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Florida Automotive Journal
December 1970

A Puerto Rican Government insurance official recently warned the American insurance industry that if it fails to provide a just and acceptable solution existing auto insurance problems, the Federal Government will definitely enter the picture.

"The critical situation, and the hesitation of the insurance industry in making a realistic approach by providing a private enterprise alternative to this situation, will force the government to elect a different course of action," Frank W. Frounier, executive director of the Automobile Accident and Compensation Administration, Commonwealth of Puerto Rico, told a meeting of claim managers of CNA's liability - property - surety division.  The four - day meeting was held recently in Pine Mountain, Georgia.

Mr. Fournier, formerly CNA claim manager for Puerto Rico and Central and South America, reported on Puerto Rico's "Social Protection Plan for Victims of Automobile Accidents" that went into effect on Jan. 1, 1970.  "While the merits and drawbacks of no-fault are being debated throughout the U.S., the no-fualt concept is already successfully operating under the U.S. flag," he said.

He explained that the plan is a "social system that intends to provide everyone driving on the island's roads with a basic plan offering immediate help to traffic accident victims, regardless of the application of the principle of liability on the basis of negligence."

The Puerto Rican plan is compulsory, government administered, emphasizes socially adequate benifits rather than individual equity, and aims at a basic floor of protection for all victims—drivers, passengers or pedestrians—through benefits prescribed by statute.  It does not require underwriting, policy issuance, billing or collection of premium.  The plan is financed through an annual fee of $35 paid by drivers at the time of vehicle registration.

Mr. Fournier reported that insurance Companies in Puerto Rico continue to provide insurance cover over the basic no-fault limits established.  "We don't foresee any elimination or curtailment of their existence or incompatibility with the government plan," he said.

In explaining the philosophy behind the plan, Mr. Fournier stated that it "broadly spreads the cost of traffic injuries over all drivers—it falls lightly on each rather than heavily on a few.  It transfers the cost of accidents from the victims to all drivers."

Echoing the theme of change, another speaker addressed himself to the question of whether "the no-fault system will eventually extend into the products liability field."

J.E. Worley, CNA claim manager, Orlando branch, stated that "had our industry faced up to claim handling service and offered an advanced payment program two decades ago, the general public would not be looking to our various legislative bodies for a remedy today."

Statistics show that in 1963, there were approximately 50,000 products liability cases throughout the country.  In 1966, this figure more than doubled, and in 1968, there were more than 300,000 suits filed in the courts.  "This kind of volume may very well bring prompt action on the par of federal and state legislative bodies, action to explore the possibility of 'no-fault' in the products area to gove faster satisfaction to those who have been injured," Mr. Worley said.

"If we, as an industry, can come up with new, modern techniques of claim handling, can we perhaps avoid some of the state and federal intervention into out affairs?" Mr. Worley asked.  "By providing the injured citizen with prompt and courteous service on a fair basis, he will no longer be looking to state and federal government agencies to legislate a law to provide him adequate compensation for his damages and for his injuries."

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