Car Insurance Reform
Price of Paradise · Hawaii Public Radio · aired 1996-03-31
Guests: Carolyn Fujioka (Director of Public Affairs in Hawaii, State Farm Insurance); Janice Kim (consumer law attorney)
Duration: 1:04:26

[00:00:00] Speaker 1: Good morning. nice radio show, sometimes known as pop radio. We're broadcast live each Sunday morning at 8:00 on KHPR 88.1 FM and KKUA 90.7 FM and then rebroadcast Sunday evenings at 8:00 on KIFO 1380 a.m. Everyone who works on this show is a volunteer. We do what we do because we enjoy doing it and because we believe in the importance of public dialogue. Our topics often are controversial, but we do our best to find guests who are not just knowledgeable but thoughtful and reasonable as well. The conversations we generate almost always are friendly and constructive as well as lively and informed. Our bottom line is that we want to shed light rather than generate heat.

[00:00:37] Speaker 1: Our bottom line is that we want to shed light rather than generate heat. The sponsor of pop radio is Hawaii Community Foundation, an organization that encourages grass roots efforts to improve the quality of life in Hawaii and that manages charitable funds with efficiency and compassion. Today's topic is car insurance reform, and with me in the studio to discuss it are Carolyn Fujioka and Janice Kim. Carolyn graduated magna cum laude from USC and then earned an MBA at the University of Hawaii Manoa. She's a member of Phi Beta Kappa and has earned a CPCU. That's a chartered property casualty underwriter's designation. Carolyn has 19 years experience with both auto and fire casualty claims, and since last November has been in charge of public affairs for State Farm Insurance company here in Hawaii.

[00:01:13] Speaker 1: Carolyn has 19 years experience with both auto and fire casualty claims, and since last November has been in charge of public affairs for State Farm Insurance company here in Hawaii. She's married, has two sons and is very active in a number of school and community projects. Good morning, Carolyn.

[00:01:29] Carolyn Fujioka: Good morning.

[00:01:31] Speaker 1: Janice Kim earned her undergraduate degree at the University of Hawaii Manoa, where she also served as student body president. She went on to earn a law degree from Georgetown University. After law school, she took a job working for her father, who has a law practice in Kaimuki. Her mother, who conducted the interview, concluded that no other applicant possessed Janice's sterling qualifications. In a footnote, Janice says she doubts that anyone else bothered to complete the exhaustive interview process, which for her took 25 years. She's been a member of or headed up a number of professional and civic organizations and currently is a board member of the Consumer Lawyers of Hawaii. Janice and her husband soon will take over as the executive couple of an organization known as Marriage Encounter. Welcome, Janice.

[00:02:06] Speaker 1: Janice and her husband soon will take over as the executive couple of an organization known as Marriage Encounter. Welcome, Janice.

[00:02:12] Janice Kim: Hi, Randy.

[00:02:13] Speaker 1: Well, I'm going to start things by describing, I think accurately, what we have now and what we're here to talk about. And then I'm going to give our guests an opportunity to tell me in what ways I've oversimplified the issue or or heaven forbid, maybe even misstated it. As I understand it, the Hawaii currently has a car insurance system that's called no fault and that name suggests that accident claims get settled without regard to who's at fault. But that's not the way it always works. Today, anyone who's injured in a car accident and whose medical bills exceed $11,000, that's called a threshold, when they exceed $11,000, that person can sue the person who allegedly caused the accident.

[00:02:40] Speaker 1: Today, anyone who's injured in a car accident and whose medical bills exceed $11,000, that's called a threshold, when they exceed $11,000, that person can sue the person who allegedly caused the accident. If the lawsuit is successful, that is if the plaintiff convinces a jury that the accident was the defendant's fault, the latter or his insurance company will have to pay the plaintiff's damages, which generally include not just actual out of pocket costs but amounts for a variety of things including pain and suffering. Again, as I understand it, State Farm Insurance company supports a senate bill that would replace the current system with one that might be called pure or true no fault. It's quite complicated, but in theory at least, would eliminate almost all lawsuits, 99% of the lawsuits, by raising the threshold from 11,000 to $250,000.

[00:03:19] Speaker 1: It's quite complicated, but in theory at least, would eliminate almost all lawsuits, 99% of the lawsuits, by raising the threshold from 11,000 to $250,000. Consequently, the payment of claims, at least as a general rule, would be unrelated to the question of fault. On the other hand, Janice's group, the Consumer Lawyers of Hawaii, supports a house bill that would get rid of no fault completely. It would return us to the tort system in which fault always matters. In my mind, the system we now have is somewhere between the two ends of a spectrum. Carolyn's approach, which I'll call true no fault, is at one of those ends, and Janice's approach, which I'll call the tort or fault system, is at the other.

[00:03:53] Speaker 1: Carolyn's approach, which I'll call true no fault, is at one of those ends, and Janice's approach, which I'll call the tort or fault system, is at the other. Both Janice and Carolyn want to junk the current law, which I'll call plain old no fault insurance. Well, Janice, have I oversimplified it too much?

[00:04:11] Janice Kim: Well, I I think you have to, frankly, because it's a very confusing system, even the current one that we have, and a lot of people don't understand no fault until they get into an auto accident. But the what we've been trying to tell people is that, you know, no fault is really good drivers paying for bad. Essentially, if you're involved in an auto accident, your own insurance company is the one that's going to be taking care of your medical and your wage loss and um, and out of pocket expenses. It doesn't have, at least the the program that's put forward by the Senate, um, which they call pure no fault, and we call legalized irresponsibility is, is, is about everybody just kind of um being responsible for the irresponsible driver.

[00:04:38] Janice Kim: It doesn't have, at least the the program that's put forward by the Senate, um, which they call pure no fault, and we call legalized irresponsibility is, is, is about everybody just kind of um being responsible for the irresponsible driver.

[00:04:54] Speaker 1: And so I guess part of your main message is that you think with pure or true no fault, the cost of insurance would actually go up in Hawaii.

[00:05:01] Janice Kim: Well, I don't think that that's our message. Yesterday at a hearing in the House, the insurance commissioner was asked by Ron Manoa, the chairman of the chairman of one of the committees in the house, what what was the savings that was going to be recognized by Senate Bill 2001? And and Mr. Metcap just told them it's 0 to 10% for a basic policy holder and for anyone in the professional professions or or has assets to protect, it will probably go up.

[00:05:30] Speaker 1: Okay. And just so people know who the players are, Ron Manoa is the head of the consumer protection committee in the House and the House is, um, uh, where the bill that you would support is is coming from. And then we've got Milton Holt, who's the counterpart of Ron Manoa in the Senate, he's the head of Consumer Protection in the Senate and the Senate bill is more on the side of where State Farm insurance might might be described as being. Carolyn, you've listened to my simplistic description of what's going on and Janice's brief response to that. Any comments on what either of us have said?

