I. WHAT IS NFl? NFl is a curious catch-phrase - the type emanating from Madison Avenue apparently designed to attract public attention but at the same time convey little meaning. The massive advertising programs espousing NFl, and the public utterances concerning its thought-ta-be virtues, tend to indicate that it is a brand new type of insurance, but this is not the case at all. The only novel features that AUC finds in any NFl proposal today is that its promoters propose that it be projected beyond the insurance feature and (1) made a compulsory by all who wish to drive a vehicle, and (2) that it be a substitute for the present, and historical, system of effecting reparations to an automobile injured person on the basis of right and
wrong. Our studies of NFl establish that it is not a new type of insurance at all, rather it is now available to the insurance buying public, and has been so available for many years (perhaps a century). Bared of its vagueness created by its catch-phrase name, NFl is purely and simply a form of limited accident insurance, its coverage being limited to accidental injuries resulting from motor vehicle accidents. All of the occupants of a covered vehicle, plus pedestrians, are included in its coverage, and when injury results to anyone or more of the covered persons, the insurer of that vehicle will pay to him or them (1) the reasonable medical expenses up to the specified limit of the plan, (2) a percentage of loss of income, as provided in the plan, and (3) limited funeral costs, if death resu Its. The numerous NFl plans on the American scene today vary so greatly that it would elongate this report beyond its intended purpose to attempt to capsule the variations in their coverage. For instance, maximum medical payments range from $500 to $5,000, and percentage of compensable income loss (sometimes with, and sometimes without, a waiting period) of from 67 per cent to 90 per cent. No plan that has come to our attention provides compensation for disfigurement, loss of a body member or function, permanent disability, pain and suffering, mental anQuish, etc. As stated above, NFl is nothing more than accident insurance, and it is available today to any person who wants to buy it. Therefore, NFl, like the broader personal accident insu rance coverage also available, provides compensation for injuries received from its limited coverage
JULY, 1972
(motor vehicle accidents) regardless of who is at fault. Obviously, this feature is the source of its advertised phrase name, but it is important to bear in mind, always, that this "nofault" feature has been the historic nature of all forms of accident insurance regardless of whether they provide general or limited coverage. Personal accident insurance which covers the insured individual for injuries regardless of where they occur (whether in the home, the front yard, the automobile, aboard ship, the office, etc.) is "no-fault" insurance. Automobile collision insurance is "nofault" insurance, as are many other forms of insurance available tOday. The closest analogy which we can draw to NFl, aside from personal accident insurance, is Workman's Compensation Insurance (WCC), although it should be clearly understood that there is a vast difference in both coverage and "fault" rights between the two. For instance, the question of "fault" under our WCC law is eliminated oniy between the employer and employee, but remains as to all others. NFl, in and of itself, is good insurance coverage and we can find no fault with its insurance features. It, like fire insurance on the home, or life insurance on the family income producer, is another means of hedging against disastrous mishaps. If the insurance industry of America would continue to devote its time and attention to selling the American public on the virtues of this insurance, NFl would not have gained the public attention, and debates, so prevalent in our land tOday. The problem. is, however, that the insurance industry has not been so content and they propose to make this a governmentally required purchase the effect of which will limit the automobile injured persons right of recovery. They propose to do this by (1) enacting laws that will make it compulsory for every vehicle operator to purchase this insurance before he can operate a vehicle on the highways, and (2) substitute NFl compensation for the present right and wrong method which this State adopted from the common law of England.
II. WHAT EFFECT WILL NFl HAVE ON THE PEOPLE OF ARKANSAS IF ENACTED INTO LAW IN THIS STATE? The activity of the insurance industry last referred to is what brings about concern on the part of ALlC,
and while we recognize the financial boon to the insurance industry under a law requiring everyone to buy their limited insurance (and this boon makes their enthusiasm most understandable), it is our conclusion that by proposing to substitute NFl for the present right-wrong method, that they thereby take away substantial rights from the people for a mess of porridge. This detraction of individual rights will be accomplished in an apparent, and a not so apparent, way a way that will have an immediate effect and one that will have a long range effect. The immediate effect will be that should NFl become the law of Arkansas, as proposed by the insurance industry, the automobile injured person will receive less compensation under NFl than he would receive under the present right-wrong method. We grant that the insurance industry could devise a limited accident insurance plan that would pay the automobile injured person the same as, or even more than (NFl plans are limited oniy by the imagination of the drafter) the present right-wrong method of compensation, but as all of the plans coming to our attention so far provide less compensation, it would appear that lesser compensation is an inherent feature of all NFl proposals. 1t is interesting to analyze the methods that the proponents of NFl use to try and convince the public that NFl is a beneficial change in the law. This is accomplished by carefully worded statements, and advertising, that "they think NFl will cost the insurance buying public less money". We observe on this sales pitch that it should cost less money for the injured party will receive less compensation for the injury. Generally speaking one gets just about what he pays for. However, at this point there are no reliable studies, or figures, which have come to our attention to establish this opined savings as a reality. In a somewhat analogous matter, we would call attention to the fact that cost estimates of medicare have proven to be woefully inaccurate. All kinds of figures are bandied about by both the proponents and opponents of NFl, and as best we can determine at this time, neither side has sufficiently accurate information to dispute the other. Consequently, we will refrain from getting into this numbers game except in one small area hereafter noted. We conclude the best course is to bide our time until accurate and indisputable studies become available.
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