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katadj
USA
315 Posts |
 Posted - 04/09/2004 : 18:12:43
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IMHO, we need to address this issue and have some way to advise all of our readers of the preponderance of the claims / premiums / non-renewal, cancellations which are upon us.
This is starting to sound like there are some discriminatory practices being applied in certain venues. (Naw, that’s not possible, is it?)
It sure would be nice for one of our astute legal, or otherwise insurance knowledgeable readers to be able to answer some of Todd’s “ to the point” questions.
This premium raising is everywhere; My E&O has been for several years $837.00 Yr. Three quotes this year are $1787.00, $1,800.00, and $1,900.00.
In Fact my Agents premium for E&O doubled also.
To work Flood Losses you have to have E&O. I foresee many vendors E&O premiums increasing 200-300 % and where do we fit into that equation.
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Originally posted by Todd Summers
I am not talking about auto policies or liability or negligence. I am talking about cancellations of homeowners policies due to claims arising out of weather related events (acts of God).
Chuck, premiums and policies change all the time due to a variety of reasons like, weather trends, litigation, legislation, mold, Isabel, carriers just wanting to minimize their exposure in a certain area etc. These are all understood and are business as usual.
The question is how can a carrier cancel your HO policy after one weather related claim? And if they can't, how are policyholders getting wind of this threat? Is this a rumor? Is it fact? To what degree is the local/national media involved? Have some in the media lied or been lied to or mislead about this? By whom?
This is really bad news for us and I would very much like to have a better understanding of what the hell is going on here.
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Edited by - katadj on 04/09/2004 18:15:16 |
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adjuster12
USA
21 Posts |
Posted - 04/09/2004 : 18:55:48
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| insurance policies are contracts which can be cancelled when it expires. |
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Czar
USA
66 Posts |
Posted - 04/09/2004 : 20:32:45
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It would appear to me that the rising costs of insurance are due to a vicious circle of other events. At some point carriers felt as if they had to exhaust too much money on independents, CAT, and staff adjusters. In order to combat the cost of adjusting a claim, they began to trim the number of claims assigned out, as well as trimming their internal adjusters. Once this happened, carriers began to rely on contractor’s estimates to settle claims, even going as far as over paying claims to get them settled so that they had less of adjusting expense from the likes of you and me. It appears that they then realized they were overpaying these claims and coming back to utilizing independents, CATs, and so on. To me, this seems to go in circles every year. In either case they dig themselves in a hole and are looking to the policyholder to alleviate their financial burden.
The second issue that I see, and the one that appears to make everyone’s premiums rise are fraudulent casualty claims. As a multi-line adjuster my claim load is about 30% casualty, and goes to about 70% during slow weather periods. The average settlement for a two car, our driver at fault, accident is between $3,000.00 and $5,000.00 for injuries, and does not include the PD settlement. I would say that in only 10% of my files there is an actual objective injury, with the other 90% consisting of subjective soft tissue injuries, or the ever common “non-medical” term, whiplash. Day in and day out I deal with fraudulent claimants and attorneys who inflate medicals and specials in order to cash in. Then there are the slip and falls in the grocery stores, trip and falls on a sidewalk, slips on ice in the neighbor’s driveway, guy gets punched in the face at the bar and the bar is somehow at fault for lack of security for this dumb obnoxious drunk, Jr. cuts his finger off with a cheese slicer and somehow it is the manufactures fault that mom can’t watch her kid, and on and on and on….. The last fraudulent type of claim that I see is WC, and the lazy individuals who abuse a system in place to help people that it was intended for. The sorry thing about all of this is, it is far less expensive to offer a settlement in the range above then it is to allow it to go to court, as you never know when 12 people in a box will award an ignorant lady millions of dollars, cause she doesn’t know that coffee is a hot beverage. Premiums for hardworking people to cover their homes, autos, businesses, heath will keep rising as long as the system does not change.