[00:06:04] Carolyn Fujioka: Well, I I agree that we begin this process by in agreement that the current system is not working and that insurance in Hawaii doesn't need to cost as much as it does. What we need to do, what the legislature needs to do is look at what those cost drivers are and determine what can be done about them. Um, auto premiums are high because costs are high, and unnecessary litigation is a significant cost which is increasing the cost of auto insurance. Pure no fault would remove this cost driver unnecessary litigation from the system which would result in lower premiums. Now, yesterday Janice referred to the insurance commissioner said that we would not see a significant savings from pure no fault, but it has been suggested that we need to look at the figures and make sure that we're all starting with the same assumptions.

[00:06:41] Carolyn Fujioka: Now, yesterday Janice referred to the insurance commissioner said that we would not see a significant savings from pure no fault, but it has been suggested that we need to look at the figures and make sure that we're all starting with the same assumptions. When whenever you're talking about rating, um it's extremely important that all parties are starting from the same point. Um, a lot can be done in the legislature to, um pick and choose things from the two bills that are currently on the table. There are good things and bad things in in both bills. Um, but I think what's clear is that the legislature is going to need to make a decision, a bottom line decision on the type of system that we have.

[00:07:13] Carolyn Fujioka: There are good things and bad things in in both bills. Um, but I think what's clear is that the legislature is going to need to make a decision, a bottom line decision on the type of system that we have. Are we going to have a tort system in which every small little claim is litigated or are we going to have a pure no fault system where people's benefits are paid by their own insurance company without regard to fault?

[00:07:36] Speaker 1: I think it is interesting that we seem to clearly be at a fork in a road where everyone seems to agree that what we have is is not doing it and we need to make a decision. Do we go the one direction which I'll call pure no fault or the other direction, the tort or or fault system. I think something that you both agree on though is that this current threshold, this $11,000 threshold, which measures at what point a lawsuit can be filed, that it's having a perverse effect of sorts. As I understand it, both Carolyn and Janice will agree that that sometimes people behave differently with that threshold out there than what they otherwise would behave.

[00:08:06] Speaker 1: As I understand it, both Carolyn and Janice will agree that that sometimes people behave differently with that threshold out there than what they otherwise would behave. Janice is is that accurate?

[00:08:18] Janice Kim: That's kind of the current mythology that's that's going around regarding tort thresholds. Thresholds are notoriously ineffective in uh as as a as a program to try to eliminate lawsuits. They they don't work. Hawaii has the highest threshold in the country. We have this we pay the second highest premiums in the country. Uh, the only I I think the next state with a tort threshold has like a $4,000 tort threshold. Anywhere they've been tried, they it really hasn't worked, and for 22 years we've tinkered with this system. We've gone up and up and up on this tort threshold business and all it's done is drive our premiums higher and higher and higher.

[00:08:53] Speaker 1: And some people argue that we need a verbal threshold where instead of talking about a dollar amount, we would talk about certain types of injuries, and I guess you would have a similar reaction to that.

[00:09:03] Janice Kim: Well, I you know, I just want to base what I'm saying on the data. No fault's been around for 22 years. Not all states adopted it, only 17 did. Six have now repealed it. Uh, California just overwhelmingly rejected this pure no fault proposal. But some of the states that do have it have a verbal, what they call verbal threshold. Anytime you tinker with the system, it gets worse. Even the verbal threshold states are very high premium states. You just don't get around it. The states that have managed to hold their premiums down are tort states.

[00:09:32] Speaker 1: Okay. Carolyn, what do you think about this threshold issue?

[00:09:35] Carolyn Fujioka: I I would agree with most of what Janice said. Um, anytime you're trying to mix a tort system with a no fault system, which is what we're currently doing in Hawaii, we've we've seen that it doesn't work. And many other states have seen that it doesn't work, as as Janice mentioned, some states have repealed their no fault law. Um, however, no fault itself is not the problem. North Dakota, which is a no fault state, has the lowest premiums in the country. So no fault itself doesn't have to be the problem. Um, I think that it is important to to make the distinction, as you did early on in in the program, that, um, the current system that we call no fault is really not no fault at all.

[00:10:02] Carolyn Fujioka: Um, I think that it is important to to make the distinction, as you did early on in in the program, that, um, the current system that we call no fault is really not no fault at all. We could call it a tort threshold. We've we've talked about the $11,000 figure and it serves as a target that people want to reach in order to be able to sue.

[00:10:23] Speaker 1: I get the impression terminology is really important in this discussion, that the folks on the one side like to use one set of of descriptions and the folks on the other side like to use another set of descriptions. But it's you you agree, nobody's happy, nobody in this room is happy with the current system.

[00:10:38] Carolyn Fujioka: I I wanted to to address something that Janice brought up um in her initial statement that, um, no fault makes good drivers pay for bad drivers, and that that really isn't true. Under the current system, people who cause accidents pay higher premiums, and that will certainly continue under a no fault system. And I think it's it's not reasonable to expect that simply because a pure no fault law is passed, that people are going to go out and drive recklessly and intentionally cause problems to their selves, it possible injury and damage to their own property.

[00:10:59] Speaker 1: I don't think that makes sense. Okay, well I'm sure we'll come back. Or Janice, if you want to comment briefly on that and and then we'll get into it more detail a little bit later.

[00:11:15] Janice Kim: I I think that the terminology like you said, the terminology is important. When we say good drivers pay for bad drivers, we're not just talking about premiums. We're talking about the punishment that good drivers face, sometimes from their own insurance company just for being injured. And the fact that that they end up and and this is the problem with any type of system which leaves you just at the mercy of your own insurance company, which what we've really been seeing since 1992, since an a variation in the law passed, which gave insurance companies a better opportunity to start closing off the coverage to their, uh individual policy holders. People have to sue their own insurance companies to get these kind of benefits that they contracted for.

[00:11:48] Janice Kim: People have to sue their own insurance companies to get these kind of benefits that they contracted for. And we've seen an explosion as far as litigation goes in that area. My practice has turned over almost totally to people suing their own company to get the benefits they paid for.

[00:12:02] Speaker 1: Well, in in fact, your group, the uh Consumer Lawyers of Hawaii, have a publication that that uh that they send to me. And and I noticed in one place last month, they commented that they believe that the amount of litigation actually goes up with no fault as compared to a fault system.

[00:12:18] Janice Kim: It just shifts it. It essentially, and and this is just historically based on what I've experienced and what other attorneys have experienced and I think what the state has experienced. Under no fault in 1992, insurance companies were given an opportunity to send cases through to the state to determine whether or not, you know, treatment was from a doc prescribed by your doctor was reasonable or necessary. Or and what ended up happening was that the insurance commissioner's office started to handle these things. The insurance commissioner said he thought he'd get maybe 300 a year. He gets 300 challenges a month. They have a 6,000 case backlog. It takes a couple of years to get a determination if you appeal the decision, which is, um, often times, we end up prevailing in this litigation.

[00:12:46] Janice Kim: They have a 6,000 case backlog. It takes a couple of years to get a determination if you appeal the decision, which is, um, often times, we end up prevailing in this litigation.

[00:12:55] Speaker 1: Okay. Carolyn, I know you have to respond to that and then we've got some people I need to go to on the phone. Go ahead.

