[Federal Register Volume 59, Number 176 (Tuesday, September 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22545]


[[Page Unknown]]

[Federal Register: September 13, 1994]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 582

[Docket No. 94-73; Notice 1]
RIN 2127-AF44

 

Insurance Cost Information Regulation

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, NHTSA proposes technical amendments to the 
insurance cost information regulations. Among the proposed changes are 
revising the term ``passenger motor vehicles'' to read ``passenger 
cars, utility vehicles, light duty trucks, and vans,'' and revising 
from January to March, the availability date of the insurance 
information. NHTSA also proposes making more explicit the limitations 
of the collision loss data, and proposes recommending that prospective 
purchasers contact insurance agents for more information. The technical 
amendments are proposed to make the insurance cost information more 
accurate.

DATES: Comments on this notice of proposed rulemaking must be received 
by this agency not later than November 14, 1994.

ADDRESSES: Comments should refer to the docket number referenced in the 
heading of this notice, and be submitted to: Docket Section, NHTSA, 
Room 5109, 400 Seventh Street, S.W., Washington, D.C. 20590. (Docket 
hours are 9:30 am to 4:00 pm, Monday through Friday.)

FOR FURTHER INFORMATION CONTACT: Mr. Orron Kee, Office of Market 
Incentives, NHTSA, 400 Seventh Street, S.W., Washington, D.C. 20590. 
Mr. Kee's telephone number is (202) 366-4936.

SUPPLEMENTARY INFORMATION:

Background

Insurance Cost Information Regulation

    49 U.S.C. 32302(c) states that the Secretary of Transportation (the 
Secretary) shall prescribe regulations that require passenger motor 
vehicle dealers to distribute to prospective purchasers information 
developed by the Secretary and provided to the dealer which compares 
differences in insurance costs for different makes and models of 
passenger motor vehicles based upon differences in damage 
susceptibility and crashworthiness. By delegation from the Secretary, 
NHTSA has been authorized to carry out the statute.
    On January 31, 1975, NHTSA published 49 CFR part 582, Insurance 
Cost Information Regulation (40 FR 4918). Part 582, as then 
promulgated, required that automobile dealers ``make available to 
prospective purchasers information reflecting differences in insurance 
costs for different makes and models of passenger motor vehicles based 
upon differences in damage susceptibility and crashworthiness.'' Part 
582, however, did not specify information that dealers must provide.
    On March 5, 1993 (58 FR 12545), NHTSA published a final rule 
amending part 582. The rule complemented the 1975 rulemaking, and 
completed implementation of section 32302(c). The March 1993 final 
rule, which became effective April 5, 1993, requires dealers of new 
automobiles to make collision loss experience data available in 
booklets to prospective purchasers. The information to be provided in 
the booklet is specified in section 582.5, which requires inclusion of 
a complete explanatory text and updated data on auto insurance costs 
published annually by NHTSA.
    The mandatory text specified by part 582 relates to, among other 
topics, the limitations of the auto insurance cost data as a predictor 
of differences in insurance premiums. Essentially, those limitations 
result from the fact that most of the factors that insurance companies 
use to establish premiums relate to driver characteristics and, except 
for the vehicle's value, are not directly related to the vehicle 
itself. Thus, as the text explains, the fact that a vehicle's 
historical claims experience is somewhat better or worse than that of 
other vehicles in its class may not be reflected in the premium that an 
insurance company establishes for that vehicle. If the claims 
experience is reflected, it is likely to have only a small impact on 
the premium.
    The mandatory text also urges consumers to contact insurance 
companies if they wish to obtain precise information about actual 
premiums for particular makes and models of vehicles. Previous studies 
by NHTSA have revealed that the difference between the premiums charged 
by different insurance companies for the same car and driver is greater 
than the difference between the premiums charged by a given company for 
comparably-valued cars that have different claims experience. NHTSA 
believed the mandatory text would help to minimize consumer confusion 
by providing customers with an understanding of the uses and 
limitations of the auto insurance cost data.
    In specifying the yearly insurance cost data that accompanied the 
required text, NHTSA decided to rely on collision loss experience data 
collected and reported by the Highway Loss Data Institute (HLDI), as 
the best available indicator of the effect of damage susceptibility on 
insurance costs.
    In the March 1993 final rule, NHTSA specified HLDI's December 
Insurance Collision Report as the data source for part 582. NHTSA 
decided to specify HLDI's December Report because it contains more 
current data and covers more vehicle models than other HLDI 
publications. The HLDI data is presented in a format that ranks the 
vehicles in each class from best to worst (with numerical values given 
for each vehicle). NHTSA specified this format because it determined 
the use of this ranking system should assist customers in evaluating 
the comparative performance of comparable vehicles.
    In the March 1993 final rule, NHTSA stated its belief that the HLDI 
information should be available as soon as possible after its 
publication date. Therefore, NHTSA stated its intent to publish the 
annual Federal Register document updating HLDI's December Insurance 
Collision Report data no later than January of the calendar year that 
follows HLDI's publication of the data.

