This report updates an earlier study in which the authors estimated the
effects of a choice automobile insurance plan on the costs of
compensating auto accident victims in which the no-fault option was
absolute no-fault (ANF). The authors assumed that 50 percent of the
consumers who would have purchased auto insurance under their state's
current system would switch to ANF under the choice plan. That study,
requested by the Joint Economic Committee of the U.S. Senate and using
data from 1987, estimated how a variant of that plan would affect the
cost of private passenger auto insurance if all currently insured
drivers elected the no-fault option. The present report uses recently
obtained data for a representative sample of people who were compensated
for auto accident injuries in 1992. With these data, the authors have
replicated their analyses for 46 states. They find that the choice plan
could substantially reduce the costs of compensating people injured in
auto accidents.