[00:13:00] Carolyn Fujioka: We could spend a great deal of time talking about the system, but um, I don't think we should, because I think again, we're probably in agreement that the current system doesn't work. It's very cumbersome, time consuming. Um, but the the fact is that the vast majority of claims are paid and they're paid promptly. Uh, insurance companies don't stay in business by denying claims. Um, it I don't know what Janice's particular practice consists of, but I can tell you uh without hesitation that that the vast majority of claims are paid.

[00:13:30] Speaker 1: Okay. Well, we have on on the line, uh Milton Holt, who is the head of the Consumer Protection Committee in the Senate. And then we have Ron Manoa, who is his counterpart in the House. Let's first go to Milton Holt. Good morning, Milton.

[00:13:42] Caller: Good morning, Randy.

[00:13:44] Speaker 1: Uh, you've been listening to Carolyn and Janice this morning?

[00:13:47] Caller: Uh, yes I have.

[00:13:48] Speaker 1: Uh, any any reaction to anything that you've heard?

[00:13:51] Caller: Well, I think, uh, I'm in agreement with both of them that the current system isn't working as is uh the chairman of consumer protection in the house side.

[00:13:59] Speaker 1: So you're pretty sure something's going to be changed this year?

[00:14:03] Caller: Well, we tried to change it last year and the governor vetoed the bill. Um, I think it's important that we keep working and and get the administration to work with us, so that this year if we do pass the bill, he can support it.

[00:14:15] Speaker 1: Okay. What are what are your chances?

[00:14:18] Caller: Well, we feel that we've uh we're getting closer. We've been in communication with the administration. Um, we're going to hear the House bill uh well, in fact, we're hearing the version they had last year on Tuesday this week. Um, we're hoping that the House will reconsider their position uh on going through tort. We believe that that's only going to drive up uh rates and hopefully uh in the next couple of weeks we'll come to a compromise that everybody can support.

[00:14:48] Speaker 1: Uh, how can you compromise when when it seems as though what we have now that nobody likes is a compromise and at least the people in the studio feel that that we need to finally make a decision and either go in the direction of no fault or the direction of uh fault?

[00:15:03] Caller: Well, I'm not convinced that the uh that the House in in moving their position of tort over to the Senate uh are really comfortable with what they sent over. Um, we also have to remember that there is another position that the House sent over to the House, which is choice, that is still alive. So, currently the House is two positions in the Senate.

[00:15:22] Speaker 1: Okay. And and as I understand it, uh right now, at least according to an article in this morning's newspaper, a lot of the discussion is over the numbers. Uh, you have suggested that the Senate approach would save somewhere between 25-35%, one of the estimates was 40%. The um your counterpart Ron Manoa in the House has come up with similar estimates in terms of savings from from his bill and both sets of estimates have been uh questioned by a variety of others. And so, where are we on the numbers?

[00:15:54] Caller: Well, I think Janice was correct uh with respect to uh everyone starting from the same point of departure in terms of uh assumptions and what kind of assumptions they're using in in in in pricing the bills. Um, we couldn't find out what those assumptions were um when we asked the insurance commission, so we'll still pressing him for those figures. Um, it's important that you do start, uh for example, with the a typical two car family uh who drives from Mililani into town to work every day in a 95 Honda Accord or something like that, versus another family who, you know,

[00:16:32] Speaker 1: So, it's apples to apples, right? Instead of apples to

[00:16:35] Caller: Yeah correct. You have to use the same assumptions in order to price the bill accurately.

[00:16:38] Speaker 1: Okay. So you're still trying to to figure out exactly what those numbers and and what the difference says are. Uh, Milton, but the bottom line is that the governor has indicated to us in his letter that rate reduction, significant rate reduction is a a as a top priority.

[00:16:53] Caller: We try to address that we've we pretty much modified our position since passing the bill over to the House.

[00:17:00] Speaker 1: One last question for me, and that is, I'm I'm under the impression that you recently announced that the Senate bill was going to be significantly changed. Uh, do I have that right?

[00:17:10] Caller: Uh, it's it it has been changed. Uh we're still in a pure no fault system. Um, it has been changed somewhat, modified to to make sure that those CV savings are actuarially defensible.

[00:17:24] Speaker 1: So we're back to the numbers.

[00:17:26] Caller: Yes, going back to the numbers. Um, we will be coming out with a bill um tomorrow for distribution which will shift um those will basically be cost reductions in the system. Um, instead of shifting to prepaid health, which we finally have a with a problem with the ERISA exemption, we're going to uh modify the amount of of the kinds of coverages that you will be required under law to pick up. That will generate substantial savings.

[00:17:54] Speaker 1: Okay, great. Well, I know you've got a family outing that uh you're anxious to get to. I really appreciate you being available to us this morning.

[00:18:00] Caller: Okay, thank you, Randy.

[00:18:02] Speaker 1: Thank you. And listeners out there, we'll we'll come back and talk a little bit more about the prepaid health and your Risa issue. Uh, but I want to go to Ron Manoa who is Milton's counterpart in the House. Good morning, Ron.

[00:18:13] Caller: Ron, are you there? Yes, Randy. Can you hear me?

[00:18:15] Speaker 1: Yes, I can. Have you had an opportunity to listen to Janice and Carolyn and and now Milton talk about car insurance reform?

[00:18:21] Caller: Plenty of opportunity. Definitely woke me up on a Sunday morning.

[00:18:27] Speaker 1: Your thoughts on what you've been hearing.

[00:18:29] Caller: Well, first of all, I hope that your listeners realize that in listening to both uh Carolyn and uh and Janice, uh that they both sound very persuasive. Uh, of course they represent different viewpoints and legislators have to consider these kinds of different different viewpoints that are often equally persuasive. So, as you can see, legislators have a very difficult decision in terms of trying to come up with a uh a proposal, a no fault reform bill that is going to be fair and and will provide meaningful rate relief. Um, in addition I would agree with uh Milton in that

[00:19:00] Speaker 1: I think both house and senate realized that it's very important for us to enact no-fault, no-fault reform bill this session. We are very sensitive to the fact that insurance rates in Hawaii are among the highest in the country, consumers need the relief, and as such we need to get a bill out. And thirdly, as the chair of the House committee, I've often emphasized the importance of consensus as much as possible. We want to avoid getting into the kind of confrontational situation that we got into last session where we sent the bill over to the governor and he vetoed it. From the very beginning, from the start of this session, the House has been in very close consultation with the administration.

[00:19:28] Speaker 1: From the very beginning, from the start of this session, the House has been in very close consultation with the administration. We think that the House bill that we've sent over contains many of the features that the administration would support, and as such we still think that the House bill provides the best framework for future no-fault reform.

[00:19:43] Speaker 2: Okay. Would would you agree though that compromise is very difficult because it seems as though philosophically you need to go one direction or the other?

[00:19:52] Speaker 1: Well, I think it's not going to be an easy process for the legislature to arrive at compromise or to achieve a consensus. You know, we've got a month to go and we've got a lot of difficult issues to have to iron out. But I think that what's going to motivate both house and senate to come together or to make a strong effort to do so, along with the governor, is again our recognition that from the standpoint of policy, it's important for us to provide rate relief to consumers without infringing upon fundamental consumer rights. So, in that respect I remain hopeful that we'll be able to hammer out some kind of a consensus bill prior to the close of the session.

