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It Is The Insurance Industry That Is In Dire Need Of Reform

The American Association for Justice recently published a report entitled "The Ten Worst Insurance Companies in America." The report identifies some pretty staggering figures relating to the profits made by the insurance industry over the last ten years. For example, the report states that "over the last 10 years, the property/casualty insurance industry has enjoyed average profits of over $30 billion a year." The report further states that "the life and health side of the insurance industry has averaged another $30 billion." It deserves special emphasis that these figures are the profits earned by the insurance industry.

The report also notes that the U.S. insurance industry takes in "over $1 trillion in premiums annually" and has "$3.8 trillion in assets." This later figure is more than the GDPs of all but two countries in the world.

Given these figures, it is hard to argue against the fact that the insurance industry is doing quite well. Yet, in comparison, how are policyholders doing? Many of us are aware that health care providers are complaining that the rising cost of their medical malpractice insurance premiums. Most of us know that our health insurance premiums continue to rise. Those who have had the misfortune of being victims of a natural disaster, such as Hurrican Katrina, know that our insurance companies often fight us by denying claims rather than help us recover.

Proponents for tort reform often advocate for changes in our civil justice system in an effort to stem the rise in insurance premiums. They argue that restricting the right of Americans to bring lawsuits, or arbitrarily limiting the amount of recovery by persons injured due to the negligence of others, will best effectuate such an end. Of course, there is little evidence to support such claims. Perhaps it is time that different questions are asked. For example, why do insurance companies continue to raise premiums when they are earning record profits? Why do insurance companies continue to emphasize profits over fair dealing with their policyholders?