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alanporco
USA
112 Posts |
Posted - 04/10/2004 : 19:51:30
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Czar: You're correct about the cost of insurance rising due "to a vicious circle of other events." Insurance companies tend to be reactionary. The trend in downsizing adjusting staffs is because the carriers have seen the number of claims drop. It is too expensive to carrier under utilized staff. I doubt that the number of claims has declined due to anything carriers have done. Most states have very serious rules about investigating a claim. Now agents don't always follow that. I've seen many agents upset that an insured filed a claim, albeit the claim was legitimate. The agents get upset because a high loss ratio adversely affects their contingency bonus. Another factor dramatically affecting things, at least for us, is the low number of CATs over the past couple of years. Some posted numbers for claims over the past 5-6 years, the trend was down. Many of the CATs declared by Farmers over the past year and a half have been handled by the NCC staff, no I/As were called. Now carriers have or are planning staff reductions, so that when the weather picks up again (and it will), the carriers will crying for adjusters. If the CAT is outside TX, the state could turn into a ghost town when all the adjusters head out.
As for the casualty side, get rid of the lawyers. If lawyers were fined for filing frivolous lawsuits, the proliferation of these might stop. The stories about these types of suits are endless. This stems from a general attitude in this country that whenever anyone is injured, they are entitled to compensation, no matter who's at fault. That is a direct quote of an assist AG in MA several years ago. WC is screwed up in CA because of the lawyers, doctors haven't helped, but the ones showing the way have been the attorneys. |
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Czar
USA
66 Posts |
Posted - 04/10/2004 : 22:54:04
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Alan:
Your correct about attorneys, but I believe it is more the mind set of the average person. I received a leaky roof homeowners claim about a year ago. When I went out to inspect the homeowner attempted to submit through me a casualty claim due to the fact her subfloor had warped from the water and she had tripped and fell fracturing her ribs. So now not only when someone else causes you injury it is there fault and someone should pay, but when your own negligence causes your injury it is somehow someones elses fault? |
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trader
USA
236 Posts |
Posted - 04/11/2004 : 10:09:54
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Don't get too wadded up about the plaintiff attorneys. I started as a casualty adjuster over 40 years ago, and I have seen many injustices corrected by the plaintiff bar. In Texas for example:
Contributory negligence, sole proximate cause, rental car reimbursment, guest passenger, etc, etc.
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alanporco
USA
112 Posts |
Posted - 04/11/2004 : 12:24:16
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| trader: Without a doubt the plaintiff's bar has brought many good changes in our society. HOWEVER, they are largely responsibility for instilling the mind set that one should be compensated when something goes awry. As an example: A ladder manufacturer is sued and loses because they failed to put a warning label on their product informing users that it is unsafe to set the leg(s) of the ladder in a frozen cow patty and then attempt to climb the ladder after the cow patty has thawed out. This case happened when the farmer set the ladder up in the early morning, then came back later to complete the work and the ladder slipped. The woman who was awarded damages from McD's for the hot coffee was an attorney (what did she think she was buying - iced tea?). When I first heard about this case, the gender of the plaintiff was not stated. I commented that it had to be a woman because no male would stick a HOT cup of coffee in his crotch. And the list goes on. Many things have been made safer due to lawsuits, but personal responsibility has certainly been eroded. Everything is some else's fault. |
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KileAnderson
USA
875 Posts |
Posted - 04/11/2004 : 12:37:05
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| Plaintiff's attorneys do far more harm in todays world than they do good. If tort reform is not implemented in the next decade, no one will be able to do business in this country. The cost of frivolous lawsuits will destroy our economy. Two things that would end the lawsuit abuse and trolling for clients that we see in the lawyers ads on TV would be to make it illegal for a lawyer to charge a client a percent of the damages awarded and to institute a loser pays system so that if you bring about a lawsuit and lose, you have to pay the defenses legal bills. If a jury awards x amount to make a plaintiff whole again, why does the lawyer then get to take 40% of that amount. Then the plaintiff is now only 60% whole. Where's the justice in that? |
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ChuckDeaton
USA
373 Posts |
Posted - 04/11/2004 : 13:30:47
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Suits filed in tort are not won because of plaintiffs attorney's, suits are won because of you, me and our neighbors who sit on juries. McDonald's didn't lose the hot coffee suit based on physical injury to one person, MacDonald's lost because a plaintiff's attorney was able to convince a jury that MacDonald's had repeatedly been warned and that MacDonald's failed, repeatedly to heed the warnings.
