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Congressman John Bryant got his MANDATE before the election. OPEN MONDAY-SATURDAY I0-6 AND OPEN SUNDAY I0-4 WATSON & COMPA BOOKi g Life Insurance and Annuities Stn LiFe Martin Elfant, CLU 4223 Richmond, Suite 213, Houston, TX 77027 influential in setting policy and dictating market behavior. \(It is also responsible has decided that there are certain types of American insurance policies they simply will not buy. That leaves American insurance companies without a reinsurance market and, thus, without an ability to accept the risk. According to the Reinsurance Association of America, this second level of insurance is difficult to obtain not because of huge judgments but because of a few court cases which have “highlighted the totally unpredictable nature of casualty risks . . . which can be enlarged by the courts.” When this position is dissected, it becomes clear that to re-insurers recent losses are just part of the problem. The real problem for them is, they do not want to be exposed to a system such as the one the United States has. Essentially, they want safe risks. Those safe risks, the re-insurers admitted at a recent joint legislative committee hearing, are in countries with a great deal of socialization. A. country like Lloyd’s own Great Britain with public defenders to represent injured parties, a national health-care program, and socialized housing would naturally mean lower liability exposure under an insurance policy. If the government picked up the bulk of the tab for an injury, the insurance companies would not have to. But in the U.S. market, it appears that both primary insurers and re-insurers are suffering from what Ralph Nader calls the “blackbird syndrome.” Once one of them has had to pay on a loss, the rest immediately get flustered and fly away. Although Lloyd’s claims it is losing great sums of money in its U.S. insurance business, it is not surprising that neither the primary insurance carriers nor the re-insurers have presented legislators with the actual figures verifying the true state of their affairs. In Texas, Sen. Kent Caperton of Bryan, who is serving on the joint legislative committee, has asked for hard figures. He sought from the State Board of Insurance data on: the actual number of claims, to see if people are in fact suing more; the amounts of the claims awarded, to see if the pay-outs have in fact gone up; and the number and size of settlements, to verify allegations of huge settlements. The State Board, though, could only give him limited data, which did not answer his questions. WITH DATA revealing questionable business practices but none on the impact of lawsuits on insurance company profitability, concentrating on amending the legal system to solve the insurance crisis is clearly misplaced. The primary solutions should lie in changing insurance practices to alleviate the current dilemma for business needing liability coverage and to prevent the cycle from repeating itself. These changes should include experience ratings for businesses, just as there are now for automobile insurance holders. Just as a bad driver has to pay higher premiums than a good one, so should a negligent doctor pay more than a careful one. A state re-insurance program for certain lines of insurance should be established so that our cities, school districts, etc., are not prey to the whims of Lloyd’s of London in the writing of re-insurance.. The purchase of group liability insurance, similar to group health insurance, should be expanded as an option so that similar businesses can pool their insurancebuying resources. The state antitrust laws should be amended to cover insurance price-fixing. Although it is illegal for insurance companies to boycott, it is not illegal for them to fix ,prices. Texas Attorney General Jim Mattox is looking into the possibility of insurance collusion in this regard. He suspects that some sort of price-fixing in some types of insurance coverage may exist where rates have uniformly increased dramatically. THE INSURANCE industry in this , is untaxed, exempt from anti-trust statutes, and unac countable. Yet it is central to the lives of every American. Insurance is the third largest expense in the United States, coming just after food and housing. Americans spend more on insurance coverage than on all federal income tax payments. Every person in the country, including children, would pay $105 a year for insurance if the expense were apportioned on a per capita basis. The regulation of the property and casualty liability industry would touch the lives of every citizen of this country. The insurance “crisis” will not be solved by taking away the legal access of citizens. Addressing problems of the tort law system will not provide lower premiums and increased coverage. These will only come when the real problem is addressed the way the insurance industry conducts its business. 614zkca 2600 E. 7th St. ,.. lw Austin, Texas i r 477-4701 ….. vegetarian food THE TEXAS OBSERVER 11