Effects of an Auto-choice Automobile Insurance Plan on Costs and Premiums

Résumé du livre

This publication contains the written statement of Stephen Carroll delivered on March 19, 1997, to the Joint Economic Committee of the United States Congress. The statement draws on several RAND Institute for Civil Justice studies of "choice" auto insurance plans. The studies estimated the cost effects of giving policyholders a choice between absolute no-fault and the current insurance system in each state. (Absolute no-fault means that policyholders neither recover nor are liable for noneconomic loss for any auto accident injury). Key findings: In most states, the compensation costs for personal injury coverages insurers incur on behalf of policyholders who choose absolute no-fault should be reduced about 60 percent, on average, compared to what they would have been under the current system. If insurers pass on these savings to policyholders, this translates into a roughly 30 percent reduction in total auto insurance premiums. The plan will have little effect on policyholders who opt for coverage under their state's current system