[00:20:23] Speaker 1: So, in that respect I remain hopeful that we'll be able to hammer out some kind of a consensus bill prior to the close of the session.

[00:20:29] Speaker 2: Okay. Ron, anything else before we we let you go?

[00:20:32] Speaker 1: Yeah, I just wanted to clarify one point. First of all, I want to make very clear that the House position, which has been characterized as as a so-called pure tort bill, is not a bill that would result in simply throwing open the system to unlimited lawsuits. First of all, our bill does contain provisions that would provide for medical coverage for accident medical costs. And in most instances if people get injured, we anticipate that most drivers, instead of filing a lawsuit, will still have their medical costs covered under the medical coverage insurance system that the House bill proposes. In addition, there are a lot of cost savers, or cost control measures that are contained in our bill, which if enacted into law, we think will bring down costs.

[00:21:08] Speaker 1: In addition, there are a lot of cost savers, or cost control measures that are contained in our bill, which if enacted into law, we think will bring down costs. For example, we eliminate the medical threshold. In addition, discussion has been conducted this morning about the peer review process and the fact that it really hasn't been working and has been contributing to additional costs and delays in the provision of no-fault benefits. The House bill eliminates the peer review, whereas the senate bill retains that. In addition, we have caps on the on the bodily injury liability limits at $50,000 per accident, which at at which under current law is uncapped. We've got a $5,000 offset from court award court award settlements, which we think will result in lower premiums.

[00:21:43] Speaker 1: We've got a $5,000 offset from court award court award settlements, which we think will result in lower premiums. And in addition, we have a binding arbitration provision or not binding but an arbitration provision that may many of the plaintiff attorneys may not be too happy with, but we think will reduce litigation and result in claims being resolved out of court as opposed to the litigation process. So I want to make very clear that what the House is proposing is not just throwing open the system to unlimited lawsuits but rather to go to a rational system which can bring down costs and which to us makes a lot of sense at this point.

[00:22:15] Speaker 2: Okay. Ron, I really appreciate your being available to us this morning.

[00:22:18] Speaker 1: Okay, thank you very much.

[00:22:19] Speaker 2: Um Carolyn Fujioka, I think you have a reaction.

[00:22:22] Speaker 3: Well, um just the the point that it's my understanding that um uh suits can be filed from dollar one in the tort plan, that um any small accident could be litigated. Um this uh clearly will result in an increase in litigation.

[00:22:40] Speaker 4: Janice Kim. Well, you know, that's an interesting position, but it's not one in which all state another you know, we have four we have about 14 insurers that really write auto insurance here. The top three are State Farm, Allstate and AIG. Allstate at the House hearing came forward and didn't support this senate plan. They came forward with their own plan which involved lawsuits from dollar one because they just felt that that was the way to go and that was the way to lower premiums. So you know, a lot of times you hear that it's the insurance companies against consumer lawyers, it's not true. The insurance companies themselves, some of the biggest insurers are disagreeing among themselves of what to do.

[00:23:10] Speaker 4: The insurance companies themselves, some of the biggest insurers are disagreeing among themselves of what to do.

[00:23:16] Speaker 3: Well, I I'm sorry to have to disagree with that, that Allstate is participating with us in an effort to see pure no-fault passed. Um, they have expressed um different views at different times, but at this point in time, it's my understanding that they are uh supporting pure no-fault. But I I don't I don't think we need to get off on a um tangent of who's supporting what, that's not the point.

[00:23:39] Speaker 2: One and my reaction as I was listening to Ron was that uh this really is more complicated than simply going to no-fault or going to a fault system. There are just a number of of nuances and subtleties, I think, that until a person really gets deeply involved in all of this, you just don't realize that it's there, Carolyn.

[00:23:57] Speaker 3: But really, the basis of the system needs to be determined first. Either it needs we've we've all agree that the current hybrid system of mixing tort and pure no-fault does not work. We need to establish what is going to be the underlying system. Then we can do lots of things like talk about the things we do and don't like in the different bills and mix and match and get the best uh system possible, but we do need to establish what it's going to be, what the basis will be.

[00:24:22] Speaker 2: And I know that's something that Janice you agree with.

[00:24:25] Speaker 4: Well, yeah, I'd agree with the Constitution.

[00:24:28] Speaker 2: Okay. Uh I want to remind listeners that this is Pop Radio. Our topic today is car insurance reform. With me in the studio is Carolyn Fujioka, who is the director of public affairs for State Farm insurance company here in Hawaii, and Janice Kim, who is a practicing lawyer and member of the governing board board for the consumer lawyers of Hawaii. Uh we've had on the phone Ron and Milton Holt, who are the the primary people in the legislature right now so far as the no-fault and and fault bills are concerned. If you'd like to ask a question or make a brief comment, you can call us at 955-8821. Uh from the neighbor neighbor islands, the number is 1-800-955-8821.

[00:25:03] Speaker 2: Uh from the neighbor neighbor islands, the number is 1-800-955-8821. Uh a couple of things that I would request. One is that we try to the extent possible not to use this just as an opportunity to bash lawyers or bash State Farm insurance company. Let's let's try to stay focused on on the topic. Uh and the other is that I've I've been told that the one group uh at least has suggested to their members that they flood our lines and try to make it sound as though the public out there is totally absolutely on one side of this issue. And we know that's uh not the case, that it's split uh out there in the public.

[00:25:34] Speaker 2: And we know that's uh not the case, that it's split uh out there in the public. So we we hope that uh no group tries to to flood our our lines. We also have in the studio with us this morning Ron Antone from KHON TV2 News and Ed the cameraman, and uh if you want to see a report on Pop Radio, you might tune in to 6 o'clock and perhaps 10 o'clock as well tonight on KHON TV2 News. Again if you'd like to ask a question or make a brief comment, our number is 955-8821, and that's Rod and Tone. Uh let's go to Larry in Makiki, good morning Larry.

[00:26:09] Speaker 5: Good morning Randy. I want to thank you for bringing this important topic to the airwaves, but I I think you've only got two thirds of it. There was a just a brief mention earlier that there is uh another possibility which is a choice system. And as I think you know that's the one that I favor, um, and I would be really interested in hearing your guest who seem to fall on uh one side or the other, Okay. Try the middle and see what their comment is about offering uh motorists uh a real way to lower the premiums which is to give us a choice of what kind of insurance policy we want and offer us the premiums that might uh give us the incentive to choose one.

[00:26:30] Speaker 5: who seem to fall on uh one side or the other, Okay. Try the middle and see what their comment is about offering uh motorists uh a real way to lower the premiums which is to give us a choice of what kind of insurance policy we want and offer us the premiums that might uh give us the incentive to choose one.

[00:26:48] Speaker 2: And Larry, I haven't had a chance to read what you faxed this morning but I did look at the chart, and according to the chart, this choice approach uh looks pretty good in terms of what the premiums would be. Um Carolyn Fujioka, your reaction to Larry's suggestion that we look at choice which, as I understand it, that would give us both what Janice wants and what you want, but each motorist would decide which of the two that motorist would depend upon, Carolyn?

