The House Consumer Protection, Judiciary and Finance committees yesterday overwhelmingly approved the Cayetano administration-backed proposal, which mandates insurers reduce their rates between 25 percent and 35 percent by October 1997.

"The primary concern of the Legislature this year is to deliver an immediate, meaningful and substantial rate reduction," said Rep. Ron Menor, Consumer Protection chairman.

"This will help to make auto insurance affordable to a vast majority of consumers."

Under the House plan, the state's current modified no-fault law would be replaced by a tort-based system, in which accident victims could sue at-fault drivers for damages.

The measure also aims to eliminate duplicative medical coverage for auto accident victims by shifting medical cost covered by victims' auto insurance policy to the state's prepaid health care system.

Other elements of the bill include:

Stiffer fraud penalties;

A repeal of the medical-rehabilitative threshold which allows accident victims to sue if damages exceed $13,000;

A $5,000 reduction to any award that an auto accident victim may receive from a suit, settlement or arbitration. The $5,000 reduction aims to discourage small lawsuits.

Some committee members, like Rep. Mike White (D, Lahaina), expressed concern that shifting auto accident victim's medical cost would be an added burden to employers, who pay for most of the state's prepaid health care system.

But Menor (D, Mililani) said that the prepaid health care system can manage medical costs much more efficiently. He added that many employers would see a corresponding drop in their auto insurance premiums for their fleet cars under the new bill.

Insurers, meanwhile, are critical of any plan to repeal the state's no-fault law. Tim Dayton, local manager for Geico which is the state's eighth largest auto insurer, said that the company in April studied the potential impact of a no-fault repeal bill that was introduced last year.

The study found that Geico's claim expenses would increase by 48.5 percent with last year's bill, which is similar to the current repeal proposal, Dayton said.

The added costs would force Geico to raise premiums to its 34,000 local customers by 57.4 percent, not lower them, Dayton said.

Bob Toyofuku, lobbyist for the Consumer Lawyers of Hawaii, disagreed, saying that insurers in states like Georgia and Connecticut saw rates fall dramatically when the states recently repealed their no-fault auto insurance laws and replaced them with a tort-based system.