[Congressional Record Volume 145, Number 54 (Tuesday, April 20, 1999)]
[House]
[Pages H2179-H2180]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        AUTO CHOICE ACT OF 1999

  (Mr. ARMEY asked and was given permission to address the House for 1 
minute and to revise and extend his remarks.)
  Mr. ARMEY. Mr. Speaker, today I am introducing the Auto Choice Act of 
1999. This bipartisan bill, which is also being introduced today in the 
other body, is designed to give the American people a choice in the 
type of auto insurance they can buy.
  Auto Choice offers drivers a way out of the current expensive lawsuit 
lottery by giving consumers the option to buy a policy that offers them 
prompt compensation for medical bills and lost wages from their own 
insurer, regardless of fault. According to the Joint Economic 
Committee, those who choose the new system would save 45 percent on 
their bodily injury premiums. This translates into an average savings 
of nearly $200 per policy, with low-income drivers seeing the greatest 
benefits. Over 5 years, the savings could total nearly $200 billion.
  Mr. Speaker, this is like a tax cut for the drivers across the 
country, and it does not cost the Government a single dime. But not 
only does Auto Choice give consumers a choice, it also gives States a 
choice. States retain their traditional authority over auto insurance 
regulation and can accept or reject Auto Choice. Because it respects 
States' rights, Auto Choice has by called a ``model of federalism.''
  Mr. Speaker, Auto Choice protects consumers' wallets, ensures 
compensation for victims, respects States' rights, and gives drivers a 
choice when and where to buy their auto insurance.
  I am proud to sponsor this important bipartisan initiative and look 
forward to its passage in the 106th Congress.
  Mr. Speaker, I include the following statement for the Record:
  The Auto Choice Reform Act will go far toward taking needless 
litigation costs out of our auto insurance system. It will save 
consumers billions of dollars annually, while ensuring speedier 
recovery of medical bills, lost wages, and other economic damages. By 
encouraging states to eliminate the middle-man--trial lawyers who add 
significant costs to the system--the Auto Choice Reform Act will 
produce significant savings while also fully protecting injured 
motorists' right to recover.
  When injured parties are involved in a car accident under the tort 
system, legal fault must be established to recover money for economic 
damages. This is not an easy task, and often requires the parties 
involved to hire lawyers and go to court. It is a costly and tedious 
process, and can take up to 16 months for adjudication, and longer when 
the injury is serious. The delay in payment puts pressure on the 
seriously injured, particularly the poor, to settle their claims for 
less than they are worth.
  The determination of legal fault is no guarantee that an injured 
person will receive equitable compensation. People with economic losses 
up to $5,000 recover two and three

[[Page H2180]]

times their losses, while a victim with medical expenses and lost wages 
between $25,000 and $100,000, recovers on average only half of those 
losses. For people with catastrophic injuries and losses over $100,000 
recovery drops to nine percent on average. There are two main reasons 
for this: First, insurance companies find it more cost-efficient to 
settle small nuisance claims for more than they are actually worth to 
avoid expensive litigation costs. Second, seriously injured accident 
victims recover just a small percentage of their damages because their 
losses typically exceed the other driver's policy limits.
  The Auto Choice Reform Act gives drivers a less expensive, more 
efficient alternative to this process. It allows victims to bypass the 
litigation maze and guarantees more just compensation, helps to prevent 
fraudulent claims, and provides the possibility of tremendous savings 
for American auto insurance consumers. A few of the benefits of the 
Auto Choice Reform Act are highlighted below:
  Flexible Choice. Under the Auto Choice Reform Act, drivers can choose 
the form of auto insurance they believe is best for them and their 
families. One route would be for drivers to choose a policy similar to 
that now available in their state, either tort or no-fault insurance. 
Another route would be to choose the new PIP option.
  Prompt Payment. The new choice, called personal insurance protection 
(PIP), would pay the injured person within 30 days for medical bills 
and lost wages, regardless of fault. The victim could also recover 
compensation from the at-fault driver for any additional medical bills 
and lost wages above the victim's policy limits.
  Better Compensation for Serious Injuries. Under both systems, parties 
could make a claim against at-fault drivers for medical bills and lost 
wages in excess of their own insurance. In such situations, because 
injured persons could recover from both their own coverage and the at-
fault driver's coverage, people would receive more compensation for 
serious injuries. Additionally, drivers in either system would be able 
to seek both economic damages and pain and suffering from drivers who 
operate a vehicle while under the influence of alcohol or illegal 
drugs, or engage in intentional misconduct.
  Less Fraud. Because people who choose the new PIP option could 
neither sue nor be sued for pain and suffering, most of the incentives 
for fraud would disappear. As a result, for those who choose PIP, 
compensation for economic losses would increase dramatically, while 
dollars paid for fraud, pain and suffering and unnecessary attorneys' 
fees would plummet.
  Savings. A March 1998 Joint Economic Committee study estimates the 
savings at about 45 percent on average for personal injury premiums, 
which translates into about 24 percent of overall premiums, or about 
$184 per year, per car for the typical American driver. The JEC also 
found that low-income drivers would see higher savings--about 36 
percent on their overall premiums.
  In addition, Auto Choice promotes federalism. It gives states the 
option to not extend the first-party liability coverage option to their 
residents by passing a law precluding such a system. Regardless of 
whether states choose to subscribe to the bill's insurance choice 
system, they will maintain their current regulation authority over all 
aspects of auto insurance.
  Finally, it is important to note what Auto Choice will not do. Auto 
Choice will not abolish lawsuits or eliminate the concept of legal 
fault. Drivers who chose to remain in the current tort system will 
still be able to recover for both economic and noneconomic losses. 
Those who choose to enter the new system can still sue for any 
uncompensated economic loss. And, victims of drunken or other negligent 
driving may sue for both economic and noneconomic losses.
  Given these significant benefits to consumers, the Auto Choice Reform 
Act enjoys bipartisan political support--from Rudy Guiliani to former 
Massachusetts governor Michael Dukakis. It is endorsed by the U.S. 
Chamber of Commerce; consumer advocate Andrew Tobias; Citizens for a 
Sound Economy; and taxpayer advocate Grover Norquist.
  My colleague, Mr. Moran, and I hope that others will consider joining 
in our ongoing effort to find ways to help hard-working Americans to 
save more of the money they earn.

                                                   April 20, 1999.
       Dear Colleague: On Tuesday, April 20, 1999, I introduced 
     the Auto Choice Reform Act of 1999. The Monday, April 19, 
     1999 edition of the Washington Times carried an op-ed by 
     Robert R. Detlefsen of Citizens for a Sound Economy (CSE) 
     which outlines the philosophy behind Auto Choice--ridding our 
     nation's courts system of frivolous lawsuits and helping car 
     insurance consumers achieve lower annual premiums. I commend 
     this article to you as yet another way that we can help 
     American families and consumers keep more of what they earn 
     for themselves.
           Sincerely,
                                                       Dick Armey,
     Member of Congress.

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