as otherwise provided in this section, amounts received by an employee through accident or health insurance, or property liability insurance for personal injuries or sickness shall be included in gross income to the extent such amounts (1) are attributable to contributions by the employer which were not includible in the gross income of the employee, or (2) are paid by the employer." (c) Section 105(e) (68A Stat. 30) is amended to read as follows: For purposes of this section and section 104 "(1) amounts received under an accident or health plan, or property or liability plan for employees, and "(2) amounts received from a sickness and disability fund, or property or liability plan for employees maintained under the law of a State, a Territory, or the District of Columbia, shall be treated as amounts received through accident or health insurance, property or liability insurance." SEC. 3. (a) The heading of Section 106 (68 A Stat. 32) is amended by adding after the word "plans" the language “and property and liability plans.' (b) Section 106 (68A Stat. 32) is amended to read as follows: "Gross income does not include contributions by the employer to accident or health plans, or property or liability plans for compensation (through insurance or otherwise) to his employees for personal injuries or sickness." SEC. 4. Section 7701 (20) (68A Stat. 911) is amended by adding after the comma which follows the words "accident and health plans" the language "or property or liability insurance or property or liability plans". SEC. 5. The amendments made by sections 1, 2, 3, and 4 shall become effective on the date of enactment. The charts and tables, presented by Mr. Hart, are as follows: Chart 1.-Where each $100 of automobile bodily injury liability insurance State taxes_ premiums goes $3.05 5. 25 19.50 27.80 14. 00 15.90 1. 90 40. 40 Source: Senate Antitrust & Monopoly Subcommittee: Derived from Bests Aggregates & Averages (ann. eds.), Spectator, U.S. Dept. of Transportation, Automobile Personal Injury Claims, pp. 73, 80 (1970), and Automobile Accident Litigation, p. 7 (1970). Chart 2.-Breakdown of the $40.40 of net benefits to claimants out of each $100 of automobile bodily injury liability insurance premiums In excess of out-of-pocket loss (viz. general damages such as pain and suffering)__ Duplicate recovery Out-of-pocket loss not otherwise compensated___ $19. 80 7. 27 13. 33 Source: Senate Antitrust & Monopoly Subcommittee; Derived from Statement of Robert E. Keeton, Harvard Law School, Before the Subcommittee, Hearings on Automobile Insurance, December 9, 1969, and U.S. Dept. of Transportation, Economic Consequences of Automobile Accident Injurles (1970). TABLE 1.-WHERE $37,000,000,000 OF AUTOMOBILE BODILY INJURY LIABILITY INSURANCE Source: Senate Antitrust and Monopoly Subcommittee; Derived from Bests Aggregates and Averages (annual editions), Spectator, U.S. Department of Transportation, Automobile Personal Injury Claims, pp. 73, 80 (1970), and Automobile Accident Litigation, p. 7 (1970). TABLE 2.-WHERE $15,200,000,000 OF AUTOMOBILE PROPERTY DAMAGE LIABILITY INSURANCE PREMIUMS WENT, 1959-68 Source: Senate Antitrust and Monopoly Subcommittee; derived from Bests Aggregates and Averages (annual editions) and Spectator. TABLE 3.—WHERE $17,600,000,000 OF AUTOMOBILE COLLISION DAMAGE INSURANCE PREMIUMS WENT, 1959-68 Source: Senate Antitrust and Monopoly Subcommittee; derived from Best Aggregates and Averages (annual editions) and Speciator. TABLE 4.-WHERE $9,400,000,000 OF AUTOMOBILE FIRE, THEFT, AND COMPREHENSIVE DAMAGE INSURANCE PREMIUMS WENT, 1959-68 Source: Senate Antitust and Monopoly Subcommittee; derived from Bests Aggregates and Averages (annual editions) and Spectator. TABLE 5.-AUTOMOBILE INSURANCE PREMIUMS WRITTEN AND LOSSES PAID, 1960-69 TABLE 6.-COMPARISON OF SELECTED CONSUMER PRICE INDEXES, 1960-65, 1970 (JULY) 6.4 10.2 59.5 $3.8 61.2 17.3 56.6 89.0 48.9 TABLE 7.-SELECTED CONSUMER PRICE INDEXES RATE OF INCREASE 1970 (JULY) OVER 1960 AND 1965 Note: 1970 over 1960-1.00-percent increase; same for 1970 over 1965. The CHAIRMAN. Could I just say one thing. It seems to me what we are talking about here is the inefficiency of delivery of benefits. But you are not going to improve that unless you get rid of the tort approach. Senator HART. That is right; it may be a disagreeable sea in which to swim for a while, but unless we get into it, we are apt to be kidding ourselves we are doing something and all we are doing is piling up further studies. Secretary VOLPE. Senator, may I suggest that when we use the term "no-fault" I think you will agree, in essence it is somewhat an oversimplification because as you know, I am sure, with the tremendous study you have made in this field, that there are several kinds of first party or no-fault insurance now. Senator HART. I started my question by using the expression "first-party coverage" because that has a