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From: rcj@burl.UUCP (Curtis Jackson)
Newsgroups: net.legal
Subject: Re: excessive liability claims
Message-ID: <794@burl.UUCP>
Date: Sun, 4-Aug-85 17:23:54 EDT
Article-I.D.: burl.794
Posted: Sun Aug  4 17:23:54 1985
Date-Received: Mon, 5-Aug-85 07:42:36 EDT
References: <933@sphinx.UChicago.UUCP>
Reply-To: rcj@burl.UUCP (Curtis Jackson)
Organization: AT&T Technologies, Burlington NC
Lines: 45
Summary: 

>>   If you honestly believe liability claims are resonable are you aware that
>> 1 dollar out of every 6 in the price of new aircraft goes to pay for the
>> liability suits.  And are you aware that half of the cost of your
>> pediatrician's care is to cover his liability insurance!
>>    
>>             -- David Burleson

I heartily agree with your views on excessive liability suits, but I do want
to make a point about this particular example.  Liability insurance is so
high because insurance companies are regulated on a state-by-state basis
and (apparently) have the local authorities in most states in their pockets.
When a major insurance carrier decided to provide malpractice insurance for
doctors, they put aside money from premiums to cover the possible loss of
suits.  They figured the amount of money to put aside (and the premiums) based
on losing every lawsuit at a rate quite a bit higher than the average for
previous cases (got to allow for inflation, right?).  Well, at the end of five
years, they had:

a) Not settled a single claim, since they 'forgot' to take into account the
fact that the average malpractice suit runs for something like 5-7 years total,

b) not paid a dime in income taxes on the $72 million dollars in premiums they
had ammassed, and

c) were, of course, only required at that time to pay taxes (with 5-year-weaker
dollars) on the premiums collected the first year (due to the average length
of lawsuits), and (last but not least),

d) NONE of these oversights were passed back to the customers in lower rates.

If you are interested in this area, definitely read Andrew Tobias' book
"The Invisible Bankers -- What the Insurance Industry Doesn't Want You to Know"

As a closing note (not really a legal one, just a foolish one), consider that
your chances of being killed on a domestic airline flight are less than
1 in 1,000,000; which means that for every $3,000,000 American Express takes
in on its Flight Insurance program @ $3.00 per ticket; they have to pay out
$175,000.

How sweet it is!
-- 

The MAD Programmer -- 919-228-3313 (Cornet 291)
alias: Curtis Jackson	...![ ihnp4 ulysses cbosgd mgnetp ]!burl!rcj
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