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
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
"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
"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
- 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
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. …