Originally Posted by Wiggin
Can you provide a reference to further qualify that statement?
Well, I don't usually save these things, read over many years, but a quick search pulls up this:http://www.nytimes.com/2005/07/07/bu.../07insure.html
There's another study out there, that I don't have time to look for right now, that looked at malpractice insurance rates, malpractice settlements and awards, and investment losses by insurance companies and showed that there was no relationship between insurance rates and settlements/awards, but a direct relationship between the money they lost in bad investments and rate hikes. This study looked at the industry over many years.
Which doesn't refute your argument. Yes, they base their rates on losses. It's just that those losses are not from "frivolous" (or even "non-frivolous") awards and settlements. The losses are from bad investment decisions by the insurance companies. Well, that's fine, that's how they do business.
But when they promote a brazen fiction to the public about how rates are going up because of "outlandish" malpractice awards, they are quite simply lying.
EDIT: And since you've gotten me started on the subject of tort reform, I will say this. The law allows people to sue for damages as a way of discouraging behavior that while perhaps not criminally illegal, is at least highly undesirable. This include doctors cutting off the wrong leg and companies manufacturing unsafe products that cause harm to consumers. Of course these companies and doctors (or insurance companies) don't want to have to pay damages for their misconduct, so of course they keep up a steady PR campaign to convince us that "the system is out of control". But there's a really good reason that punitive damages are allowed in these suits (which are often much higher than "real" damages), and an even better reason why there ought not be limits on these damages.
Punitive damages exist so that companies don't just consider harm to the public a cost of doing business. Sure, a death here and there might result in a certain cost due to real damages being awarded, but that cost is quantifiable. So, without punitive damages, or with caps on damages, companies are able to sit back and basically say, "Well, we know that the baby carriage is inherently unsafe, and our engineers tell us that that it will cause 1 death per 500 infants using it. But, if we factor out profits against the possible losses from law suits, we still come out ahead. And, since it'll take us a year to make it safe and cost just as much, and we need good results this quarter, let's just ship it anyway." So causing death and injury becomes just another cost of doing business.
(Many will object that this portrayal of corporate executives is too harsh, that they are not all evil. I would agree that most of them are not. (Some of them probably are, or become so.) They don't necessarily discuss the matter in the terms I outlined. They make all sorts of rationalizations and convince themselves that they aren't really putting the public at risk, and go home and play with their kids at the end of the day. But the end result, regardless, will be as I portrayed it.)
The only way to make causing harm something other than a manageable business cost is to introduce a degree of uncertainty into the equation. With unlimited punitive damages, shipping the unsafe product is always a gamble. It might work out, but it might also put them out of business. They do have a responsibility to the shareholders, so, in most cases, it's not a gamble that's worth taking. So called "tort reform" takes away this degree of uncertainty and encourages companies to engage in business practices that cause public harm.
And no, I'm not a lawyer, nor have I ever sued anyone, and I hope I never need to.