Source: Bureau of Labor Statistics, U. S. Government, BLS indices for 1963-1974 based on average prices over the entire year. The index for January, 1975 is based on average prices for the month of January, 1975.

Source: State Farm Crash Parts Price Index. The indices for years 1963-1974 are based on prices as of July 1 of each year. The index for January, 1975 is based on prices as of January 1, 1975.

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revealed considerable activity in attacking this problem. Some countries of Europe are directly leading an effort to increase the productivity and/or introduce innovation in auto repairs and thus lowering cost. In Sweden, Folksam was the first to establish a crash-repair research facility in 1963. Such facility has developed technological repair innovations which have led to a reduction in labor and material costs. Cost of spare parts has also been reduced by establishing an organization for utilizing spare parts. Another innovation was the development of rating classifications for damageability and repairability of various models of automobiles. This new pricing system led to a reduction in the prices of spare parts from 10-28 percent by some automobile manufacturers. Similar research facilities have

been established in the United Kingdom and have had considerable effect on the methods adopted by repair shops. Insurers in Norway have also founded an automobile damage institute and plans are being made to introduce a rating system based on repairability of various models of cars.

Insurers in France have jointly established a large, efficient auto repair facility; and Belgium has recently established a Center for Automobile Repairs which will repair automobiles directly, control prices and the duration of repairs, as well as conduct research on repair costs. The organization will also control prices and the duration of repairs at independent shops for repairs of insured vehicles. Some insurers in other countries are purchasing their own repair shops, entering into agreements with repair shops, or recommending to their insureds lower-cost repair

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facilities in an attempt to moderate the inflation of automobile repair costs.

Also, individual insurers in several countries, e.g., Austria, Germany, Japan, and the United States, have introduced sophisticated computerized systems of assessing automobile physical damage repair costs.

Insurers in the United States have been seriously negligent in not introducing and promoting innovations in auto repairs. The auto repair problem in the United States is massive, complex, and in need of major reform. Automobile manufacturers exercise a price monopoly on parts and the repair industry is powerful but inefficient. The only major effort has been the activity of the Insurance Institute for Highway Safety--an industry trade association. The Institute has conducted and publicized research on means of safeguarding passengers in motor vehicles and on damageability

of various models of autos.

REHABILITATION

Insurers have become more sensitive to the need and usefulness of

8 For a thorough analysis of the American scene see D. A. Randall and A. P. Glichman, The Great American Auto Repair Robbery, (N. Y.: Charterhouse, 1972). A recent survey has also indicated that the public in the United States is receptive to stronger action by insurers to control repair costs. See J. Cummins, "Consumer Attitudes Towards Auto and Homeowners Insurance," Op. Cit.

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rehabilitation of accident victims. The health centers established by La Prevoyance Sociale and Zenkyoren which are open to the public are wellknown to members of the I.C.I.F. Physical and vocational rehabilitation are socially beneficial. Where it applies to policyholders, it reduces the severity of losses and may produce substantial savings to the insurer. In some countries rehabilitation is a function of government. In some cases the financing of rehabilitation is by insurers. For example, in Belgium, a special government fund for rehabilitation is financed by special surcharge on auto liability and Workmen's Compensation premiums. There are other instances where insurers have directly established rehabilitation centers, e.g., Finland. In the United States, two states, Michigan and New Jersey, now require auto insurers to provide unlimited no-fault rehabilitation benefits to auto accident victims. Insurers in those states must

therefore work closely with professional rehabilitation organizations, and some insurers have directly organized their own rehabilitation units.

OTHER LOSS PREVENTION EFFORTS

It is impossible to fully describe all of the indirect efforts of insurers to ultimately reduce losses. Individual insurers and their industry trade associations to which they contribute finance research and provide important information on loss prevention in areas such as fire, arson, fraud, theft,

etc. Insurers have also promoted safety legislation. For example, insurers have supported and promoted mandatory auto seatbelt legislation.

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Zenkyoren of Japan has developed an interesting program of vehicle inspection--75,000 vehicles will be inspected in 1975. They have also conducted tests of drivers' competence using a computer for 120,000 drivers during 1975, as well as holding traffic safety classes.

EXPENSE CONTROL

Insurers have attempted to increase productivity and thus lower administration expenses. Electronic data processing has been employed by many insurers and is a continuing development. It is in the marketing area where potential large increases in productivity is possible. Group selling or "mass-marketing" of life and non-life insurance employing payroll deduction techniques is a growing trend in the United States. Selling costs have been reduced considerably. Samvirke of Norway has introduced several collective insurance solutions by marketing through large national organizations, including the development of homeowners insurance on personal contents for 290,000 trade union members. Folksam has also provided various coverages for trade union members required as a result

of collective bargaining.

Another development in its infancy is group automobile insurance written as an employe benefit. The potential for reduction of marketing and underwriting costs and savings produced by integration of employe benefits is substantial. Although the technology for group plans exists, growth in the United States has been stifled mainly by the tax treatment

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