Hey look, I can cut-n-paste too!
http://www.freethought-forum.com/for...ead.php?t=5185
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Originally Posted by Stephen Maturin
This horseshit "lawsuit crisis" story repeats itself at fairly regular intervals here in the U.S. Private insurance companies make money by investing the policy premium payments they collect. When investments are good, insurers cut premiums to attract more customers and thereby bring in more investment capital. The higher investment income goes, the more reckless the insurers' premium cutting and underwriting practices get. Eventually, the whole mess comes crashing down. Investment income does a full gainer into the toilet and insurers, thanks to their dubious pricing and underwriting practices, are left to operate on a very thin margin.
At that point, the insurance industry and its ever-obedient lap dogs -- chambers of commerce, Republican legislators and the insurer-funded American Tort Reform Association -- start screaming about a "litigation crisis" that's causing an "insurance crisis" and threatening the very fabric of American life. The solution, so these professional liars tell us, is a singularly odious form of corporate welfare known as tort reform. Arbitrarily cap recoveries,* eliminate joint and several liability, etc. and everything will be fine.
We've heard a lot of this nonsense with regard to medical negligence cases in recent years. When the last investment income crash occurred, insurers started losing money hand over fist. Doctors got fucked in a big way when insurers imposed astronomical increases in malpractice insurance premiums to cover their own losses. Desperate for relief (and often constitutionally incapable of admitting fallibility), many a physician jumped on the tort reform bandwagon.
Trouble is, thirty years of tort reform history prove rather conclusively that tort reform legislation never translates into lower premiums. Indeed, the statistics show that premiums rise faster and farther in tort reform states than in non-reform states. Tort reform helps insurers by lowering payouts on injury claims, but those savings don't get passed on to consumers. Heaven forbid that State Farm's CEO be forced to skinny by on $3 million a year instead of his customary $10 million.
So, then, all the wailing and gnashing of teeth about "lawsuit crises" are directly related to the insurance industry's business cycle. There have been three major tort reform waves, all of which coincided perfectly with dramatic downturns in investment income. That's no coincidence. And as Fencesitter's article shows, the data on which such wailing is based are utterly bogus.
*Tort reformers call these caps on damages, which is a rather egregious misnomer. The amount of damages a person can suffer on account of a tortfeasor's negligence is limitless. Thus, you can only cap recoveries, not damages.
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