Insurance Industry Admits: Don’t Expect “Tort Reform” To Reduce Insurance Rates

For Immediate Release:
March 19, 2002

Contact: Joanne Doroshow
212/267-2801

Insurance Industry Admits: Don’t Expect “Tort Reform” To Reduce Insurance Rates

New York, NY - In a startling admission, the American Insurance Association (AIA), a major insurance industry trade group, says lawmakers who enact “tort reform” should not expect insurance rates to drop. Specifically, a March 13, 2002 AIA press release, evidently issued to critique the Center for Justice & Democracy’s 1999 study Premium Deceit - the Failure of “Tort Reform” to Cut Insurance Prices, leads with an astounding face-saving pronouncement: “[T]he insurance industry never promised that tort reform would achieve specific premium savings.”

Said CJ&D Executive Director Joanne Doroshow, “We would like to thank the insurance industry for finally admitting what is already obvious: that they have not cut, and have no plans to cut, insurance premiums for doctors, hospitals or other businesses as a consequence of ‘tort reform’ - restrictions on consumers’ rights to sue wrongdoers in court. AIA’s friends at the American Tort Reform Association (ATRA) said this nearly three years ago following Premium Deceit’s release. Now that we’re all in agreement, can we please recognize ‘tort reform’ for what it is - an insidious movement that has had terrible consequences for many innocent people, while doing nothing to improve the affordability of liability insurance for businesses or professions.”

A medical malpractice insurance “crisis” for doctors is currently driving a national movement to restrict patient’s rights to sue malpracticing doctors, on the grounds that these restrictions will reduce doctors’ insurance rates.

In 1999, ATRA President Sherman Joyce told Liability Week (July 19, 1999), “We wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates.” Victor Schwartz, ATRA’s General Counsel, told Business Insurance (July 19, 1999) that “[M]any tort reform advocates do not contend that restricting litigation will lower insurance rates, and ‘I’ve never said that in 30 years.’”

Premium Deceit is an exhaustive look at the impact of “tort reform” on nationwide insurance costs between 1985 and 1999. It finds that tort law limits enacted since the mid-1980s have not lowered insurance rates in the ensuing years. States with little or no tort law restrictions have experienced approximately the same changes in insurance rates as those states that have enacted severe restrictions on victims’ rights.

For a copy of CJ&D's full response to AIA's critique of Premium Deceit in pdf format,