Why insurance carriers are becoming more unreasonable
Insurance carriers have become more conservative in the past several years. Many insurance carriers are forcing more and more small to medium cases into litigation because of one or more of the following reasons:
Public sentiment against Lawyers in general.
If you have not already noticed, the growing public sentiment against Lawyers is at an all-time high. Attacks on Lawyers are common in newspapers, magazines, and tabloid television shows.
Public sentiment against Personal Injury Lawyers specifically.
In the recent years, Personal Injury Lawyers are the most vulnerable of all Attorneys with respect to public criticism and scorn. The multitude of Lawyer jokes is proof of the public sentiment.
Exaggerated and inaccurate news coverage of Personal Injury verdicts.
Is there anyone in this country who has not heard or read about the verdict against McDonald’s for the spilled coffee burn injuries sustained by an elderly patron? Unfortunately, most newspapers and news reports exaggerate news coverage about incidents, report the information inaccurately, or fail to disclose all material facts surrounding the verdict. For example, in the McDonald’s case, the reading and listening public was not made aware of several important details that provoked both the lawsuit and the verdict itself. Such details, which were disclosed later in Lawyers’ publications, included the following:
- McDonald’s refused to consider a settlement request that was a mere fraction of the actual verdict.
- Several hundred claims of injuries caused by hot coffee had been filed against McDonald’s prior to this incident.
- The plaintiff was not trying to open her coffee while she was driving her automobile as speculated by the public.
- The burns were very serious.
- The award included punitive damages because McDonald’s was on actual prior notice that their coffee was so hot that it was likely to cause burns according to the experts who testified for the plaintiff.
- The verdict was substantially reduced by the Trial judge.
A Trial Attorney recently lost a case in federal court despite clear liability and documented damages. When he contacted a member of the jury, he was informed that the juror believed the jury had “a duty to do something about the insurance crisis in this country.” Unfortunately, such a comment from a juror after the Trial is not subject for appeal.
There is no question that Lawyer advertising and increased solicitation of Personal Injury clients has damaged the reputation of Personal Injury Trial Attorneys. While some of the advertisements are tasteful and informative to many, others resort to cheap “furniture sale” tactics which, unfortunately, have been successful for those Lawyers employing such aggressive advertising. Each time a potential juror sees a television ad, the chances of a substantial verdict in a small to medium case is decreased.
Increased insurance claims
As a result of Lawyer advertising, increased public awareness, and the increasing number of Lawyers, there has been a proportionate increase in the number of Personal Injury claims in this country. It has become necessary, therefore, for many insurance carriers to simply “hold the line” by either offering minimal settlements in cases or by forcing many cases into litigation.
Minimal jury verdicts in small to medium cases
There is no question that many jury verdicts in small to medium cases are very much on the minimal and conservative side. Small verdicts seldom get reported by national reporting services, but many state Trial Lawyer associations publish jury verdicts. The past several years has seen a substantial increase in the number of very low verdicts in small to medium cases. In such cases, it has been very apparent that the verdict was much lower than the plaintiff’s final settlement request before Trial and in many cases, much lower than the defendant’s final offer before Trial. Recognizing that jurors are becoming more reluctant to award significant damages in small to medium cases, insurance carriers are more willing to take their chances by forcing the case all the way to Trial.
Increase in the number of defense Attorneys
In some states major changes in workers’ compensation laws resulted in a substantial increase in the availability of both plaintiffs’ Lawyers and insurance defense Attorneys. This increase in the number of available defense Firms has created competition among defense Firms for insurance carrier business. Therefore, many of these defense Firms have begun to “bid” for insurance carrier defense work. The result is that many insurance carriers can now acquire Attorneys at a fraction of the previous cost. In many cases, the defense Firm will bill defense costs at a flat rate rather than on an hourly basis. As a result, the carrier is more likely to spend a few thousand dollars to defend a small to medium case when the outside risk of a substantial verdict is minimal. In most cases, the insurance carrier will save money by defending the case because the plaintiff will accept a settlement offer that has been reduced to reflect actual defense costs. The final result is that the insurance carrier delays settlement, saves money in defense and settlement costs, and forces more and more cases into litigation thereby discouraging claims.