Posted on 04/07/2003 10:44:25 AM PDT by WaveThatFlag
Edited on 07/19/2004 2:11:11 PM PDT by Jim Robinson. [history]
Here is how it works....an insurance company can not deny a claim if it does not conduct a reasonable investigation or if does not have a reasonable basis for denial.
For instance, lets say you, the insured, has $50K in coverage. You get into a car accident (your fault) and kill a family of four. Obviously, their damages are in excess of $50k, and the plaintiff's attorney demands your insurance limits. Your insurer can not, in good faith, deny this claim, particularly since the damages are likely to be in excess of your limits and, therefore, involve your personal assets.
Surprisingly, some insurance companies have internal documents that, um, "suggest" that claims should be delayed or low-balled.
Finally, I would suggest that you learn how an insurance company makes money before you go spouting off....
Insurance companies make money off of gambling...they are making educated guesses, based on years of claim history, that they will not have to pay out more than they take in in premiums. Of course, insurance companies also make money on investing those premiums.
If oyu are trying to make a point that insurance companies are folding due to litigation, you have failed. Insurance companies will always be around...your premiums will just keep increasing.
I appreciate this incisive analysis of complex financial issues, considering how little, you pointed out, I know of how insurance cos make money. But, *could* it also be that these same companies may not write the particular policies and kinds of policies the consumer really needs to be written? Case in point, the Texas companies which are not writing homeowners' insurance. This has reached a crisis because of "bad faith" issues, btw. Mold gold, that is. Texas tea.
This has had some unpleasant effects on real estate and banking, because if you don't get homeowner's insurance, you don't get a mortgage. No mortgage, no home sale.
And, even if there will always be insurance companies to provide lawyers with settlement fees and plenty to complain about with other lawyers, we still might have to endure a lot of upheaval as insurance becomes scarce and expensive.
And, further, what happens when the consumer can't afford to pay premiums at all? That might make it tough on a lawyer, too. I think the phrase, "sqeezing blood from a turnip" about covers it.
A few limits in place, and that goose on life support might be able to churn out the golden eggs.
http://www.insurancejournal.com/news/newswire/national/2002/12/19/24982.htm
Please do note the following:
"Nevertheless, it is true that the price of insurance is directly related to return on investment. No one (including consumer advocates) seemed to mind during the 1990s when expectations of high rates of return on investments pushed the cost of insurance downward, but it must be recognized that this is a two-way street. If investment returns diminish, then any change in underlying costs must be offset by price increases and tighter underwriting."
And Texas is a strawman argument...the homeowners insurance market in Texas is poor, and State Farm over-extended themselves in that poor market.
The issue is the ultimate circumstance of consumers not being able to afford premiums. We already see that with medical insurance, so people do not buy it or can't find it for any price. Then they show up at hospital ERs, thrown on the mercy of a hospital's ability to withstand yet more bad debt. Your airy dismissal earlier--"insurance coverage will always be with us," is so much wishful thinking Insurance can and will collapse.
State Farm is not the only insurer of homes in Texas, the larger insurance company has already bowed out. They refused to provide "mold gold" bonanzas to Texas lawyers. They can refuse, and will. Then I watch the Texas Insuarance Board try to tell the public that they can legislate coverage, force companies to write policies...it'll be amusing to watch them try.
Homeowners insurance has always been the most reasonable of my insurance expenses, and now I'm watching it climb like my car and other insurance expenses. Then I read of all this litigation that involves huge settlements against home insurers, staggeringly over and above the value of the actual home. The first volley of the mold litigation involved a Texas home worth $1M, and the jury awarded $32M. The insurers drew the reasonable conclusion that they could expect no reason from the officers of Texas courts, and withdrew.
Insurance is my family's single biggest expense. If it continues to climb at its present rate, I'm going to have to reduce my coverage in a few more years. If I, who live within my means, must face this, you can be sure that there are many, many profligates out there who have already made that decision.
I suppose I'm naive enough to believe that insurance is a citizen's responsibility to his fellow citizens. I think this notion has long since faded from view. It is certainly a sour experience to read of lawyers behaving like Vandals within a system designed to help the injured--knowing that every time I make a premium, some lawyer makes a fool of me.
How much better it would be to steward our resources, to make sure the injured get some coverage rather than none at all--which is where we are headed.
And your ignorance regarding the fact that insurers make money off the premiums that they invest means that you are unwilling to debate the issues.
And one of the biggest reasons for the rise in property insurance is the 9-11 payout. Do some research.
Because I read ALL of the Supreme Court decisions (in order to write about them monthly) I can tell you why Justices Scalia and Thomas dissented in this case. There is no real authority in Article III of the Constitution (the courts) to tell STATE courts what they can and cannot do concerning punitive damages.
Why Justice Ginsburg did this is beyond me, until I read the Opinion and Dissent. Bottom line, there are many absurd situations in this society which cry out for a solution. However, it is a fallacy to assume that because there is something wrong, THEREFORE, the Supreme Court MUST have jurisdiction to solve the problem.
As the Court itself said in a decision long ago, "bad cases make bad law." This is a bad case. I doubt in my analysis a month from now that I will praise this decision. The problem should have been solved by the legislature of Utah, which clearly DOES have jurisdiction over the definition of punitive damages in its state courts.
Congressman Billybob
Except that a fine is fundamentally different than a punitive damages award. A fine's amount is mandated by statute, often with some judicial discretion allowed. A punitive damages award depends on the case, and is frequently set by a jury.
I guess I was still recollecting 2 years ago(great thread to revive!), what had happened to a certain Burnaby, B.C. Funeral Home Company which was disembowelled by a MS court. ;^)
How ya doin' these days, Congessman? It's always good to see you active here.
Raises the tone. ;^)
I have noot read this decision yet, but in prior cases, they have said that the 10-1 limit is not written anywhere in the Constitution, and that the constitutional right of trial by jury means that juries can do anything not explicitly prohibitted by the text of the Constitution.
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