The pay-at-the-pump was particularly promoted by Andrew Tobias, who is one smart finance guy. It was opposed by the Insrance Industry and plaintiffs’ attorneys, who would have lost business.
I think it would have worked. Advantages:
– Lower structural costs (more efficient)
– more fair recompense
– government-run monoplistic (so prone to being fouled up)
– required some entirely new structure to determine who would handle each claim. (government? randomly chosen insurance co.?)
Over 30 years ago, NY State had the Rockefeller-Stewart Report (named after the governor and insurance superintendent) that recommended no-fault. I heard a talk from Stan Dorf, the chief NY State actuary at the time, who helped write the report. He said the Committee began by saying that the best no-faulot plan would be to simply pass a law saying that nobody could sue for an auto accident. However, that was not politcally viable, so they added a requirement for first party insurance.
That committee was encouraged by Professors Keeton and O’Connell, who wrote a book (or article?) describing the flaws in the tort liability system. The one I remember is that those with minor in over-collected; those with serious injuries got less than they deserved.
Many states now have a partial no-fault system – no fault for small claims, but one can sue for larger claims. A practical problem is organized fraud, where people with minor or fake injuries are allegedly given dozens and dozens of medical treatments, which are billed to the insurance company. One would think this scam would be easy to control, but this has not been the case. According to an article in the NY Times a few days ago, the total cost of this fraud in NY amounts to $250 for every driver in the state!