Proposed Amendments

    In this notice of proposed rulemaking, NHTSA proposes to amend part 
582 by making certain changes in section 582.5, that specifies the text 
of the insurance cost information booklet. At present, the text 
specifies the date ``January [Year to be Inserted].'' In this NPRM, 
NHTSA proposes to revise ``January'' to ``March.'' The change to a 
later month will allow NHTSA adequate time to publish the comparative 
insurance cost information booklet. HLDI sends the December Insurance 
Collision Report data to NHTSA in mid-January. The data is then 
formatted for printing and distributed to automobile dealers by mail. 
NHTSA can thus expect that the booklet will be published by March of 
each year.
    Part 582 presently specifies a comparison of insurance costs for 
``passenger motor vehicles.'' In this NPRM, NHTSA proposes to revise 
``passenger motor vehicles,'' at appropriate places in Sec. 582.5, to 
read ``passenger cars, utility vehicles, light duty trucks and vans.'' 
The proposed revisions would make clear that ``passenger motor 
vehicles'' includes many vehicle types besides ``passenger car.''
    In this NPRM, NHTSA also proposes to make certain changes to the 
required text that would make more explicit the limitations of the 
collision loss data. At present, the text in Sec. 582.5 explaining the 
data's limitations states that the collision loss data table does not 
include information about new models, models that have been 
substantially redesigned, and models without enough claim experience. 
In order to make clear that certain data should not be relied upon, 
NHTSA proposes to revise the third paragraph in Sec. 582.5 to state:

    The table is not relevant for new models or models that have 
been substantially redesigned for [YEAR TO BE INSERTED], and it does 
not include information about models without enough claim 
experience.

    At present, the fourth paragraph in Sec. 582.5 states that it is 
unlikely that a consumer's total premium will vary more than five 
percent depending upon the collision loss experience of a particular 
vehicle. Upon further review, NHTSA believes it would be more accurate 
to state that it is unlikely that a consumer's total premium will vary 
more than ten percent. This notice proposes that change.
    The reason for the change to ten percent is that the Insurance 
Services Organization (ISO) recommends insurance premium rates to its 
members. An ISO representative indicated to NHTSA that the collision 
cost data could result in an insurance premium reduction of ten percent 
rather than the five percent mentioned in the booklet ``Comparison of 
Differences in Insurance Costs for Passenger Motor Vehicles on the 
Basis of Damage Susceptibility,'' made available to motor vehicle 
purchasers.
    Finally, at present, Sec. 582.5 states that to determine the actual 
premium that a consumer will be charged for insuring a particular 
vehicle or for complete information about insurance premiums, the 
consumer should contact insurance companies directly. In this proposed 
rule, NHTSA proposes that Sec. 582.5 be revised to advise the consumer 
to contact insurance company agents directly. Amending the text to 
advise the consumer to contact the insurance company agents directly, 
reflects the fact that the consumer's first point of contact with 
insurance companies is the insurance company agent.