[00:27:12] Speaker 3: The theory of choice is excellent, and that is that everybody gets to choose what they prefer. The reality is that you can't uh work realistically work one system and the other at the same time. Again, it's it's back to what I said earlier, we need to decide what the basis basic system will be and then introduce the element of choice. It's wonderful to have people be able to choose the coverages that they want to purchase. Mhm.

[00:27:42] Speaker 4: Uh Janice? Well, New Jersey has choice. They're the highest paying premiums in the country. And uh I I kind of have a problem with and I read the choice bill, it includes a provision in there that gives um immunity to agents who don't understand what they're advising people to buy. So whenever I see that that already at the at the starting blocks in a bill, I kind of wonder whether or not anybody could really administer that kind of a plan.

[00:28:05] Speaker 2: Well, I did talk to an insurance agent preparing for the show and he was saying that's a big concern because with choice, what you choose becomes so important, and this is complicated even when there's just one system and when you've got side by side systems, that's that's a concern. But so we do have the the three options actually. We have the House bill, the Senate bill, and then as as one either Milton or or Ron commented, there is still alive this so-called choice approach. Okay, Larry, thank you for your call. We're going to have to move on.

[00:28:32] Speaker 5: Okay, thanks Randy.

[00:28:33] Speaker 2: You bet. Let's go to Lee in Kailua, good morning Lee.

[00:28:36] Speaker 6: Good morning.

[00:28:37] Speaker 2: You're on the air.

[00:28:38] Speaker 6: Well, I hear everybody talking about uh cost and that's important, but the reason I buy insurance is for protection that it gives me and my family. And I'd like to ask um Miss Fujioka uh which uh version gives the best protection or the best coverage, uh the house side or the senate side?

[00:28:59] Speaker 2: That that sounds like a softball that you're lobbing up for her to smash out of the park. Carolyn, what's your reaction?

[00:29:05] Speaker 3: Well, the coverages provided in the Senate bill, I think are clearly more extensive, broader. Um, they do offer the most coverage for the price. Um, one important thing is that um I've I've heard the insurance commissioner testify that a lot of the cost savings that is seen in the House bill is due to the cost shifting of medical expenses to help prepaid health plans.

[00:34:02] Speaker 2: in the and we should talk just a minute about that. Ron Manora raised that and I commented that that we would get to it uh in some detail a little bit later. Right now, if I'm in a car accident and I and I'm hurt, car insurance will pay for various medical costs, but I also have medical insurance. And as I understand it, some people see that overlap as creating an inefficiency. And the House bill would more or less say, well, forget about the car insurance, that injury will be covered by my prepaid health care that typically is provided through through an employer, and that that will be a a more efficient system. Uh Janice, have I described it reasonably accurately?

[00:34:36] Speaker 2: Uh Janice, have I described it reasonably accurately?

[00:34:39] Speaker 4: Right, the the problem of course is that 22 years ago, we decided to insert medical coverage into our car coverage. And if you want protection, then you should cover your family for all times that that gets injured with medical coverage. And you know, why put it into your car insurance? And it is inefficient to have it in the car insurance. Right now, HMSA and Kaiser can administer medical health plans with an overhead cost of about 6%. When we start throwing this kind of stuff into an auto insurance policy, to an auto insurance company who's used to doing auto insurance, their overhead goes up to around 30%. That's just not efficient.

[00:35:12] Speaker 3: I think it's critical to point out that when you talk about prepaid health plan versus no-fault benefits, you're really talking about apples and oranges. There are many more coverages in no-fault coverage than there are in um prepaid health plan. For instance, people can choose the doctor that they want to go to, and they're not limited to the type of treatment under no-fault. Um under prepaid health, this is not the case. There are restrictions, limitations. Another critical point to remember is that usually in prepaid health plans there's some sort of co-payment that's um part of the system. So people have to realize that um under no-fault they their bills would be paid 100% by the insurance company as opposed to if they use their prepaid health, they're going to pay a co-payment.

[00:35:44] Speaker 3: So people have to realize that um under no-fault they their bills would be paid 100% by the insurance company as opposed to if they use their prepaid health, they're going to pay a co-payment.

[00:35:55] Speaker 2: Well and as I understand it, at least right now with our current no-fault system, if I'm hurting a car accident that no-fault car insurance will cover things like chiropractic visits and a number of things that typically aren't covered by by health insurance um per se. Janice?

[00:36:10] Speaker 4: Well, that's um it depends on the policy that you have for health insurance. You know, whether or not it includes those kinds of things, you can always purchase those on your own too. The bottom line though is that um you with 24-hour care with with prepaid health care, if you get injured, you get covered and they don't ask you where you got injured, they don't challenge you. What we're finding now in no-fault is that people really don't get the benefit of what they paid for because they're getting challenged.

[00:36:34] Speaker 2: And you're saying it's inherently more efficient because you're only paying for that coverage once.

[00:36:37] Speaker 4: Right.

[00:36:38] Speaker 2: Okay. Well, we'll probably come back to this issue because I have a feeling it's it's one of the the more important uh sub issues in this question. But we've got a number of people on the line. Let's move to Ruth Ellen from Makiki. Good morning Ruth Ellen.

[00:36:49] Speaker 7: Good morning. Um, I would I think the panelists have made it quite clear what this offers the driver and the people in his car. I wonder if each one of the uh people who are speaking would address a question of what happens, put coverage is there for the innocent bystander who's hit at a crosswalk, or uh somebody who's the victim of a a reckless driver, and who is very gravely injured.

[00:37:13] Speaker 2: Okay, and Carolyn, I know that's one of the things you addressed in your article this morning. Could you give a quick answer to Ruth Ellen's question?

[00:37:19] Speaker 3: The the mechanism for covering these people won't change. There is a a fund, JUP fund that um people who have no source of insurance and they are injured will go to that fund for coverage. But um the the senate bill clearly offers more opportunity for uh coverage for catastrophic claims because of the higher limit that is involved. There's a $250,000 uh benefits in the um pure no-fault that would be available for the the uh pedestrian. Now, um under the um House bill, uh the the uh limit of liability insurance that's going to be required is

[00:38:00] Speaker 1: going to be reduced. So the likelihood that somebody will recover enough to cover catastrophic injury under the house plan is pretty remote.

[00:38:08] Randall Roth: Okay, so there were two pieces of that, I guess, and and one was the the big claims and you're saying 250,000 is is bigger than what we have now and so that's good with no fault. And the other if I understood you correctly, is that if I'm driving my car, I'm covered by my no fault insurance policy, but if I'm walking on the sidewalk, I'm covered by some sort of special fund, is is that what you were saying?

[00:38:29] Janice Kim: No, you would be covered by the car that that strikes you, but um as I understood the caller, the question was if if there was no insurance on that car that hit the innocent pedestrian in the crosswalk, then there is a fund and that that won't change. That will remain the same as it is today.

