Liability Insurance Top Recommendation of Panel / for Small Business

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A recommendation for ways to solve the problem of available liability insurance with tort reform and federal regulation was No . 1 among 23 recommendations approved by the Oklahoma delegation as a block during the White House Conference on Small Business, Oklahoma delegates said Monday.

In addition, two of the most important recommendations involved a stand against government-mandated employee benefits and reform of the Social Security System, said Ruthann Fairbairn, who co-chaired the Oklahoma delegation with Casey Clugston of Tulsa.

At the conference, held last week in Washington, D.C., delegates voted for 60 recommendations overall, said Fairbairn, president of the CPA firm of Fairbairn & Co., and Terry Neese, who is president of the Terry Neese Agencies of Oklahoma City and a founder of Oklahomans Helping Oklahomans.

"The most important overall concept to come out of the conference was that small business (firms with 500 or less employees) must be recognized as a necessary force in the national economy," said Neese. "In the past four years, 10.5 million jobs have been created by small business.

"From 1980 to 1982, during the steepest national recession since World War II, small business hired 2.6 million workers while large corporations laid off 1.7 million workers.

"It's important to recognize this in Oklahoma, which is having economic problems now. Small business is a viable force in Oklahoma's economy today, and tort reform in liability insurance is a majorissue in Oklahoma as it is across the country."

The liability insurance recommendation of the White House conference included a four-pronged effort at reform, including:

- Civil justice (or tort) reform.

- Uniform federal standards for product, professional and commerical liability.

- Federal regulation of the insurance and re-insurance industries for availability and affordability.

- Viable affordable alternatives to liability coverage.

The civil justice recommendation included a return to a fault-based standard of liability, use of credible scientific and medical evidence, eliminating joint liability when defendants have not acted in concert, limiting non-economic damages to $250,000 in any case, restricting punitive damages, limiting attorney fees, reducing awards when plaintiffs can be compensated by collateral sources, statutory right for prevailing parties to recover legal fees, a statute of limitations, periodic payments for medical care and encouraging settlements out of court.

Under federal regulations for availability and affordability, the recommendation suggested joint underwriting associations and a minimum of 60 days notice by an insurer for non-renewal.

Others were tax deductable self-insurance through risk pooling, plus self insurance allowing firms to pay premiums with pre-tax dollars.

Also, the recommendations included financial disclosures for insurers by lines of insurance.

The Social Security reform and the stand against government-mandated employee benefits are particularly important for small business from a CPA's perspective, said Fairbairn.

They can break a small business firm's back," he said. "The paperwork alone is a significant burden."

The Social Security reform recommendation included removal of non-retirement programs, bringing all government and private workers under the Social Security System, freezing employer contributions at the 1986 rate and developing long-range alternatives. …