CONN. URGED TO UPDATE AUTO LAW

CONN. URGED TO UPDATE AUTO LAW

Some Connecticut automobile insurance law is obsolete, despite state efforts at accommodation in these days of rapidly escalating costs, the state's largest auto insurer said in a statement.

Allstate Insurance Co., with some 12.5 percent of the Connecticut auto market, won't follow the lead of Cigna Corp., New Hampshire Group and Transamerica Insurance Co., in ending their auto business in the state. But the Illinois-based insurer is pushing for some major updating of state law.Connecticut Governor William O'Neill has ordered an insurance department study of the state's entire auto insurance system.

While each company has its own reasons for leaving, Transamerica and New Hampshire Group cited losses as one factor. Cigna is pulling back from its auto business nationwide, but the other two companies' actions puzzle John Linden, Connecticut's chief property/casualty regulator.

''These guys are not going insolvent," he said. "We've done everything the industry said to do, (but) they say we can't make money and they go." The state has had a no-fault law since 1973, and since 1983 personal lines deregulation, Mr. Linden said, "there's no such thing as an excessive rate."

While that may be true, said Allstate spokesman Gregory Rossiter, the no-fault law has a $400 threshold instead of a minimum couple of thousand

dollars to deter lawsuits. State courts regularly allow stacking, which means a lawsuit winner can collect similar awards from several parties.

Allstate had a 1989 profit of .07 percent in the state's voluntary auto market, while premium income grew by 19 percent over 1988.