"it is more the mind set of the average person."
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KileAnderson
USA
875 Posts |
Posted - 04/11/2004 : 13:51:27
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That's another problem Chuck. Lawyers should have no input in the seating of juries. Juries should be picked at random. Lawyers are allowed to weed out anyone who can make a rational decision from the jury pool. If you have any kind of knowledge of what the case is about they will disqualify you. Has anyone here ever been asked their occupation or educational background when called for jury duty? I'm sure that being an insurance adjuster will get you eliminated from the jury of just about any tort case.
The lady in the MacDonald's trial caused her own injury and the jury was too stupid to put blame where it belonged, ON THE PERSON WHO SPILLED THE COFFEE. Coffee is hot, even an idiot knows that. If you spill it on you it will burn you. A 4 year old child can figure that out. |
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trader
USA
236 Posts |
Posted - 04/11/2004 : 13:56:44
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KIle: It seems you are drinking the red tort Kool Aid in the same quanatities as red contract Kool Aid.
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JimF
USA
1014 Posts |
Posted - 04/11/2004 : 14:34:45
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Before we allow ourselves to be seduced by the myths or infatuated with injustice, let's take a look at the FACTS in the case of the woman who sued MccDonald's over hot coffee:
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McDonalds coffee and the Liebeck lawsuit
Here are some facts about what really happened:
At the trial, it was revealed:
McDonalds required their coffee kept at 185 degrees Fahrenheit, plus or minus 5 degrees, significantly higher than other establishments. [Coffee is usually served at 135 to 140 degrees]
An expert testified that 180 degree liquids will cause full thickness burns in 2 to 7 seconds.
McDonalds knew before this accident that burn hazards exist with any foods served above 140 degrees.
McDonalds knew that its coffee would burn drinkers at the temperature they served it.
McDonalds research showed that customers consumed coffee immediately while driving.
McDonalds knew of over 700 people burned by its coffee, including many third-degree burns similar to Ms. Liebeck's.
McDonalds had received previous requests from consumers and safety organizations to lower their coffee temperature.
There were many things McDonalds could've done to prevent injuries:
lowering the holding temperature of their coffee,
putting warning labels on the cups not to drink immediately,
redesigning the cups to minimize tipping or prevent drinking in cars
McDonalds knew of the risk and knew scores of injured customers, but did nothing to mitigate the chance of injury.
Evidence showed that McDonalds served their coffee so hot to save money. This let them get away with a cheaper grade of coffee and cut down on the number of free refills they had to give away.
McDonalds executives testified that they thought it would be cheaper to pay claims and worker's compensation benefits to people burned by their coffee versus making any of these changes.
Even the trial court judge called McDonalds' conduct willful, wanton, reckless and callous.
On to the situation at hand:
Stella Liebeck, age 79, was a passenger in the car.
The car was at a full stop so she could add cream and sugar to her coffee. [She was not the driver and the car was not moving.]
The cup tipped and spilled over her lap.
Within a few seconds, Ms. Liebeck suffered third-degree burns over 6 percent of her body, including her inner thighs, perineum, buttocks, genitals and groin.
Ms. Liebeck was hospitalized for 8 days, and required skin grafting and debridement treatments.
Parts of Ms. Liebeck's body were permanently scarred.
Ms. Liebeck tried to settle with McDonald's for $20,000 to cover her medical expenses. McDonalds offered her $800. She sought mediation, but McDonald's refused.
The jury initially awarded Ms. Liebeck the equivalent of two days worth of coffee sales for McDonalds as punitive damages.
The trial judge reduced the verdict to something under $600,000.
