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Litigation Reform

Ask any industry professional, from the boardroom to the claim handler, What is one of the top problems facing the industry? More often than not they will answer, litigation. Whether it is auto,

By Michael H. Adams | Updated on January 31, 2007

Ask any industry professional, from the boardroom to the claim handler, What is one of the top problems facing the industry? More often than not they will answer, litigation. Whether it is auto, personal injury protection, medical malpractice, or the ongoing battle over homeowners’, sinkhole, and water liability, litigation is a main feature of any line of insurance, cost withstanding. Most of the time, however, the perception of litigation and its effect on a line of insurance is undocumented and subjective. As a result, litigation can serve as the bogeyman wherever needed.

Now, where is this better seen than in the legislative process? Citizen legislators, overwhelmed by trying to understand an insurance crisis, often rise and point a finger at fraud with a certainty not shown since the Salem witch trials. And each time they do, they find comfort in that particular section of the unwritten unofficial legislative handbook. When approaching insurance reform, litigation equals fraud, which equals higher rates, which leads to outrage, and ultimately to votes. Sometimes this fixation on fraud is helpful, for it provides it quick narrative that is easily understood.

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