Posted On: October 21, 2004, 10:36 am CDT

Posted By: MGD

Two observation: (1) We don't know the extent to which the market has not been able to operate efficiently because the numbers will continue to change as the probe go deeper and others, in addition to Marsh , are implicated. To the extent that business is placed with carriers offering a higher contingency package because of that package as oppossed to best pricing available, there is a problem. We do know that most standard carriers operating in the American Agency system have such arrangements with their producers and therefore have created an incentive that the best deal not neccesarily be offered. Therefore, how much of the total cost is actually made up of the delivery cost component? This question must be answered before the matter of bid rigging is even discussed.
(2) To what extent are unnecessarily high litigation frequency/costs being incurred? In medical malpractice for instance, the most expensive component of cost for both the plaintiff and defendant in any case, whether meritorious or not, comes from the use of expert witnesses. The expert hourly fees are most often 2.5 to 5 times higher than what the attorney who is being paid to defend the case is charging. These experts come from the same medical community which cries foul because litigation is too expensive. Further, a significant amount of malpractice coverage is written through doctor owned mutuals who pay these high expert fees to their members to testify and then include the cost as a justification to raise premiums. The complaints about increasing premiums or unavailable coverage then come from these same Doctors. The important point to consider is that the pricing and/or availablity of insurance as currently represented should not be the measuring stick to justify tort reform initiatives which would unfairly deny an injured person the right to hold a responsible party fully accountable.