No-Fault Insurance Bill Could Affect Mailers

AUTO INSURANCE DMers may have to radically alter their mailings to no-fault insurance states, thanks to a bill now before Congress.

Sponsored by Sen. Mitch McConnell (R-KY), the Auto Choice Reform Act would force car insurance marketers to offer consumers a complete range of insurance products, including both regular and no-fault policies. In no-fault insurance states, accident victims are compensated for personal injury, but not for pain and suffering and other forms of liability.

Some say this could be the first step toward a federally mandated no-fault auto insurance system.

And though advertising copy is not specifically mentioned in the bill, direct mail pieces “will have to be revised and expanded to include quotes for each of the product lines and coverages being offered under both systems,” says DM insurance veteran Don Jackson.

One thing’s for sure: The states, which now regulate the insurance industry, and some lawyers, must be happy about it.

At a recent Commerce Committee hearing on the bill, federal lawmakers were politely told by Arizona lawyer Michael R. Perry to butt out of car insurance reform and leave the matter up to the states. Perry is director of the Arizona Association of Defense Counsel.

Instead of imposing “a federal system of no-fault auto insurance,” federal lawmakers should tighten the federal seat-belt use law and provide states with grants to finance dispute-resolution programs to reduce the number of lawsuits stemming from auto accidents, Perry added.

Jackson seems to concur. “If this is an attempt by the legislative branch of the federal government to decrease the powers of states in fixing rates, I doubt it will pass,” he says.

However, McConnell argued at the hearing that the bill offers consumers “a choice of opting out of the pain-and-suffering litigation lottery.”

The nation’s auto insurance system is “clogged and bloated by fraud, wasteful litigation and abuse,” he continued. The bill would save motorists more than $240 billion in premiums, reduce auto insurance fraud, slash auto accident medical claims by half, and give automakers an incentive to build safer cars.

There’s some good news. The bill would not require any changes in offerings to residents of states with no-fault auto insurance systems.