That crisis tune sounds familiar

Dang, we're having an insurance crisis again! This means the industry's profits are down from obscene to excessive, and - as we usually find upon close examination - the reason that their profits are down is because of their own screw-ups.

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In April, the Center for Justice and Democracy released the report "Shakedown: How the Insurance Industry Exploits a Nation in Times of Crisis." This follows the center's equally useful 1999 study "Premium Deceit - the Failure of 'Tort Reform' to cut Insurance Prices." Limiting the great American right to sue didn't work the last time, didn't work the time before and didn't work the time before that to reduce premiums - so of course the insurance industry wants us to do it again.

Here's the deal: The reason that malpractice rates are skyrocketing is because of the insurance industry's own pricing errors and lost investment income. In a useful summary of the situation, The Wall Street Journal reported this week:

"While malpractice litigation has a big effect on premiums, insurers' pricing and accounting practices have played an equally important role. Following a cycle that recurs in many parts of the business, a price war that began in the early 1990s led insurers to sell malpractice coverage to ob-gyns at rates that proved inadequate to cover claims.

For a copy of the complete article, contact CJ&D.