Regulatory Impacts

1. Executive Order 12866 and DOT Regulatory Policies and Procedures

    This notice has not been reviewed under Executive Order 12866. 
NHTSA has considered the impact of this rulemaking action and has 
determined the action not to be ``significant'' under the Department of 
Transportation's regulatory policies and procedures. The agency has 
determined that the economic effects of the proposed amendments are 
minimal, so that a full regulatory evaluation is not required. This 
NPRM proposes minor amendments to the insurance cost information 
regulation, so that the information to be provided to potential motor 
vehicle purchasers is more accurate. Assuming these proposals are 
adopted, any extra text that must be included in the information 
booklet would be minuscule.

2. Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, NHTSA has 
evaluated the effects of this notice of proposed rulemaking on small 
entities. NHTSA estimates there are about 24,000 dealers of new 
passenger motor vehicles. Many of the dealers would be considered small 
entities, that may be affected by this proposed rule. However, NHTSA 
believes that this proposed rule would not have a significant economic 
impact on a substantial number of these small dealers. The rationale is 
that this rulemaking proposes minor editorial changes, resulting in a 
small amount of extra text in the insurance cost information booklet. 
The potential cost increments associated with this proposed rule should 
have negligible effects on the purchase price of new passenger motor 
vehicles. For these reasons, I certify that the proposed rule will not 
have a significant economic impact on a substantial number of small 
entities.

3. National Environmental Policy Act

    In accordance with the National Environmental Policy Act of 1969, 
the agency has considered the environmental impacts of this proposed 
rule and determined that if made final, it will not have a significant 
impact on the quality of the human environment.

4. Federalism

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 12623, and it has been determined 
that the rule does not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment.

5. Civil Justice Reform

    This proposed rule would not have any retroactive effect, and it 
does not preempt any State law. Chapter 323--Consumer Information of 49 
U.S.C. does not provide for judicial review of rules issued pursuant to 
49 U.S.C. 32302. The Administrative Procedure Act, 5 U.S.C. 701 et 
seq., provides generally for judicial review of final agency action, 
which in certain circumstances may include this proposed rule. The 
Administrative Procedure Act does not require submission of a petition 
for reconsideration or other administrative proceedings before parties 
may file suit in court.

Procedures for Filing Comments

    NHTSA solicits public comments on the issues presented in this 
notice. It is requested, but not required, that 10 copies be submitted.
    All comments must not exceed 15 pages in length. (49 CFR 553.21.) 
Necessary attachments may be appended to these submissions without 
regard to the 15 page limit. This limitation is intended to encourage 
commenters to detail their primary arguments in a concise fashion.
    If a commenter wishes to submit certain information under a claim 
of confidentiality, three copies of the complete submission, including 
purportedly confidential business information, should be submitted to 
the Chief Counsel, NHTSA, at the street address given above, and seven 
copies from which the purportedly confidential information has been 
deleted should be submitted to the Docket Section. A request for 
confidentiality should be accompanied by a cover letter setting forth 
the information specified in the agency's confidential business 
information regulation. 49 CFR part 512.
    All comments received before the close of business on the comment 
closing date indicated above for this notice will be considered, and 
will be available for examination in the docket at the above address 
both before and after that date. To the extent possible, comments filed 
after the closing date will also be considered. Comments received too 
late for consideration in regard to the final rule will be considered 
as suggestions for further rulemaking action. Comments on this notice 
will be available for inspection in the docket. NHTSA will continue to 
file relevant information as it becomes available for inspection in the 
docket after the closing date, and it is recommended that interested 
persons continue to examine the docket for new material.
    Those persons desiring to be notified upon receipt of their 
comments in the rules docket should enclose a self-addressed, stamped 
postcard in the envelope with their comments. Upon receiving the 
comments, the docket supervisor will return the postcard by mail.

List of Subjects in 49 CFR Part 582

    Administrative practice and procedure, Insurance, Motor Vehicles.

    In consideration of the foregoing, NHTSA proposes to amend 49 CFR 
part 582 as follows:

PART 582--[AMENDED]

    1. The authority citation for part 582 would be revised to read as 
follows:

    Authority: 49 U.S.C. 32302, 32303; delegation of authority at 49 
CFR 1.51.

    2. Section 582.5 would be revised to read as follows:


Sec. 582.5  Information form.