McDonalds has since lowered the temperature on their coffee.
http://www.lectlaw.com/files/cur78.htm
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Edited by - JimF on 04/11/2004 14:46:48 |
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KileAnderson
USA
875 Posts |
Posted - 04/11/2004 : 14:34:57
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| You're right Trader. I'm only pointing out what intelligent people already know. The real question is, what can be done about it. The major problem is that lawyers not only try the cases but they now make and enforce the laws. It seems that a large percentage of politicians are lawyers and even though the Democrats get a bad reputation for being in the pockets of the legal proffesion, Bush's largest group of donors is made up of lawyers. Bush poularly known as the Big Oil president but in reality lawyers give many times more money to his campaign than do the oil companies. They are playing both ends of the field so it seems that little will be done to fix this insane situation any time soon. |
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KileAnderson
USA
875 Posts |
Posted - 04/11/2004 : 14:52:51
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| The reason MacDonalds served their coffee so hot was because most of their coffee sales are through the drive through and if they served it at 130 degrees it would be cold by the time the customer got to where they were going to drink it. By serving it hotter than normal the coffee would be at the right temperature for drinking when it was actually consumed 5-10 minutes after it was purchased. The fact remains that if the customer hadn't spilled it, she wouldn't have been burned. The only person at fault is the lady who spilled it. She caused her own injury. No matter how much a lawyer tries to twist the facts or how stupid a jury is, the lady burned herself and that's all there is to it. |
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JimF
USA
1014 Posts |
Posted - 04/11/2004 : 15:04:03
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Let's see what the Wall Street Journal had to say about the hot coffee lawsuit and who is at fault.
(And I think we can all agree that the WSJ is not some left wing liberal news rag of "the Left" or written from a Socialist bent.)
************************************************************************
McDonald's Callousness Was Real Issue, Jurors Say, In Case of Burned Woman
How Hot Do You Like It?
by Andrea Gerlin
Staff Reporter of The Wall Street Journal
September 1, 1994
The Wall Street Journal
(© 1994, Dow Jones & Co., Inc.)
ALBUQUERQUE, N.M. - When a law firm here found itself defending McDonald's Corp. in a suit last year that claimed the company served dangerously hot coffee, it hired a law student to take temperatures at other local restaurants for comparison.
After dutifully slipping a thermometer into steaming cups and mugs all over the city, Danny Jarrett found that none came closer than about 20 degrees to the temperature at which McDonald's coffee is poured, about 180 degrees.
It should have been a warning.
But McDonald's lawyers went on to dismiss several opportunities to settle out of court, apparently convinced that no jury would punish a company for serving coffee the way customers like it. After all, its coffee's temperature helps explain why McDonald's sells a billion cups a year.
But now - days after a jury here awarded $2.9 million to an 81-year-old woman scalded by McDonald's coffee - some observers say the defense was naïve. "I drink McDonald's coffee because it's hot, the hottest coffee around," says Robert Gregg, a Dallas defense attorney who consumes it during morning drives to the office. "But I've predicted for years that someone's going to win a suit, because I've spilled it on myself. And unlike the coffee I make at home, it's really hot. I mean, man, it hurts."
McDonald's, known for its fastidious control over franchisees, requires that its coffee be prepared at very high temperatures, based on recommendations of coffee consultants and industry groups that say hot temperatures are necessary to fully extract the flavor during brewing.
Before trial, McDonald's gave the opposing lawyer its operations and training manual, which says its coffee must be brewed at 195 to 205 degrees and held at 180 to 190 degrees for optimal taste. Sine the verdict, McDonald's has declined to offer any comment, as have their attorneys. It is unclear if the company, whose coffee cups warn drinkers that the contents are hot, plans to change its preparation procedures.
Coffee temperature is suddenly a hot topic in the industry. The Specialty Coffee Association of America has put coffee safety on the agenda of its quarterly board meeting this month. And a spokesman for Dunkin' Donuts Inc., which sells about 500 million cups of coffee a year, says the company is looking at the verdict to see if it needs to make any changes to the way it makes coffee.
Others call it a tempest in a coffeepot. A spokesman for the National Coffee Association says McDonald's coffee conforms to industry temperature standards. And a spokesman for Mr. Coffee Inc., the coffee-machine maker, says that if customer complaints are any indication, industry settings may be too low - some customers like it hotter. A spokeswoman for Starbucks Coffee Co. adds, "Coffee is traditionally a hot beverage and is served hot and I would hope that this is an isolated incident."