less emotional overtone to it. Secretary VOLPE. Yes; but the fact is, how do we adopt the firstparty insurance to the other areas that are not now covered and which are now covered by the tort liability system? I think you have hit the nail right on the head when you say that this basically is the problem that must be solved. It is a question of how far the Federal Government feels it must go in order to develop those answers that can contribute meaningfully to the solution of the total problem. I might just comment on Senator Pastore's question, if I may, with regard to whether the costs will go up or down with no-fault or first-part insurance. I can tell you you probably can get as many answers as there are people in this room. I addressed the American Trial Lawyers Association meeting recently and there were two lawyers from Massachusetts I was discussing this with. The new law in Massachusetts had just passed, and the Governor hadn't signed it yet. One of them was willing to bet me a good Borsalino hat that in 4 years the premiums would be higher under the no-fault insurance. And the other lawyer was willing to bet me anything I wanted to bet-I told him I didn't bet anyhing at that time premiums would do down. So I don't think, as Senator Hart has said, that anybody can really say, with any degree of certainty, the premiums will go up or down. There is a hope and expectation that under the right set of circumstances the premiums might or probably would go down. Senator HART. I hope I was tentative in my answer to Senator Pastore's question, but if you wanted to be an aggressive advocate of the first-party concept, I think you can find some experience which justifies the claim that it would be reduced substantially. The New York experience is an example, I think, that argues that way. But after having sounded as though I knew all of the answerswhich I don't—I agree with the Secretary when he says at the end that the problems of automobile insurance and compensation are incredibly numerous and complex. We all understand that. Now you say that some people have had some trouble, according your study, and auto insurance today appears to be becoming more and more difficult for some drivers to buy in the voluntary insurance market. An awful lot of people find that, don't they? Doesn't the study suggest that? Secretary VOLPE. Yes, sir. Senator HART. Not just daredevil drivers or alcoholics, but establishment pillars are experiencing this; am I right? Secretary VOLPE. I would rather have Dick answer that. But that is correct; it all depends on the definition of "establishment pillars. Senator HART. All right. But let me recite one whom even the insurance business would acknowledge as an establishment pillar. It comes out of the September 5, 1970, issue of the Weekly Underwriter. The editorial here deals with a top official of a life insurance company and his reaction after his automobile insurance was canceled. Here is a chunk of it-and I will ask the editorial in full be printed: Our correspondent, who is in his middle 50's and has had his driver's license since he was 18, describes a respectable driving record: never a moving accident where he was at fault (twice he was struck by other vehicles); one speeding ticket, received when he was 18; a ticket for going through a red light at a traffic ambush, received 15 years later. He goes on to describe his treatment at the hands of a giant casualty insurer which some 18 months ago refused to issue insurance either on the car assigned to him from his company's fleet of leased vehicles or on his personal car. The insurer in question-with whom this gentleman had done business for many years—gave only the vaguest reasons for refusal to renew. I think there are two points that need laboring. First, if an insured with a good driving record, high social standing, and imposing professional qualifications has trouble with two of our largest insurers, where does the less heavily armed insured stand with those companies? And, second, where does it leave the public image of insurers when a man in a position to make his voice heard far and loud in the industry is unnecessarily angered? In case you have any doubts about this gentleman's attitude toward the property casualty business, here is the final paragraphs of his letter: As far as I am concerned, the managements of most of the property-casualty companies have demonstrated their incompetence, their stupidity, and their lack of worthiness to lead great financial institutions, and the ultimate nationalization of the property-casualty industry will rest squarely upon the shoulders of the men who, for the past 50 years, have led that industry into its decline. That is a much harsher statement that I or any of my colleagues would ever voice about a segment of this industry. But it is a statement voiced by a distinguished member of the industry himself who happens |