[00:38:43] Randall Roth: Okay, Janice Kim.

[00:38:44] Janice Kim: So now we have a fund in addition to the fact that most people carry health insurance, then I think you just have to understand that what the bill um doesn't provide for for people is as great as as, you know, is as wide open as you as what it provides. When we talk about this $250,000, we're talking about medical and wage loss. If you're um if you're buying that kind of coverage and you're a child, you don't work, the wage loss doesn't apply to you. If you're a homemaker, the wage loss doesn't apply to you. If you're a retiree, the wage loss doesn't apply to you. So you've paid for wage loss, you'll never be able to claim. It's based on a 12-month earning cycle and some people are out of the job market for various periods of time for whatever reason. It only covers wage loss in the 12 months prior to, that's how they base what they'll pay you.

[00:39:27] Janice Kim: It does an awful lot of things that um would hurt small business people. They don't they only recognize after taxes what you earn after taxes on. I'm a small business person. I plow a lot of my money back into my into my business. It doesn't recognize that. Those are some of the things that the insurance commissioner was trying to point out to the house yesterday.

[00:39:43] Randall Roth: Okay, Carolyn.

[00:39:44] Carolyn Fujioka: Well, this is an excellent example of the type of of uh coverage that can be optional. As I understand it in a Senate plan, uh wage loss coverage is optional, so people have the choice of whether to purchase it or not.

[00:39:56] Randall Roth: Okay. Well, let's uh, Ruth Ellen, thank you for your call. We've got all our lines are full as usual, and we're going to try to start moving a little bit more quickly. Let's go to David on the Big Island. Good morning, David.

[00:40:05] Caller: Yeah, good morning, Randy. There's a couple important points. First of all, the Senate bill is not pure no-fault, because after you exhaust your your medical coverage, you then can sue. Um What the the answer to the whole problem is go to a pure no-fault where there's no suing at all, because then you don't have to carry liability insurance. For the Senate version, you do have to carry liability insurance. If each of us carried a million dollars worth of bodily injury coverage, it would be cheaper than what we now have, and it would cover all eventualities. Okay, and you had a second point? One other point is as far as saving money goes, this state currently pays over 200 million a year to the trial lawyers for service that we would not need under no-fault. So 200 million would be saved, it has to lower premiums.

[00:40:27] Caller: If each of us carried a million dollars worth of bodily injury coverage, it would be cheaper than what we now have, and it would cover all eventualities. Okay, and you had a second point? One other point is as far as saving money goes, this state currently pays over 200 million a year to the trial lawyers for service that we would not need under no-fault. So 200 million would be saved, it has to lower premiums.

[00:40:54] Randall Roth: Okay, David, thank you for your call. We appreciate it. And Janice, I think you'll have a reaction to that, but if you don't mind, I'm going to take a couple more callers quickly, and if you can take some notes, we'll we'll come back to both of you in just a moment. Let's go to Joe in Makiki. Good morning, Joe.

[00:41:04] Caller: Good morning. Uh uh, wherever your caveat about the comments, uh I'm a retired trial lawyer myself, but you have as guests two uh people that represent the biggest cost drivers of our of our of the problem. Uh, the try uh lawyers, and insurance companies. I know for lawyers, their primary interest is their fees and the fact that uh people get a lot of money as a result of uh settlements is useful, but that's not what drives lawyers, and insurance companies are there to make money. Uh, so I think everyone should be aware, uh the comments come from that standpoint. But how about a system like this which would cut out both of the cost drivers. Governor Cayetano had suggested that we have a pay at the pump premium that as everyone would pay according to the amount of miles they drive, and that is a perfect system of put putting the cost where the where it where where it where it all goes. And then for the payment portion, have something akin to the workman's compensation system we have for employees. This way, we would have uh very very very low premiums. Everyone would pay their fair share because of the pay at the pump and we would eliminate all lawsuits and do it the same way we do Workman's compensation for injuries that is have a schedule for what things cost, eliminate this phony pain and suffering stuff which causes uh premiums to rise. How about that system?

[00:41:34] Caller: Uh, so I think everyone should be aware, uh the comments come from that standpoint. But how about a system like this which would cut out both of the cost drivers. Governor Cayetano had suggested that we have a pay at the pump premium that as everyone would pay according to the amount of miles they drive, and that is a perfect system of put putting the cost where the where it where where it where it all goes. And then for the payment portion, have something akin to the workman's compensation system we have for employees. This way, we would have uh very very very low premiums. Everyone would pay their fair share because of the pay at the pump and we would eliminate all lawsuits and do it the same way we do Workman's compensation for injuries that is have a schedule for what things cost, eliminate this phony pain and suffering stuff which causes uh premiums to rise. How about that system?

[00:42:25] Randall Roth: Joe, thank you for your call. We appreciate it, and I'm going to I was going to go through a bunch of calls, but I need a quick reaction from both Janice and Carolyn to Joe's suggestion, which the the governor had championed I I guess a year or so ago, the pay-at-the-pump approach. Janice Kim.

[00:42:38] Janice Kim: Pay at the pump. Um I think pay at the pump could could work in some situations. I I um I haven't studied it so I don't have a feeling one way or the other for it. I like it because they think it it, you know, it seems fair that you'd pay per mile that you drive. On the other hand, it doesn't take into account a person's individual driving record. So, you know, it's kind of to me, it's it has A good driver that drives a lot of miles would pay a lot more than a bad driver that doesn't drive quite as few miles. That's right. And so you don't get that kind of um equity in that. As far as workers' compensation goes, I mean, we know the problems with workers' compensation. We've seen businesses screaming over the increases in premiums that have been going on. And in fact, let's see, after 1992, when they instituted a kind of a workers' comp system in the no-fault system already. Right after that session, I I read the headlines that that they wanted to raise work comp prices 30%, so everybody who's a business owner knows the problems with work comp.

[00:43:28] Randall Roth: Okay. Carolyn.

[00:43:29] Carolyn Fujioka: Well, just a comment on pay-at-the-pump. Um I I think that it is not a a viable alternative right now because it's seen as not being a fair system. Um I would totally agree with the comment that it does um penalize good drivers who may happen to have to drive long distances.

[00:44:17] Randall Roth: Okay. Want to remind listeners that this is the Price of Paradise radio show. My name is Randy Ross. Our topic today is car insurance reform. With me in the studio is Carolyn Fujioka, the Director of Public Affairs for State Farm Insurance Company here in Hawaii, and Janice Kim, who's a member of the governing board for the Consumer Lawyers of Hawaii. If you'd like to ask a question or make a brief comment, our number is 955-8821. On the neighbor island islands it's 1-800-955-8821. And our director of operations is just shaking his head at that because our lines have been packed the whole time. There's no way that we're going to get to everybody who's been trying to call in. But I'm going to try to move very, very quickly. Scott from Kapaa, Hulu, can you make it real quick?

