PIACT Urges Conn. General Assembly to Oppose Reduced Benefit Auto Program

March 17, 2003

Professional Insurance Agents of Connecticut President James Pascarella, urged the Insurance & Real Estate Committee of the Connecticut General Assembly to oppose Raised Senate Bill No. 1084 during a public hearing last week.

The bill would establish a pilot program to offer low-cost, reduced benefit auto insurance to uninsured CT motorists. The PIACT bulletin said that while the organization “has always been in favor of providing coverage for the largest number of drivers possible,” Bill No. 1084 takes the wrong approach to solving the problem of uninsured motorists in the state.”

“PIACT has opposed bills similar to this one in the recent past, and we oppose this bill for largely the same reasons,” Pascarella stated. “Despite the obvious fact that the coverage offered would be more affordable, it would not provide a sufficient level of coverage to those involved in accidents with holders of this policy.”

He indicated that, if a driver with a reduced benefit policy is at fault in an accident with a regularly insured driver there would most likely be insignificant coverage. This would force the regularly insured driver to look to his/her own policy in order to collect the excess, even though the driver wasn’t at fault.

He also questioned pricing under the policy. While an assigned risk plan would establish a base rate that would be adjusted based on the individual’s risk characteristics, the low premium for the policy would likely cause insurance companies to charge their regularly insured drivers more to compensate for any losses. “In terms of equity, the bill would do more harm than good,” Pascarella told legislators.

He questioned how many people would benefit from this policy, stating that “even given the lower limits proposed by this bill, we are not confident that if priced correctly, this program would be able to offer a truly affordable method of insuring more drivers.”

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