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It's almost impossible to get the information you want--for several reasons.

1.Any major player in the insurance market will never want to publicly admit that they lost money--it will scare off agents who represent them, causing a reduction in their billings and thus in their income--a death spiral. Also, any admission that they lost money scares off customers who feel the company would not be able to pay claims--another death spiral scenario.

Therefore, they resort to 'adjusting reserves for losses'. Not all losses are paid in the month they occur. So reserves for anticipated losses make up a large part of the liabilities listed. Playing around with reserves is an arcane insurance practice that goes on all the time.

The next thing they do is to increase premiums to make up for actual losses plus an added amount for future anticipated losses plus a profit margin. When states try to regulate the market by limiting premium increases to adjust for these factors, many insurors will simply stop writing the particular policies that are giving them trouble (such as auto) or will withdraw entirely from the state because of the hampering regulations.

2.Smaller insurors don't have the luxury of enormus premium bases. They sometimes go belly-up because of losses that are higher than any viable recoupment by increases in insurance premiums.

Usually, one of two things happens: They are bought out by a larger insuror who accepts their lieabilities and assets with the goal of working their way out of financial trouble--or they go out of business and their insureds are protected by state laws that spread the losses around among all the insurors doing business in that state.

3. When a market like malpractice becomes a sure loser, most insurance companies simply refuse to write policies. This results in the rise of under-capitalized 'specialty insurors' who serve a 'niche market.' There are virtually NO large insurance companies that write medical malpractice any more. In some cases doctors have resorted to forming their own cooperative companies--with predictable results. Another practice, often entered into by dodgy insurance executives is to set up non-regulated insurance companies in places like Belize but which serve the American market. A lot of them are simply scams. As the losses start piling up, they don't pay off and often go into bankruptcy, laaving policyholders and agents holding the bag.

In short, insurance is a very involved financial business. I spent twnety-nine years in it and find it difficult to explain all the financial ramifications in a short time. You might get some additional information about companies which have actually gone into receivership from your state insurance commission.

I cut and pasted several of these responses, including yours, since you were in the business for twenty-nine years.

She also said that most of the large settlements are argued down but that that part doesn't get reported by the press. And the reason why she's against tort reform is because there shouldn't be a cap put on pay-outs..she uses the example of a person becoming wheelchair bound due to a doctor's carelessness. If this said person was only rewarded 250k, that amount would just cover all of the modifications to her house...how could this person live?

I see this worst case scenario example to be more of the exception that the rule. I mean, just in my short life, I've known SO many people who have profitted from false claims of disability. It's really quite infuriating.

I know that there is probably really no real way to measure the percentage of false claims but based on your experience, do you have any thoughts on this, Wildbill?

Best Regards,