[00:45:24] Caller: Well, I'll I'll try. Uh my my name's Scott Foster and I'm representing a third group that never seems to uh get mentioned here and it's not represented in your studio today or in the paper this morning, and that's the consumer. Uh our organization has been working to bring the consumer voice forward in all this. Uh first comment uh uh we work directly with the Ralph Nader organization, so we have access to a great deal of information nationally. Uh the choice uh system that's now being mentioned uh Mr. Nader's made it very clear that what happens with the choice system is uh because insurance is mandated in Hawaii, uh uh uh people will usually go and especially the poorer people uh will will go for the least expensive. So usually what happens with a choice system is no-fault gets priced below uh uh the other system that's offered, and so people go for the no-fault, and now you've got a insurance policy laying in your drawer you hope you never use and you've bought it because it was the cheapest one and you do finally have to use it and you're back in the no-fault system, which is has proved itself here to be a failure. Uh no-fault is a very compelling idea on paper, and this is a point that we keep trying to push out. Uh there was another Scott you're going to have to You're going to have to pull it together.

[00:46:45] Caller: Okay, there was a very another compelling idea I would use as a comparison, and that was the hydrogen-filled dirigible. That too is a very compelling idea, and everyone remembers the Hindenberg. Thank you.

[00:47:56] Randall Roth: Thank you, Scott. Appreciate it. Let's go to David in Honolulu. Good morning, David.

[00:48:00] Caller: Morning. Uh the Governor okay to fine by Wayne Medcaf for your company there uh, Carolyn. Uh it it was up to $50,000 for speaking out on this issue. Uh do you think it's right for Wayne Medcaf uh as insurance commissioner to use his power to fine you uh to muscle people in speaking out on this. Could I have both panelists speak out on that? And I have a comment about that because I've talked to Wait.

[00:48:22] Randall Roth: Okay. Well, um I I I don't want to get bogged down on this. I think it's another show. I I think it's another show. I think everybody realizes that that last year the the insurance commissioner Wayne Metcaf charged State Farm with having uh been less than honest in its advertising talking about the no-fault bill at that time. Uh eventually uh State Farm was was vindicated but there are some less than good feelings I think on both sides and other than to say it's another show, I I think we just we need to move on from that.

[00:48:49] Carolyn Fujioka: But Randy, my question is, do I have a constitutional right to file a lawsuit? If I do, I want to be able to do that, but if it's not guaranteed by the Constitution, is it something that I can stand on?

[00:49:11] Janice Kim: Well, Janice, I guess one spin on on Scott's question is if we had the Senate bill enacted, would somebody question it as being unconstitutional because it would in 99% of the cases prevent somebody from filing a lawsuit? I think that's an excellent challenge to the way in which it tries to approach uh people's ability to to, you know, get a fair um, fair determination of what they've done, and with regard to litigation costs, you know, the in a lot has changed. Lots of these cases now go through a court annexed arbitration program, and in 90% of those cases that go through the court annexed arbitration program which has an advisory decision, it is not the consumer and it is not the person making the claim that has appealed those decisions to take it on to trial. So when we talk about cost drivers, everybody wants to point at lawyers, well both sides of that fence have lawyers and 90% of the time, it's the lawyers for the consumers that are saying okay, we'll take this arbitration decision and we won't go further.

[00:49:55] Carolyn Fujioka: Janice is right, it's not lawyers, it's the system, it's litigation.

[00:50:00] Randall Roth: Okay. Scott, I appreciate your call, very provocative question. Let's go to John on Maui. Good morning, John.

[00:50:05] Caller: Good morning. I have two quick comments. First of all, the cost of living in this state is high regardless, and I think it's not fair to say that our insurance rates are wrong because we're such and such in the nation. Living here is expensive. My other quick comment, and more importantly is, the prepaid health insurance that you have in your regular medical coverage is not parallel to your auto insurance medical. Many people in the state are underinsured medically or poorly insured and if the cost share associated with one accident would more than wipe out any savings in your auto insurance if you were to go to the emergency room and follow up medical care.

[00:50:40] Randall Roth: Okay, John, appreciate your call. Let's go to Alex from Kaimuki. Good morning, Alex.

[00:50:44] Caller: Uh good morning, Randy. Uh uh, my question is that uh uh recently there was an article on uh Senator Crumbley, who's uh probably doing a good job. But uh uh it was uh an error on the part that he said that the uh good guys sent him a letter, and I understand that uh perhaps he had telephone in to get a letter sent to him so he could check on it. Could uh someone answer that, please?

[00:51:08] Randall Roth: Well, and so our listeners know what's going on, uh evidently, um Representative Crumbley got a letter addressed to him from him, saying that uh that that he wanted no-fault insurance, and he felt this was an indication of of some dirty tricks out there. But I guess there's some other people who feel that it might have been a real honest mistake, that if Representative Crumbley had had called this 1-800 number and given his name as somebody who was curious about all of this, that that he inadvertently had his name on a on a form letter, and I probably misstated it, but that's my understanding, Janice.

[00:52:12] Janice Kim: So, you know, I think that was an unfortunate um case where where I think the Good Drivers Coalition got some got got unfortunately uh told that they did something wrong when they did nothing wrong.

[00:52:24] Caller: Uh Randy, uh one more question. Can I ask that? Sure. Uh you you know, it's obvious from this discussion, and I'll try to make it short, that uh with the no-fault and the uh State Farm, and and that woman is employed by State Farm, uh you know, uh they they seem to be pushing uh to have uh no no litigation, and uh isn't it true that the litigation was uh lower last year than and and and and these people are pushing to try to stop the consumer from uh uh getting his fair rights uh for injuries that he sustained? I'd like to have that answer.

[00:53:08] Randall Roth: Well, let let me take that as a comment, Alex, if you don't mind, because I I think uh uh Carolyn has said she would like to have less litigation. I think that is a a goal. So we'll we'll take that as a comment, and I appreciate it. We're going to move on and and again, we're going to try to hear uh everyone who's been waiting patiently before uh before we get to the end of the hour. Let's go to Carol in Mililani. Good morning, Carol.

[00:53:27] Caller: Good morning. Um I was calling with a an interesting question. I moved here from North Carolina, and in North Carolina we insured four vehicles for half of what we insure one vehicle for here in Hawaii. I have less coverage, and I pay more. I'm wondering, who benefits from this no-fault system? Cause clearly, as a consumer, I do not.

[00:53:44] Randall Roth: Okay. Um Carolyn, before you answer, and Carolyn Fujioka has an answer, but one of our listeners sent me some um uh some date data. And and I think the point of this is is twofold. One is that those states that have high premiums tend to be those states that have high traffic density. For example, New Jersey, which is number one in premiums is number three in traffic density, Hawaii which is number two in premiums is number two in traffic density, District of Columbia, which is number three in premiums is is number one in in traffic density. So, the point of this this um uh listener who sent this in I think, was that it relates more to traffic density than it relates to the type of insurance that they have. But another point that they were making, and I'm sure they were anti-lawyer, Janice, and so I want to let you respond to this and then Carolyn can respond to our caller. Uh, but they also listed uh by ranking I see that the states that have more lawyers per capita and less lawyers per capita, and North Carolina, which has relatively low premiums, despite relatively high traffic density, uh, the person who sent this, I think, was suggesting because they're they're last in the nation nation in lawyers per head, that that explains why their premiums are low. What's your what's your reaction to that, Janice?

