Covey prepared for fight to pass motor vehicle `no-fault' law

Journal Record, The (Oklahoma City), Feb 10, 2003 by Ray Carter The Journal Record

State Rep. James Covey, D-Custer City, believes the growing number of uninsured drivers on Oklahoma roads is driving up the cost of insurance for other motorists.

This year, he hopes to do something about it.

Covey has filed House Bill 1148 to create the Oklahoma Motor Vehicle No-Fault Act and limit the ability of uninsured motorists to recover damages from other drivers.

Covey noted that the number of insured motorists in Oklahoma has been estimated as high as 30 percent of all drivers on the road.

"Whenever you buy insurance and I buy insurance, we're insuring that individual," Covey said.

Under the provisions of a no-fault law, an uninsured motorist could not receive compensation from the insured motorist, unless the insured motorist has done something illegal.

"If you're operating within the confines of the law, then you're pretty well insulated from that individual," Covey said.

He said the issue hasn't been pushed by any one constituent or interest group, but simply came about due to his own frustration with Oklahoma's existing insurance system.

"This is something that I've thought about for some time," Covey said. "I think it's time to take another look at it."

But insurance officials say Covey faces stiff resistance in the Legislature due to opposition from certain groups, including trial lawyers.

"Quite frankly, it's going to be a tough road for Representative Covey to pass that bill," said Jim Walker, a lobbyist representing State Farm Insurance. "There's going to be a lot of opposition to it."

Walker said insurers would support reasonable restrictions, since a reduction in claims would benefit their bottom line. But he suggested other groups may not be as willing to go along with the proposed changes.

"It has been introduced in the past in Oklahoma but has not gotten anywhere," Walker said.

Walker said State Farm officials were concerned about some portions of Covey's bill as originally filed, particularly the high benefits provided -- $50,000 per person.

"That's pretty substantial," Walker said. "It would have made us the fourth-highest no-fault level in the country."

The measure also contained other provisions allowing further recovery, Walker said.

"All of these came to the question of cost," he said. "And if we were looking to find an inexpensive solution for the problem, we felt like this bill was not going to offer the consumer a choice that would be affordable as compared to our current system."

The insurance company has recommended that Covey use a bill filed in 1997 by former Rep. Mark Seikel, D-Harrah, as a model for the legislation. Walker said State Farm officials believe that there are several issues "specific to Oklahoma" that must be addressed by any proposed no-fault law for the law to be effective.

Currently, Oklahoma requires all motorists to carry a certain level of coverage -- $10,000 per person, $20,000 per accident. That's lower than every other state but Mississippi, Walker said, and creates a problem with "underinsured motorists" since the minimal liability levels often fail to cover actual costs in an accident. That leads to more litigation and drives up the cost of auto insurance in Oklahoma, he said.

But even with Oklahoma's low level of mandated insurance, the state still has problems with drivers who refuse to buy insurance. In Oklahoma, the number of uninsured motorists is "fairly high," Walker said. State agencies estimate that 17 percent of drivers on Oklahoma roads are uninsured, but Walker said State Farm believes the number is higher. Based on the number of claims filed with the company, State Farm officials estimate that at least 20 percent of drivers are uninsured.

State Farm has more than 20 percent of the auto insurance market in Oklahoma.

A no-fault law is one option for dealing with those drivers, Walker said, but that solution has been strongly opposed in past legislative sessions.

Another option is to pass a "no pay, no play" law that caps the amount of recovery available to uninsured motorists. Walker said California and Louisiana have adopted similar laws.

"If you didn't buy insurance and the other guy's at fault, you may not be able to recover, simply because you chose not pay or buy insurance," Walker said. "And there are various versions of that."

He said there are only three basic options for addressing uninsured motorists. Drivers can buy insurance to cover accidents with uninsured motorists (which is now the case in Oklahoma), they can have no-fault insurance where a driver pays only to protect himself or herself, or lawmakers could pass a "no pay, no play" law.

"There's no simple solution for all of this," Walker said.

In spite of the challenges, Covey plans to forge ahead with his bill.

"The states that have instituted no-fault insurance, their policies have gone down or haven't escalated as high or as quickly as ours have," he said.

Covey said he will introduce a committee substitute of his bill containing language addressing many of the problems identified by insurers. The measure is scheduled for a hearing in the House Homeland Security and Public Safety Committee this (Monday) morning.