The Automobile Insurance Industry and Federal Takeover

It is part of the badge of being a red-blooded American businessman to oppose government regulation of business and-as the ultimate anathema-to oppose government takeover, i.e., government operation of an enterprise that might otherwise be run by private business. Although the insurance industry has long been regulated on the state level, there seems little or no fear of takeover by state government. But nowhere does one find fear of takeover by the federal government any stronger than in the insurance industry. Nor is this fear totally groundless. Insurance-tied inextricably to misfortune and the welfare of those who suffer from it-is obviously fraught with public interest. That interest is the reason for the intense regulation (in theory at least) of insurance in the first place. Clearly government is concerned with what succor is available to victims of accidents and catastrophe and their survivors. Clearly, too, government provides aid to unfortunates from public coffers, often thereby competing, more or less, with private insurance. Social security, payable to survivors of decedents, to the permanently disabled, to the retired, and to the aged for medical care, is the classic example of such government aid. And in the case of social security, the aid is somewhat analogous to insurance since the recipient contributes to the system, thus, in a measure, paying "premiums" for the payout he eventually receives. This makes the competition with private insurance all the more obvious. The scope of social security has expanded through the years with coverage for new categories and provision for higher payments. Many an insurance executive anxiously looks over his shoulder to see to what extent government insurance is catching up with him. In fact, however, the growth of social security and other forms of social insurance has been very modest in the United States compared to other industrialized countries. Nevertheless, the insurance executive still feels the threat of government takeover looming large. To examine the depths of this fear-and how realistic it is-we might