BOSTON - Dramatic increases in liability
insurance premiums for doctors, governments, businesses and other
groups are caused by the insurance industry's own decisions and not
excessive lawsuits, according to a study prepared for the nation's
Despite alarming reports of a liability ""crisis,'' the industry
is profitable and is not suffering from an ""explosion'' of
litigation in state courts, the authors said.
The study, which blames the industry for underpricing insurance in
the 1970s to attract revenues for investment, says, ""The emphasis on
a need for change in the civil justice system to rescue the insurance
industry from financial problems is therefore entirely misplaced.''
Similar conclusions were drawn in a study released by the Consumer
Federation of America. In the past decade, jury awards in damage
cases have increased at the same pace as inflation, and economic
conditions have raised costs, the national consumer group found.
The 45-page report to the nation's top legal officers, obtained by
the , was prepared for discussion at the National Association of
Attorneys General convention in Seattle.
It was written by two aides to Massachusetts Attorney General
Francis X. Bellotti, who sits on an association's insurance panel
with his colleagues John Van de Camp of California, Lacy H.
Thornburgof North Carolina, Jim Mattox of Texas, Charlie Brown of
West Virginia and Bronson LaFollette of Wisconsin.
The report notes the recent skyrocketing cost and restricted
coverage of liability insurance for organizations, municipalities and
professionals, but it rejects the industry claim that premiums
arerising in response to growing jury awards, and criticizes a
February federal report that agreed with the industry.
The federal report, which was sent to each attorney general, was
prepared by an inter-agency working group and prompted President
Reagan to call for an examination of the nation's tort system, the
legal mechanisms for resolving injury claims.
""The facts do not bear out the allegations of an "explosion' in
litigation or in claim size, nor do they bear out the allegations of
a financial disaster suffered by property/casualty insurers today,''
the report said.
The authors warned the attorneys general to study conditions in
their states carefully before advocating changes at the state level,
where 98 percent of liability cases are tried and where most
insurance regulation takes place. …