    The information made available pursuant to Sec. 582.4 shall be 
presented in writing in the English language and in not less than 10-
point type. It shall be presented in the format set forth below, and 
shall include the complete explanatory text and the updated data 
published annually by NHTSA.

MARCH [YEAR TO BE INSERTED]

COMPARISON OF DIFFERENCES IN INSURANCE COSTS FOR PASSENGER CARS, 
UTILITY VEHICLES, LIGHT DUTY TRUCKS, AND VANS ON THE BASIS OF DAMAGE 
SUSCEPTIBILITY

    The National Highway Traffic Safety Administration (NHTSA) has 
provided the information in this booklet in compliance with Federal law 
as an aid to consumers considering the purchase of a new vehicle. The 
booklet compares differences in insurance costs for different makes and 
models of passenger cars, utility vehicles, light trucks and vans on 
the basis of damage susceptibility. However, it does not indicate a 
vehicle's relative safety.
    The following table contains the best available information 
regarding the effect of damage susceptibility on insurance premiums. It 
was taken from data compiled by the Highway Loss Data Institute (HLDI) 
in its December [YEAR TO BE INSERTED] Insurance Collision Report, and 
reflects the collision loss experience of passenger cars, utility 
vehicles, light trucks, and vans sold in the United States in terms of 
the average loss payment per insured vehicle year for [THREE 
APPROPRIATE YEARS TO BE INSERTED]. NHTSA has not verified the data in 
this table.
    The table represents vehicles' collision loss experience in 
relative terms, with 100 representing the average for all passenger 
vehicles. Thus, a rating of 122 reflects a collision loss experience 
that is 22 percent higher (worse) than average, while a rating of 96 
reflects a collision loss experience that is 4 percent lower (better) 
than average. The table is not relevant for new models or models that 
have been substantially redesigned for [YEAR TO BE INSERTED], and it 
does not include information about models without enough claim 
experience.
    Although many insurance companies use the HLDI information to 
adjust the ``base rate'' for the collision portion of their insurance 
premiums, the amount of any such adjustment is usually small. It is 
unlikely that your total premium will vary more than ten percent 
depending upon the collision loss experience of a particular vehicle.
    If you do not purchase collision coverage or your insurance company 
does not use the HLDI information, your premium will not vary at all in 
relation to these rankings.
    In addition, different insurance companies often charge different 
premiums for the same driver and vehicle. Therefore, you should contact 
insurance company agents directly to determine the actual premium that 
you will be charged for insuring a particular vehicle.

    Please Note: In setting insurance premiums, insurance companies 
mainly rely on factors that are not directly related to the vehicle 
itself (except for its value). Rather, they mainly consider driver 
characteristics (such as age, gender, marital status, and driving 
record), the geographic area in which the vehicle is driven, how 
many miles are traveled, and how the vehicle is used. Therefore, to 
obtain complete information about insurance premiums, you should 
contact insurance company agents directly.

    Insurance companies do not generally adjust their premiums on the 
basis of data reflecting the crashworthiness of different vehicles. 
However, some companies adjust their premiums for personal injury 
protection and medical payments coverage if the insured vehicle has 
features that are likely to improve its crashworthiness, such as air 
bags and automatic seat belts.
    Test data relating to vehicle crashworthiness are available from 
NHTSA's New Car Assessment Program (NCAP). NCAP test results 
demonstrate relative frontal crash protection in new vehicles. 
Information on vehicles that NHTSA has tested in the NCAP program can 
be obtained by calling the agency's toll-free Auto Safety Hotline at 
(800) 424-9393.

[INSERT TABLE TO BE PUBLISHED EACH MARCH BY THE NATIONAL HIGHWAY 
TRAFFIC SAFETY ADMINISTRATION]

    If you would like more details about the information in this table, 
or wish to obtain the complete Insurance Collision Report, please 
contact HLDI directly, at: Highway Loss Data Institute, 1005 North 
Glebe Road, Arlington, VA 22201, Tel: (703) 247-1600.

    Issued on September 6, 1994.
Barry Felrice,
Associate Administrator for Rulemaking.
[FR Doc. 94-22545 Filed 9-12-94; 8:45 am]
BILLING CODE 4910-59-P