Wow, I guess the insurance issue won't die yet...
AJane, there are other ways to make insurers change from a for-profit business to some other model besides just having the government take them over.
However, in light of the recent US government bailouts of pretty much the whole US banking industry, and the country's largest insurer--AIG--these ways may be moot. The government bailouts mean a marked increase in government involvement in these industries, so either the government is going to end up taking them over or significantly restructuring them.
The vehicle insurance situation you describe certainly avoids litigation, but it also avoids really taking care of people. It sure is easy to give a crippled person a check for $3,000 and think you've done them a favor, but you haven't really. That's just an example of a system that has another flaw in it rather than the flaw we're discussing at the moment.