Coffee connoisseur William McAlpin, an importer and wholesaler in Bar Harbor, Maine, who owns a coffee plantation in Costa Rica, says 175 degrees is "probably the optimum temperature, because that's when aromatics are being released. Once the aromas get in your palate, that is a large part of what makes the coffee a pleasure to drink."
Public opinion is squarely on the side of McDonald's. Polls have shown a large majority of Americans - including many who typically support the little guy - to be outraged at the verdict. And radio talk-show hosts around the country have lambasted the plaintiff, her attorneys and the jurors on air. Declining to be interviewed for this story, one juror explained that he already had received angry calls from citizens around the country.
It's a reaction that many of the jurors could have understood - before they heard the evidence. At the beginning of the trial, jury foreman Jerry Goens says he "wasn't convinced as to why I needed to be there to settle a coffee spill."
At that point, Mr. Goens and the other jurors knew only the basic facts: that two years earlier, Stella Liebeck had bought a 49-cent cup of coffee at the drive-in window of an Albuquerque McDonald's, and while removing the lid to add cream and sugar had spilled it, causing third-degree burns of the groin, inner thighs and buttocks. Her suit, filed in state court in Albuquerque, claimed the coffee was "defective" because it was so hot.
What the jury didn't realize initially was the severity of her burns. Told during the trial of Mrs. Liebeck's seven days in the hospital and her skin grafts, and shown gruesome photographs, jurors began taking the matter more seriously. "It made me come home and tell my wife and daughters don't drink coffee in the car, at least not hot," says juror Jack Elliott.
Even more eye-opening was the revelation that McDonald's had seen such injuries many times before. Company documents showed that in the past decade McDonald's had received at least 700 reports of coffee burns ranging from mild to third degree, and had settled claims arising from scalding injuries for more than $500,000.
Some observers wonder why McDonald's, after years of settling coffee-burn cases, chose to take this one to trial. After all, the plaintiff was a sympathetic figure - an articulate, 81-year-old former department store clerk who said under oath that she had never filed suit before. In fact, she said, she never would have filed this one if McDonald's hadn't dismissed her requests for compensation for pain and medical bills with an offer of $800.
Then there was the matter of Mrs. Liebeck's attorney. While recuperating from her injuries in the Santa Fe home of her daughter, Mrs. Liebeck happened to meet a pair of Texas transplants familiar with a Houston attorney who had handled a 1986 hot-coffee lawsuit against McDonald's. His name was Reed Morgan, and ever since he had deeply believed that McDonald's coffee is too hot.
For that case, involving a Houston woman with third-degree burns, Mr. Morgan had the temperature of coffee taken at 18 restaurants such as Dairy Queen, Wendy's and Dunkin' Donuts, and at 20 McDonald's restaurants. McDonald's, his investigator found, accounted for nine of the 12 hottest readings. Also for that case, Mr. Morgan deposed Christopher Appleton, a McDonald's quality assurance manager, who said "he was aware of this risk…and had no plans to turn down the heat," according to Mr. Morgan. McDonald's settled that case for $27,500.
Now, plotting Mrs. Liebeck's case, Mr. Morgan planned to introduce photographs of his previous client's injuries and those of a California woman who suffered second- and third-degree burns after a McDonald's employee spilled hot coffee into her vehicle in 1990, a case that was settled out of court for $230,000.
Tracy McGee of Rodey, Dickason, Sloan, Akin & Robb, the lawyers for McDonald's, strenuously objected. "First-person accounts by sundry women whose nether regions have been scorched by McDonald's coffee might well be worthy of Oprah," she wrote in a motion to state court Judge Robert Scott. "But they have no place in a court of law." Judge Scott did not allow the photographs nor the women's testimony into evidence, but said Mr. Morgan could mention the cases.
As the trial date approached, McDonald's declined to settle. At one point, Mr. Morgan says he offered to drop the case for $300,000, and was willing to accept half that amount.
But McDonald's didn't bite.
Only days before the trial, Judge Scott ordered both sides to attend a mediation session. The mediator, a retired judge, recommended that McDonald's settle for $225,000, saying a jury would be likely to award that amount. The company didn't follow his recommendation.
