No-Fault Insurance Topic At AALA Mid-Year Meeting

No-fault insurance, the new car models and closer cooperation with the Car and Truck Renting and Leas­ing Association were among topics discussed by members of the American Automotive Leasing Association at their Mid-Year Meeting in Chicago September 18 and 19.

Following a keynote address from William P. Benton, vice president and general manager of Ford Motor Co., there was a discussion on the new car models. Participating in the program were James Golden of Colonial Leas­ing, Donald Miller of Mike Albert Leasing and Bennett Bilski of Donlen Leasing. Approval of the new down­sized intermediates by General Motors was expressed, along with indications that the Ford Fairmont and Mercury Zephyr will be good fleet choices.

The panelists said they aren't anti­cipating problems in disposing of the new, smaller cars two years from now since the downsizing trend will con­tinue until all models are affected. The full-size Fords for '78, which are not slated for downsizing until next year, will also be no problem to dispose of, according to Miller. He said there has always been a market for large cars and he looks for the large-car used car market to stay strong.

Dr. Ross Wilhelm, a professor of economics from the University of Michigan, was the featured speaker following dinner. Dr. Wilhelm hinted that there could be a recession next year and that such downturns in the economy are running in a cycle of three to five years.

"Usually they [the recessions] are quite mild unless consumers are afraid," he said. "You as businessmen are going to have to make judgments. These judg­ments are no better than those made by economists and certainly no worse."

Dr. Wilhelm advised the group to remain flexible in the times ahead and to watch the leading economic indi­cators and the stock market. Turning to the nation's energy problems, Dr. Wilhelm said the world is not in danger of running out of oil soon. He said proven resources of oil will rise when the price of oil rises. The higher price for oil will make oil in previously undesirable or hard-to-reach areas profitable to recover.

"If prices rise, the proportion of oil recovery will rise," he said, indicating that current technology allows only 30-percent of the oil in a working well to be recovered. In addition, there are vast deposits of shale oil and coal that have yet to be tapped in this country. "The problem is not one of inadequate reserves, it's that the U.S. people are unwilling to pay the world price for oil."

The following day's events featured an update on AALA matters by President John Blessing. He indicated that members are working with CATRALA for closer cooperation between the two groups and a possible realignment of organizations in the future. The new system would have three national organizations: AALA, a national car rental organization and a national truck renting and leasing association. The three groups would belong to a national umbrella group that we coordinate activities.

John J. Murphy of Avis then spoke to the group about no-fault insurance and its impact. Murphy, who is in favor of no-fault, indicated that many dollars are paid by insurance companies under the current tort system to trial lawyers.

"We don't need a system that deters them [trial lawyers]; we need a system that eliminates them," Murphy said. He added that 45-percent of the persons seriously injured in accidents get no payments. Of those who have suffered losses over $10,000, only four percent have been reimbursed to the amount of their loss.

"We need a system that will make fast payments to the people paying the premiums. We've got to get out of the court system to have a system where you can buy insurance."

Murphy favors federal guidelines for no-fault insurance rather than a federal no-fault insurance program. He doesn't want to see the federal govern­ment go into the insurance business and feels that the government has similar views. Some of those federal guidelines, according to Murphy, should contain some, if not all, of six points adopted by CATRALA.

The points include (1) covering all vehicles by no-fault insurance; (2) making payment to the impaired with­out a lawsuit and (3) restricting the right to sue to cases of death, perma­nent loss or 180 days of continuous disablement.

Under the third point, Murphy said, "ninety eight percent of the cases would never appear in court."

The fourth point adopted by CATRALA is that there should be no reimbursement or subrogation of claims among insurance companies. Another provision is that the insurance company of the driver of a rental or lease car should pay first before the insurance company of the firm that owns the car. The last point is that trucks should pay some of the damage and liability costs when at fault.

Murphy feels that under such a system, insurance costs would go down, there would be a reduction in tort cases clogging up the courts and insurance premium payers would get fast help in accidents.

"Under no-fault," Murphy said, "the abuses that make you ill will disappear."

Following an informal lunch, Mur­phy and panelists Bilski, Miller and Golden answered questions on their presentations and discussed trends in the industry.