Why do insurance companies favor reforms that limit noneconomic damages in tort cases?
I'm guessing it would be easier to cover and big picture it could be more risky for the insurance company. But if you have experience in the insurance or risk management could you explain this in more depth? Please list your credentials though.
Noneconomic damages mean, not actual dollar losses. It's pain & suffering, puntative damages, etc.
Most of the time, noneconomic damages are MORE than actual damages. Lawyers are happier suing, because they get 1/3 of the TOTAL, so the more they can make the insurance company pay, regardless of actual damages, the more they make.
Juries don't usually think with their brains – they can easily be pursueded to award huge damages, even if the defendent was not guilty of any wrongdoing. Example: dead baby claims for obstetricians. It doesn't MATTER if the doctor messed up, any jury in the world, is going to side with the grieving parents.
Limiting noneconomic damages means smaller claims payments, which means lower premiums for the other insureds, and more ease of predicting profits for the company.
"noneconomic damages." Isn't it obvious?
References :
Noneconomic damages mean, not actual dollar losses. It's pain & suffering, puntative damages, etc.
Most of the time, noneconomic damages are MORE than actual damages. Lawyers are happier suing, because they get 1/3 of the TOTAL, so the more they can make the insurance company pay, regardless of actual damages, the more they make.
Juries don't usually think with their brains – they can easily be pursueded to award huge damages, even if the defendent was not guilty of any wrongdoing. Example: dead baby claims for obstetricians. It doesn't MATTER if the doctor messed up, any jury in the world, is going to side with the grieving parents.
Limiting noneconomic damages means smaller claims payments, which means lower premiums for the other insureds, and more ease of predicting profits for the company.
References :
agent, 22+ years, working on my cpcu
I wish I could answer this another way.
To save money.
I have observed that insurance companies now pay small claims almost instantly…but ones that require years or months of treatment they stall. I've heard the arguments about saving money for their subscribers, etc, but I have lived a different reality.
They aren't living to the contracts they ARE bound to under law. I shudder to think what they will do if they are given free reign.
References :
3 year fighting the industry
Spinal damage and surgery