One of the top stories on the Huffington Post this week was spurred by a new Center for Justice and Democracy report on some deceptive insurance industry tactics. The report, entitled “Repeat Offenders: How the Insurance Industry Manufactures Crises And Harms America,” is a comprehensive project that is predicting an upcoming manufactured insurance industry “crisis” to hit in 2012. It is an important read for all those hoping for a better grasp of how the insurance industry operates. For any local Illinois medical malpractice lawyer it also provides a wealth of ammo to combat the endless barrage of misinformation that is sent our way by those seeking to enact tort reform.
Of course one of the main arguments of tort reformers is that insurance costs increase because of medical malpractice lawsuits. This false claim has been used for the last decade and a half in order to sell these legal changes to a public that often unsuspectingly fails to realize the so-called “reform” will only work to increase the profits of big industries at the expense of legal rights for regular residents. It is disappointing how these underhanded arguments have been used to mislead large segments of the public about the need to limit damage awards, change statute of limitations requirements, limit evidence that can be presented, and otherwise make it more difficult for victims of medical malpractice to receive fair compensation for their losses-regardless of what a jury decides.
Our Chicago medical malpractice attorneys were particularly interested to read in this latest report that the insurance industry is gearing up to raise rates in the coming year. This increase will no doubt be blamed as usual on the civil justice system, spurring even more calls for dangerous tort reform measures. According to the latest report, the industry is working hard to shift to a “hard” market where companies are allowed to increase premiums (and cut services) as a result of claims about money problems. In this case, the industry may suggest that the losses they sustained as a result of damage from Hurricane Irene led to a money shortfall necessitating increased profits. It is important to recognize this claim for what it is: a dishonest ploy to raise rates.
In reality, the losses from Irene were much less than expected. At first industry insiders believed that the total could reach $14 billion in losses. Yet, the figures turned out to be much lower when properly analyzed, around $2.8 billion. Regardless of the overall costs, records indicate that the industry was well placed to handle the event, as in 2010 the industry had a surplus of $580 billion according to data from Best’s Aggregate and Averages. However, by altering the way it reports its financial picture, the industry may be able to sell the belief that it needs to raise rates in order to spare the industry. The industry is exempt from antitrust provision under the 1944 McCarran-Ferguson Act, and so they are allowed to pressure competitors to stop competing for premiums and jointly try to raise rates industry wide.
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