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The following is taken from a talk given by Ralph Nader at a fundraiser for Public Citizen, held in Austin on March 12, 1986. Austin 11 HE TORT “REFORM” effort is a cyclical assault by the insurance industry on the rights of injured people to take wrongdoers to court. They tried this ten years ago, when their profits declined due to their usual cyclical mismanagement, and got a few states to restrict victims’ rights. In California, for example, they got a number of measures restricting the rights of victims of malpractice, which unfortunately has had a bad effect on the development of the law on this issue. I’ve been to more than my share of states and state legislatures. The pattern is the same everywhere. The industry’s profits are now soaring again. Stocks are booming on the New York Stock Exchange. All the brokers say invest in casualty insurance stock. Yet, coming out of their bottom year in 1984, when they bottomed out in their rate of return, they suddenly decided, in conjunction with their foreign reinsurers, like Lloyd’s of London, that this was a great opportunity to begin arbitrarily canceling policies of day-care centers, small businesses, municipalities, counties, school boards, or they would increase premiums by 500, 600, 800, 900 percent and reduce coverage. What this did, of course, was push companies and non-profit groups to ask why. And the industry said, “Don’t look at us. It’s those courts, it’s those juries, it’s those verdicts. It’s those settlements.” Instead of saying, “Well, can you prove that?” the industries who were abused by the insurance companies turned around and in lockstep tried pushing the legislatures for a variety of court “deform,” I call them, measures. Why? Because it’s a natural propensity of people in business not to want to be sued and to get a shield of partial immunity. And that’s what the insurance industry is exploiting. Now some of these businesses aren’t buying the insurance industry . line. Theie’s a used-car rental franchise business in New Jersey with 200 dealers he was canceled in December. He had a very low loss experience. He was a real safety nut. He was canceled. He went desperately looking around. He finds a company that gives him a policy for three times the price for 5 percent of the coverage. So he says, something’s wrong here. ,He’s now trying to start a self-insurance company for auto dealers. So not all businesses are buying the line. But yesterday [March 11] 600 members of the National Association of Manufacturers flew into Washington, were put on buses and herded up to Capitol Hill in order to lobby for restrictions on liability. What they are really trying to do is awesomely nefarious. They’re taking away the basic rights of injured people to go to court and recover, to utilize the system to generate some deterrence, some internal disclosure like on the Dalkon shield, the Pinto fuel tank, and asbestos which then is used by the media and the legislature and regulators to further the safeguards against such victimization. And it also renders an opinion or two, which may elaborate further on human rights of health and safety. So the system delivers compensation, deterrence, and expansion of disclosure, human rights in these areas. We know it’s not super fine-tuned. A lot of people who deserve to get compensation don’t get anything. THE GOAL of both the business policyholders and the insurance industry is to take it out of the common law, take it away from the jury and the judge, and put it into a codified system in a formula of compensation rates which then can be changed in accordance with political action committee money and all the regular influence peddling that reaches the ears and pockets of legislators. They cannot stand a system they cannot control. They cannot stand a system they cannot totally predict, budget in as a cost of doing business, and then pass on to the consumer. They are gunning for it. We see what happened in England and in Canada, where you can’t have this kind of judicial remedy and judicial success. One thing we did was we looked for a country that had all the tort reforms, so-called, that the insurance industry wants. It’s Canada. Canada has no contingent fee, for example. In Ontario, there is no contingent fee and a cap on pain and suffering. Punitive damage is almost unheard of. If you lose, you pay the winner’s legal fees and costs. And guess what the insurance industry’s doing in Canada? Same thing. Arbitrary cancellation, massive premium gouging, reduced coverage. In Toronto, the city was stripped of its insurance. The inner city bus system got a 1,000 percent premium increase. Most of the day-care centers can’t get coverage. So we’re telling legislators around the country, you can give them all the pounds of flesh, the ton of flesh, that they want, but it’s not going to solve the so-called insurance premium level. It’s just going to give them more power to demand even more. WE HAVE a platform of strategy and reform. We should not just be satisfied with blocking the industry in their measures to restrict victims’ rights and to shield themselves. We’ve got to use this occasion to defeat them, counterattack, place them under stricter regulation, repeal the state laws .that prevent group liability insurance purchases. You can buy group health and group life, but you can’t bu3/ group liability because of laws that were passed with insurance company lobbying years and years ago. Require a closed claim study. . . . Make it routine for companies to have to disclose commercial line by commercial line how much they take in on premiums and investment income and how much they pay out in verdicts and settlements. Beef up the state insurance department. Give the consumers an opportunity to organize their own consumer policy group for infrastructure permanence. One thing the tort lawyers have not done and are paying the penalty for, is they’ve not gone beyond the courtroom and built an infrastructure of public understanding of the gravity and stature of personal injury , rights and an infrastructure of consumer groups to defend the system. That’s what’s got to . be done. Out of this crisis, defeat them, counterattack, develop the . infrastructure, reform the insurance industry. Repeal the exemption from the federal anti-trust laws. Get a federal re-insurance standby authority to take the measure of Lloyd’s of London and other foreign re-insurance gougers. And set up a standby system which will go right into place any time the insurance companies want to redline or withdraw The Politics of Insuranc By Ralph Nader 12 MAY 2, 1986