Americans for Insurance Reform (AIR), a coalition of nearly 100 consumer and public interest groups representing more than 50 million people, has produced a major new study called "Repeat Offenders: How The Insurance Industry Manufactures Crises And Harms America." The study exposes how the property/casualty insurance industry creates periodic crises where insurance becomes unaffordable or unavailable for everyone from doctors to small businesses to local governments. These crises are known as "hard markets." AIR is calling on federal and state officials to take immediate steps to prevent a new crisis, which the industry has already instigated.
Written by J. Robert Hunter and Joanne Doroshow, Repeat Offenders finds that in the last few months, industry executives have been pushing the industry, including pressuring their own competitors, to start raising rates again for businesses and professionals, setting the stage for a new liability insurance crisis in America. "We have asked insurance regulators to stop earlier crises but they have balked and not acted. This time, they must act to stop unwarranted price gouging," said Hunter.
Repeat Offenders finds that hard markets, when premiums suddenly skyrocket as they have done three times in the past 35 years, are caused by "a combination of the industry's own boom and bust economic cycle, anti-competitive (yet legal) underwriting practices, unique and opaque accounting policies, and virtually unchecked power when it comes to regulation of insurance rates." They say, "these cycles are national in scope and occur in every state irrespective of a state's 'tort' law. Because the legal system is not responsible for creating hard markets, enactment of so-called 'tort reform' has done nothing to prevent them." The authors quote numerous insurance insiders freely discussing this cycle and never referencing lawsuits or tort system costs as a cause for rate hikes.
Co-author Joanne Doroshow said "Businesses in this country have paid and will continue to pay dearly for this industry's mismanagement and lack of unaccountability. Insurance executives get away with pointing their fingers everywhere but at their own actions. This country has had enough of the insurance industry blame game and the endless cycle and the periodic crises that accompany it. Remedies that do not specifically address the insurance industry's practices will fail to stop these volcanic price jumps, which are threatening the country once again."
AIR is asking for:
-Meaningful insurance data disclosure to state authorities, allowing officials examine the financial health of the industry and the civil justice system.
-States to enact stronger regulation and oversight of the industry and to repeal anti-competitive laws.
-Congress to repeal the federal anti-trust exemption and at a minimum, the new Federal Insurance Office (FIO) to review the impact of the McCarran-Ferguson Act on consumers.
AIR is a project of the Center for Justice & Democracy.
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