Instead, McDonald's continued denying any liability for Mrs. Liebeck's burns. The company suggested that she may have contributed to her injuries by holding the cup between her legs and not removing her clothing immediately. And it also argued that "Mrs. Liebeck's age may have caused her injuries to have been worse than they might have been in a younger individual," since older skin is thinner and more vulnerable to injury.
The trial lasted seven sometimes mind-numbing days. Experts dueled over the temperature at which coffee causes burns. A scientist testifying for McDonald's argued that any coffee hotter than 130 degrees could produce third-degree burns, so it didn't matter whether Mc Donald's coffee was hotter. But a doctor testifying on behalf of Mrs. Liebeck argued that lowering the serving temperature to about 160 degrees could make a big difference, because it takes less than three seconds to produce a third-degree burn at 190 degrees, about 12 to 15 seconds at 180 degrees and about 20 seconds at 160 degrees.
The testimony of Mr. Appleton, the McDonald's executive, didn't help the company, jurors said later. He testified that McDonald's knew its coffee sometimes caused serious burns, but hadn't consulted burn experts about it. He also testified that McDonald's had decided not to warn customers about the possibility of severe burns, even though most people wouldn't think it possible. Finally, he testified that McDonald's didn't intend to change any of its coffee policies or procedures, saying, "There are more serious dangers in restaurants."
Mr. Elliott, the juror, says he began to realize that the case was about "callous disregard for the safety of the people."
Next for the defense came P. Robert Knaff, a human-factors engineer who earned $15,000 in fees from the case and who, several jurors said later, didn't help McDonald's either. Dr. Knaff told the jury that hot-coffee burns were statistically insignificant when compared to the billion cups of coffee McDonald's sells annually.
To jurors, Dr. Knaff seemed to be saying that the graphic photos they had seen of Mrs. Liebeck's burns didn't matter because they were rare. "There was a person behind every number and I don't think the corporation was attaching enough importance to that," says juror Betty Farnham.
When the panel reached the jury room, it swiftly arrived at the conclusion that McDonald's was liable. "The facts were so overwhelmingly against the company," says Ms. Farnham. "They were not taking care of their consumers."
Then the six men and six women decided on compensatory damages of $200,000, which they reduced to $160,000 after determining that 20% of the fault belonged with Mrs. Liebeck for spilling the coffee.
The jury then found that McDonald's had engaged in willful, reckless, malicious or wanton conduct, the basis for punitive damages. Mr. Morgan had suggested penalizing McDonald's the equivalent of one to two days of companywide coffee sales, which he estimated at $1.35 million a day. During the four-hour deliberation, a few jurors unsuccessfully argued for as much as $9.6 million in punitive damages. But in the end, the jury settled on $2.7 million.
McDonald's has since asked the judge for a new trial. Judge Scott has asked both sides to meet with a mediator to discuss settling the case before he rules on McDonald's request. The judge also has the authority to disregard the jury's finding or decrease the amount of damages.
One day after the verdict, a local reporter tested the coffee at the McDonald's that had served Mrs. Liebeck and found it to be a comparatively cool 158 degrees. But industry officials say they doubt that this signals any companywide change. After all, in a series of focus groups last year, customers who buy McDonald's coffee at least weekly say that "morning coffee has minimal taste requirements, but must be hot," to the point of steaming.
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Edited by - JimF on 04/11/2004 15:06:13 |
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JimF
USA
1014 Posts |
Posted - 04/11/2004 : 15:14:00
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POSTSCRIPT - Following the trial of Ms. Liebeck's case, the judge who presided over it reduced the punitive damages award to $480,000, even though the judge called McDonald's conduct reckless, callous and willful. This reduction is a corrective feature built into our legal system. Furthermore, after that, both parties agreed to a settlement of the claim for a sum reported to be much less than the judge's reduced award. (Another corrective feature).
ADDITIONAL NOTE - Prior to the Liebeck case, the prestigious Shriner's Burn Institute in Cincinnati had published warnings to the franchise food industry that its members were unnecessarily causing serious scald burns by serving beverages above 130 degrees Fahrenheit.
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"The rising costs of Insurance"
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