Posted On: February 17, 2005, 5:35 pm CST

Posted By: Tom Laquercia

First, as to the greatest impact on P&C insurers correct me if I'm wrong, but don't the greatest payouts by insurers come from individuals who suffer catastrophic property damages such as we've just experienced in Florida last year(as opposed to class actions)? And just in one state, no less, compared to payouts throughout the country for individual personal injury claims.
And aren't these individual property losses, once coverage has attached and been accepted by the insurers, almost impossible to avoid or to reduce in exposure, adjustment loss expense and payout?
On the other hand, individual personal injury claims are fought hammer and tongs where fraud or inflated claims are concerned, for example, and even give rise to criminal culpability of not only the insureds but there attorneys as well.
Three hurricanes on the one hand in one year and class actions for Phen Fen on the other just a year or so before. Take your pick.
But the reality is that the recoveries for some individuals could never have been consistently achieved without class action status, regardless of the Wall St. Journal's reporter's opinion. The very magnitude of exposure for the drug manufacturer helped enhance each individual's chance to recover. As opposed to being a small fish in a big pond paying the same contingency fee for a smaller recovery, a member of a class action doesn't even have to show up most of the time to gain.
But let me add some fuel to the fire. The NY Times recently reported a story this past Saturday about two law firms in New York squabbling over referral fees. These fees arise when an attorney refers his client to another and is completely ethical. The plaintiff firm may have referred a number of its clients to the second firm ostensibly so that they would become members of the class of Phen Fen plaintiffs. However, it was reported that the referring firm received $5 million for referring Phen Fen cases to a firm that had both class action and individual cases. But without knowing the amount of the settlement obtained (the amount of the settlement was sealed) or which companies were defendants, if Wyeth was one of the defendants involved, the exposure is astronomical. Wyeth, for example, has reserved about $16 Billion for its Phen Fen exposure. It's stock just took a hit on announcing it's fourth quarter loss.
Notwithstanding that, presumably all the members of the class received some sort of recovery as it was probably settled for a large amount of money split many, many ways.
Hey, regardless of what you've been told from whomever, whatever, wherever, whenever, however: SIZE COUNTS! (in litigation) and from the sheer size of the number of participants, the whole process and all the players get ratcheted up to deal big time.