[00:54:56] Janice Kim: Well, my reaction is this. Um and and I don't I don't I would refer you every listener to the um office of information at the Judiciary, and you can take a look and ask them how many lawsuits got to trial last year, um that involved motor vehicle accidents, and they'll tell you 19. Um you can also ask them how many uh lawsuits involved since 1994 to the to January of 1996 State Farm, and they'll tell you 567.

[00:55:24] Randall Roth: So, and and I've heard this that that there really aren't that many cases actually being litigated, but there are a number of instances where policy holders are unhappy with their their insurance company. That's right. Carolyn Fujioka, I've got a feeling you've got a reaction to that.

[00:55:39] Carolyn Fujioka: The the thing is that anytime litigation is involved, attorneys are involved, the cost is going to go up. And that's what uh we're trying to address, is is the cost driver of litigation in any form, whether it's a trial or or not. I agree with the caller that the the the critical issue here is what is best for the consumer. It's not what's best for lawyers, it's not what's best for insurance companies, it is what's best for uh the consumer. I I would suggest that uh consumers might look at what will make insurance most affordable for them and what will provide them with the best coverage. And if they can uh decide for themselves what uh meets that, then that's what they need to push for.

[00:56:18] Randall Roth: Okay, and and one of the places I guess to start would read uh would be to read the two articles in this morning's Focus section written by the the two of you, which oh, I did before I called. oh good which in a real general sort of way, lets people know what the main issues are. Okay, thank you, Carol. Appreciate your call. Let's go to Diane on the Big Island. Good morning, Diane.

[00:56:35] Caller: Yeah, good morning. I'm calling uh to make a comment about the pay-at-the-pump idea. Sure. Um living on the Big Island, um as everyone knows, it's very big and our my distance to drive to work every day is a minimum of 84 miles. I am a good driver, have an excellent record. I pay um for gasoline between $1.62 and $1.94 a gallon. When I heard the comment about traffic density, I thought, well, we have less dense traffic on the big island. So as a consumer, I think I would be unfairly penalized by the paying the premium, but I just wanted to make that comment.

[00:57:16] Randall Roth: Okay Diane, we appreciate your call.

[00:57:18] Caller: Let's go to Joseph in Punchbowl, Makiki. Good morning Joseph. Good morning. What do you have for us this morning? I have a related question. Why does the insurance division receive so many complaints about the insurance companies? There seems to be a preponderance of complaints.

[00:57:33] Randall Roth: Okay, let's let Caroline Fujioka respond to that. This is one of the things that Janice was commenting on a moment ago. Caroline?

[00:57:38] Carolyn Fujioka: I think the bottom line answer to that is it's fallout from a system that doesn't work. Uh we're all in agreement that the current system doesn't work. We could spend the entire morning discussing the problems of our current system and there are many, but I think it will be far more constructive for us to address the larger issues and talk about how we can move forward and let's get rid of what we have right now.

[00:58:01] Randall Roth: Okay. Joseph, thank you for your call. Uh let's see we've got Gianna in Hawaii Kai. Good morning, Gianna.

[00:58:07] Caller: Gianna, are you there? Pardon? You're on the air. Okay, I've handled worker's compensation claims in the past and I'm amazed at how many bills pass my desk that I have to pay for that I believe are fraudulent, but the way the law is set up, I pay them. How do either of these proposals affect the fraud that seems to be inherent in these systems?

[00:58:28] Randall Roth: Okay, let's start with Janice Kim.

[00:58:29] Janice Kim: I don't, I don't think that the um going to Senate Bill 2001 has anything regarding um any type of fraud in the system if that's what you're perceiving. And in fact, um I don't think it does anything on that regard. What it does is it continues the position of allowing insurance companies to challenge people's treatment plans, and that we've seen some some abuse going the other way now from insurance companies towards their own policy holders. With regard to fraud, if you want to ferret out fraud, then you use the regular tort system which is set up to do that very ably and does do that very ably, so it um it isn't going to be answered in Senate Bill 2001.

[00:59:08] Randall Roth: So fraud is is a form of of some of wrongdoing, and the fault system is designed to ferret out wrongdoing, among other things.

[00:59:15] Janice Kim: It's yeah. Okay, Caroline.

[00:59:17] Carolyn Fujioka: I would disagree with that. Um, I do think that the Senate uh bill pure no fault would remove the incentive to inflate claims, which um I I don't know how uh inflating claims is also fraud, and I I think that's what we're seeing more of than anything. There is a great incentive to increase medical expenses both on the work comp side and the no fault side and under a pure no fault system, that incentive would be removed.

[00:59:40] Randall Roth: Okay. Well, I just have to apologize to the many many callers who tried to get in and couldn't, and those who got in but we're not going to have time to get to you. We've got just a couple of minutes left and I want to give Janice and Caroline each an opportunity to to add what needs to be added or emphasize what needs to be emphasized. You've got about 45 seconds each. Uh let's start with Janice.

[01:00:02] Janice Kim: Well, the majority of people that have called in have talked about premiums and I think that that's the bottom line, and when anybody looks at a no, any type of uh insurance program for automobiles. And if you're looking at the Senate proposal, you're looking at probably nothing to a 10% decrease if you buy a strip down policy and you have no assets to protect. So I don't think that accomplishes anybody's aims. On top of that, it takes away tremendous and uh things rights of of individuals if you're involved in an auto accident, and discriminates in in very real ways against people and their their ability to have a livelihood and choose a lifestyle. When you look at what the house has done and you can just compare the styles in which has hap, what what has gone on. In the house, they took over seven hours of testimony the first go around and and now they've taken another five and they came up with a compromise position that heard all all parts, all sides of the story, and they're the they're the people, the house of representatives are the people that have taken the time to listen to the people and they're the ones that came up with the House Bill 3391. So, I I put my my money with the people who have listened to the people.

[01:01:06] Randall Roth: Okay. Caroline Fujioka.

[01:01:07] Carolyn Fujioka: Well, I I don't think there's any basis to the fact that the Senate has not listened to people in making its determination, but I think we have to go back to common sense that anytime we're going to have legal involvement, attorneys involved, it's going to raise the cost. Hawaii's choice is clear. We can promote the broad interest of consumer and reduce costs by eliminating legal involvement, or we can go back to a tort system which will benefit the few at the expense of many.

[01:01:21] Randall Roth: Okay. Thank you both. Caroline Fujioka, director of public affairs for State Farm insurance company and Janice uh Kim, a member of the governing board for the consumer lawyers of Hawaii. The replay is at 8:00 tonight on 1380 AM. Watch KHON TV2 News tonight for Rod Antone's report. This is Pop Radio. Aloha.

[01:01:32] Speaker 1: Okay. Thank you both. Carolyn Fujioka, director of public affairs for State Farm Insurance company, and Janice Kim, a member of the governing board for the Consumer Lawyers of Hawaii. The replays at 8:00 tonight on 1380 AM. Watch KHON TV2 news tonight for Rod Antone's report. This is Pop Radio. Aloha.