Newspaper article THE JOURNAL RECORD

Nader Urges Probe of Insurance Crisis / Calls It `Manufactured'

Newspaper article THE JOURNAL RECORD

Nader Urges Probe of Insurance Crisis / Calls It `Manufactured'

Article excerpt

WASHINGTON (AP) - Consumer advocate Ralph Nader charged Thursday that the insurance industry has manufactured a crisis by raising rates and canceling coverage for many businesses, and he called for a federal investigation.

Medical malpractice insurance, protection for midwives and day care centers, liability insurance for municipalities and many other forms of coverage have been affected in recent months.

At a news conference, Nader contended that the insurance industry has undertaken an enormous, widespread wave of policy cancellations and rate increases in an effort to get state insurance commissioners to approve higher rates overall and to induce legislatures to limit liability.

He called for a federal investigation of the crisis, including whether insurance firms are illegally boycotting certain businesses.

In addition, he proposed a federal reinsurance program to help provide protection to businesses that cannot obtain coverage, similar to the riot insurance the government provided in certain areas in the 1960s.

Edward O'Hare, a vice president of the Insurance Information Institute, responded that the current wave of rate hikes is merely a response to losses suffered in recent years by insurance companies.

""Our business has just ended a period of intense competition. Prices for commercial insurance were cut drastically and businesses got a real bargain out of their insurance for many years,'' he said.

However, the industry lost $3.8 billion last year ""and it's got to raise rates. What we are talking about is price recovery rather than price increases,'' O'Hare said.

While Nader conceded that the industry needed some rate increases, he said much smaller hikes would have been sufficient.

Counting investment income, the industry managed a 3 percent return last year, which is low but could be increased with smaller rate hikes than those being imposed, said Robert Hunter, head of the National Insurance Consumer Organization, who joined Nader at his news conference. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.