January 12, 1977

Lower Insurance Rate For Safe Drivers Fair

One of the more intriguing ideas to be suggested in a long time is that of letting automobile drivers earn lower - or higher - insurance rates by the way they drive.

Certainly the matter should be seriously considered before the Ohio legislature jumps into the no-fault auto insurance morass.

Several states have adopted no-fault insurance in an attempt to lower the cost and to reduce the number of court cases.  Yet, their experience does not support the claims.

Insurance rates continue to climb there, as elsewhere.  Opponents of no-fault contend it is no coincidence that medical malpractice suits increase in the same proportion that insurance legal filings go down.  Opportunists, it seems simply switch their quest for easy money to other targets.

A graduated insurance rate based on good and bad driving records has been tried by at last one insurance company with some success.

It is now proposed by Florida State Representative Barry Richards that the approach be extended by law to all companies and all drivers.

Richards believes that insurance policies have become so complex and so generalized in coverage that they discriminate against careful drivers.

"If there's anything we've learned with the no-fault experiment, it's that there are no magic formulas," says Richards.  "The cost of insurance is going to continue to rise as is everything else.

"What is particularly unfair is that rates have skyrocketed for drivers with perfect records and there's nothing they can do about it.

"The reason is that careful drivers are presently underwriting the irresponsibility of careless drivers."

Richards' Driver Self Rating Insurance Act would repeal Florida's no-fault law and replace it with a system in which rates would be based solely on a person's driving record.

Drivers would be grouped into three classes based upon the number of points accumulated over any two-year period.  Rates for Class A drivers - those with the best driving records - would be rolled back and frozen at the lowest available rates on the first day of the year.

Class B rates would not be more than 25 percent higher than Class A.  Rates for the worst Class C drivers would not be regulated at all - the sky's the limit.

The act wouldn't go into effect for two years to give all drivers an opportunity to start from scratch and to improve their driving habits to qualify for lower rates.

Most adults would agree that a few reckless drivers boost overall insurance costs.  Young men under 25 are most often singled out as the worst offenders, and insurance companies do penalize this group with higher costs.

As Richards sees it, this often results in double discrimination.  The young men within the high-risk group who are, nevertheless, accident free must pay the generally higher costs as the rest of us and an additional premium as well.

Insurance rates are established on the probability of different classes of drivers having accidents.  Bad drivers get penalized with somewhat higher rates, but good drivers seldom are directly rewarded with low premium payments - especially if they are in one of the high-risk categories.

Richards asserts that absolutely none of the accident burden should fall on the accident free driver.

Of course this might make private insurance prohibitive for reckless drivers and even force them to give up driving when they couldn't meet the high cost of insurance.  To deny any person wheels is unthinkable in today's car-oriented society so the state would end up underwriting the untouchables.  Michigan does this now.

Under Richard's plan, great care would have to be exercised to establish guilt lest an innocent driver be knocked into higher insurance costs.  This is pretty much the existing situation in Ohio where a chargeable accident hikes insurance premiums.

We already-observe an unofficial no-fault insurance plan here in the manner that companies pay claims.  Injury or damage claims of less than a thousand dollars seldom are contested by insurance companies.  The high cost of legal talent places the claim of several hundred dollars into the nuisance category.

However, thousands of such rip-offs each year add up to about one-fourth of total insurance costs.  Stop them, and insurance rates could go down 25 percent.

One thing is clear, the present system of auto insurance has become too costly and unwieldy.

No-fault insurance companies have become easy marks.

Until some way of cutting insurance costs is found, every possibility is worth trying.

Author: Lindsey Williams