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Auto insurance is high, say the insurers, partly because manufacturers design cars that can crumple easily in minor accidents. Allstate Insurance Co. last spring offered a 20% discount on collision coverage for any car that could withstand a 5 m.p.h. crash without front-or rear-end damage. So far there have been no takers. Criticizing Detroit's 1971 models, Allstate Chairman Judson Branch complains: "Look at the bumpers! Still tucked against the sheet metal: a perfect battering ram and shock transmitter. Another model year down the drain as far as sturdier cars go."
A Plan for No Fault. The cost of theft, burglary and fire insurance has climbed beyond the reach of many inner-city merchants. To thwart robberies, some small-shop owners in Manhattan now keep their doors locked during the business hours and have hired private patrolmen. Battered universities are also being hit by crushing increases in premiums. The University of California's bill to insure its buildings against fire, bombs and other riotous mishaps has leaped in just two years from $80,000 to $648,000.
Insurance men argue with considerable justification that many politically sensitive state authorities prevent them from raising rates for individuals fast enough to cover the soaring claims. Last year the industry lost $660 million on auto insurance alone, and over the past decade it has paid out $2 billion more in claims than it has collected in premiums. Profits from investments have kept most insurance companies in the black, but the recent stock market slump has squeezed that source of income.
What can be done to ease the crisis in casualty insurance? The most important and widely supported reform is "no fault" auto insurance, under which a victim's own policy would cover his loss, no matter who was responsible for the accident. Proponents argue that the system would cut down on today's long delays for litigation, enable seriously injured victims to collect more money sooner, and greatly reduce the insurance companies' administrative costs. Transportation Secretary John Volpe is pressing the White House to back a limited form of no-fault insurance on a nationwide basis. But such a change would hurt many powerful interests, notably lawyers who now pocket a large percentage of damage awards, and the Administration prefers to wait until next year before sending any proposal to Congress.
One step that the states could take would be to adopt tougher licensing standards to keep unsafe drivers—those who are drunks, ill, infirm or accident-prone—off the roads. Complains David Phillips, an official of the State Farm Insurance Companies: "State authorities don't have the political guts to take licenses away from irresponsible drivers. Our files bulge with people insured under assigned-risk plans despite five-to-eight drunken-driving citations." In other areas of insurance, home owners will probably have to accept $250-deductible clauses if fire and theft rates are to be kept anywhere within reason. There will be no real relief, though, so long as the nation continues to set records for crashing, stealing and burning. Until the U.S. becomes a calmer, safer place, the policyholder will have to pay more and more for less and less protection.