SPOKESMAN: (V.O.) THE MOST CARING HANDS ARE PRONE TO OCCASIONAL MISTAKES. . . . WHO WILL PROTECT YOUR CHILD WHEN YOU CAN’T BE THERE! DAY CARE EMPLOYEE: OOPS! SPOKESMAN: (V.O.) WE ALL FACE HAZARDS ON THE JOB .. WHO WILL PROVIDE FOR YOUR FAMILY IN THE EVENT OF TRAGEDY! ZOO KEEPER: FEEDING TIME! AAMAAHHHIII PANGER PON’T TRY TO FEEP OR. PET THE AMIMALS! NNN-NICE EXPRESSION OF SHOCK-GOD, IT REALLY LOOKS LIKE SHE PROPS THE KIP ON HIS HEAP-.. FANTASTIC/ PUT THAT KILLER WHALE ON THE PAYROLL, WOULP YA? SPOKESMAN: (V.O.) AND. . .SHOULD THE UNTHINKABLE SUDDENLY BECOME A HARSH REALITY, EVEN YOUR OWN GOVERNMENT WILL BE UNABLE TO HELP. . . . SPOKESMAN: YOU SHOULD KNOW BETTER BY NOW YOU CAN T TRUST ANYONE. . .NOT EVEN YOURSELF! LET THE INSURANCE INDUSTRIES OF AMERICA PROTECT YOU FROM THE UNEXPECTED . BECAUSE YOU NEVER KNOW WHAT’SGOING TO HAPPEN NEXT1! LOOKlN'GOOP— REAPY... CUT BACK TO THE ANNOUNCER- - NOW// --BEAUTIFUL/ OKAY, CUE THE SPECIAL EFFECTS... —THAT'S A WRAP/// SOUND: (BREAKING SKYLIGHT KSSSSHHH!! AAAAIIEEEAAGH H!tt ^WH«Wy/4 to push proposals through in Oregon as they did in Washington. But how much more attention will be given to beefing up state regulation of insurance remains to be seen. One primary objective for insurance reformers will be smoothing out the precipitous rate fluctuations that create so much difficulty for consumers. For instance, to raise or lower rates more than 10 percent, the company would have to submit documentation to actuarially justify the change to the insurance commission. There would have to be a detailed accounting of how much is being collected and how much is being paid out in verdicts and settlements broken down by the different categories of insurance, information now tightly held within the industry. Without it, insurance commissions cannot genuinely assess the companies’ financial status. Other proposals will be to require premiums to be set to reflect the actual experience in particular states. In 1985, 157 Colorado day care centers paid $400,000 in insurance premiums. Yet over the past 10 years insurance companies have paid only $55,000 in claims on behalf of these centers. The day care businesses were recently faced with either mass cancellations or 800 percent premium hikes, largely due to rate hikes demanded by reinsurers. Companies like Lloyd’s of London, which is the largest, basically dictate what rates will have to be in this country through their backup coverage rates, with no consideration of the inherent risks involved. Reinsurers such as Lloyd’s are subject to no federal or state control. Lloyd’s is not even regulated in Great Britain. As Ralph Nader stated, “Off-shore reinsurance companies control the system in a viselike grip that makes OPEC look like a moderated patsy.” Stipulating that rates reflect the actual in-state track record for insurers is clearly called for. A major goal will be to broaden the insurance options beyond the commercial market as it currently stands. One idea is to expand self-insurance as an option for professional associations, certain businesses and government. Another is to empower the insurance commissioner to create joint underwriting associations (JUAs) to cover high risk categories of insurance by pooling insurance company assets. One company writes the policy but everyone shares in the profit or loss. These JUAs would be similar to the successful Housing Fair Plan in Washington which came out of the riots of the ’60s to underwrite urban home and business policies that private insurers were unwilling to offer. Greater consumer involvement in me rate setting process will also be proposed in the form of a Financial Insurance Consumer Board, much like Oregon’s Citizens’ Utility Board, to monitor regulation, rates and policies of insurance companies. The rate setting process could also be expanded to require a public hearing phase. Current insurance commission offices are funded at levels woefully inadequate for this task. One way to increase funding would be to create a revolving fund paid for by a certain percentage of insurance premiums. This would tie the amount of funding for the office to the level of activity in the industry. Finally, many states are going to push for resolutions calling upon Congress to repeal the McCarren-Ferguson Act and to place the industry once more under the scrutiny of anti-trust regulators. When all is said and done, this particular round in public policy-making demonstrates that our government responds fastest and in the most sweeping fashion when it is spooked into believing that there is a crisis. In a less hysterical atmosphere perhaps some of the most crucial questions concerning the prevention of accidents and the compensation of the injured can be answered. For instance, what is the societal responsibility for an injured person? Who should assume the risk and pay the price of such modern disasters as Bhopal or Chernobyl? Should the spreading of risk and cost—what insurance was developed to accomplish—be done strictly on an adversarial basis, or does the modern technological world compel greater social interdependence? Does the threat of liability and punitive damages cause individuals, especially corporations, to behave more responsibly? Perhaps most importantly we should examine the basic function of insurance. Since it is a form of public protection, is it appropriate for a powerful, private, profitmaking industry to rake in returns due to the fears and risks of society? Wouldn’t it perhaps be better to place the service of providing public protection into public hands? It wasn’t so long ago that enactment of a nationalized health insurance system seemed politically feasible. Many of the still valid arguments used to support this would apply just as well to the property-casualty line of insurance. Unfortunately, given the current political climate, with the resurgence of enthusiasm for deregulation and market-based politics, the likelihood of a radical departure from these norms appears remote for the time being. Fortunately, however, times can and do change.... Writer Krag Unsoeld lives in Seattle. He has covered the Washington Legislature for a number of publications. This is his first story for CSQ. Artist/Cartoonist J.R. Williams lives in Portland. Clinton St. Quarterly—Spring, 1987 17
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