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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Class Actions To Raid Insurance Coffers Recklessly Undermine Expert Decisions Of State Regulators
By: Lawrence H. Mirel
Legal Times. December 16, 2002
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EXCERPT: In recent years, class action litigators have discovered some of the deepest pockets around-insurance companies. Through a series of nationwide class actions targeting the country's largest insurers, judges and juries in jurisdictions selected because of their pro-plaintiff biases are being asked to substitute their views on complex insurance issues for the authority of elected and
appointed state insurance commissioners in the 50 states and the District of Columbia. The result is bad law, confusion in the marketplace, and real harm to insurance consumers. Although the plaintiffs attorneys seek to justify their tactics as the only way to protect large numbers of people who individually have suffered relatively small losses, the members of the class usually end up with little or nothing, while the attorneys reap millions of dollars in legal fees. The costs of these suits-both the direct costs of the litigation and the broader costs that come from court-imposed restrictions on insurance companies that go against established state laws and practices-are eventually paid by consumers in the form of higher premiums. State insurance regulators, with their expertise and broader view of the market, are much better placed to render decisions that truly protect their citizens. Insurance is a highly regulated industry precisely because of its complexity and potential for abuse. Regulators are legally required to ensure that the rates charged by insurance companies are neither excessive, nor inadequate, nor unfairly discriminatory. In other words, we are obliged to look at the big picture, to make sure that consumers have access to good insurance at reasonable rates, as well as to ensure that insurers live up to their contractual obligations when claims are made. No such big-picture view is required of trial courts. They are enjoined to consider the case before them and render justice in that case alone. This works
when the suit involves one particular plaintiff who may indeed have been treated unfairly, but it makes little sense when the suit is brought in the name of millions of policyholders from every state in the union. The resulting "justice" provided to each member of the class is miniscule. And it is not balanced against the impact of the ruling on the cost and availability of insurance. Don't think that I'm talking about hypothetical problems here. Consider these real examples of nationwide class actions.
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