State insurance regulators told a House Commerce subcommittee Thursday that no-fault automobile insurance with a non-dollar standard for allowing lawsuits provides the best coverage for the lowest premiums.

Regulators from Michigan, Pennsylvania and New Jersey told Rep. James Florio, D-N.J., that low dollar thresholds in legislation in New Jersey and a prior law in Pennsylvania led to sharp increases in premium costs and difficulties in acquiring insurance.For that reason, Pennsylvania Insurance Commissioner Constance B. Foster said that state's governor is attempting to enact a new no-fault plan that would combine a verbal liability standard for lawsuits with a $10,000 threshold to allow those with grave injury but little expense to be compensated for pain and suffering.

Michigan Insurance Commissioner Herman Coleman extolled his state's system, which uses a verbal standard or threshold.

Under this threshold, a person remains subject to tort liability for non- economic loss - pain and suffering - only if the injured person has suffered death, permanent serious disfigurement, or serious impairment of body function, Mr. Coleman explained.

Andrew Tobias, author of The Invisible Bankers, a book highly critical of the insurance industry, castigated insurers for not working to eliminate state laws that prevent creation of group automobile insurance policies.

We have, I believe, a horrendously inefficient, inhumane auto insurance system, he told the Subcommittee on Commerce, Consumer Protection and Competitiveness. Its primary beneficiaries are attorneys and insurance agents.

He said that Social Security and unemployment insurance would be much more expensive if sold in individual policies by individual agents and suggested that a lot of the cost of the automobile system is inefficient delivery of the insurance product.

He also supported no-fault insurance with thresholds that are high enough to prevent victims from being encouraged by their attorneys to rack up otherwise unnecessary medical bills.

But the regulators largely dismissed the idea that insurance companies have used anti-competitive means to raise insurance rates for automobile coverage.

The driving force behind auto insurance rates is bodily injury claims, Ms. Foster said.

Morag Fullilove, senior vice president of the Alliance of American Insurers, said his group believes that the increases in automobile insurance costs are fueled by increasing medical costs, increasing auto theft rates and, perhaps most importantly, aspects of the tort system which are in meed of change.

David F. Snyder of the American Insurance Association correlated high automobile insurance rates with highway accident loss and called on Congress to help decrease death and injuries on the highway.

New Jersey Commissioner Kenneth D. Merin identified the key cause of insurance problems in his state as a matter of demographics.

New Jersey has more people, more cars, more roads and consequently more accidents per square mile than almost any other state, he said.

With such statistics, he said, insurance rates will be high no matter the insurance system adopted by the state.