Insurance Crisis Facts Sheet
I have heard of people being paid millions
for frivolous cases with only themselves to blame.
MYTH: A man who bought a Winnebago motor
home set the cruise control at 110 kph and left the drivers seat to make
coffee. The Winnebago crashed. He sued Winnebago for not warning that
cruise control could not drive for him and was awarded $1,750,000 plus
a new Winnebago.
FACT: This case is fake - never happened!
The Winnebago company confirms it's a lie: http://www.winnebagoind.com/contact/index.php
Is it true that doctors are being forced out
because of skyrocketing malpractice claims?
No. Negligent doctors and the mismanagement of medical insurer UMP are
to blame for the increase in doctors' insurance premiums.
According to the WHO, Australia has the highest rate of medical error
in the world.
Premiums should be related to each doctor's safety record so that careless
doctors pay higher premiums than the majority who take proper care for
patients.
Is it true that the insurance crisis was caused
by consumer lawsuits?
No. The insurance crisis was caused by several factors including:
- fierce undercutting among competitors;
- the collapse of HIH;
- the worldwide increase in re-insurance costs after 9/11;
- the mismanagement of company funds;
- outrageous salaries paid to insurance executives.
- All of these forced premiums up, not personal injury claims. There is no evidence that consumer litigation has any impact on insurance rates.
What about the McDonalds coffee case?
MYTH: A woman was awarded $50 million
for being scalded with McDonalds' coffee in the USA.
FACT: The grandmother had 2nd and 3rd degree burns over 6% of her body, including her thighs, buttocks, genitals and groin. She had skin grafts and a long painful recovery. McDonalds admitted that it kept coffee at 180°F-190°F to maintain optimum taste (and maximise sales) - way above the accepted safe temperature of 140°F. Their own experts testified that their coffee was a dangerous burn hazard. Over 700 previous customer burns occurred. She asked McDonalds for $20,000 and only went to court after they snubbed her. The jury ordered $160,000 compensation and $2.7 million (equivalent to McDonalds' coffee sales for one day) punitive damages as punishment for their reckless conduct. The court later reduced the punitive award to $480,000. (Note - Big Business has successfully lobbied for the outlaw of punitive damages in Australia.)
Should people assume responsibility
for their own safety?
Yes. Everyone should take care for their own safety and behave with care.
If someone maims another through recklessness, they should be accountable
for the damage they cause. No more, no less.
Why should a person injured through no fault of their own have to bear
the life-long cost of someone else's carelessness?
The real problem is safety -
not lawsuits
The financial cost of avoidable injury every year in Australia is more
than $50 billion. (By comparison the annual Qld budget is $22 billion).
Not to mention the personal cost to consumers and their families. Eliminating
lawsuits hasn't reduced the number of injuries - it has just transferred
the cost to the victim and the taxpayer.
Lawsuits hit unsafe businesses in the hip pocket. They reminded us all
to behave carefully and penalised the shonks who are all about profits
and thought of safety as a waste of money.
Governments should have focused on injury prevention and encouraged business
to invest in safety. Restricting lawsuits will increase accident rates
because it has sent the wrong message to industry - that lives and limbs
are not as important as profits.
Why should taxpayers have to
pay?
They shouldn't. But that's the effect of drastic new laws pushed by insurance
companies and big business in 2002 and 2003. Now at-fault organisations
are protected from accountability and much of the cost of the damage they
cause has been transferred to the taxpayer.
That's good for dodgy businesses and their insurers but a disaster for
everyone else. A consumer maimed through no fault of their own has to
survive on social security. Our already struggling Medicare, public hospital
and welfare systems are under enormous extra pressure.
Why are there so many lies told
about the justice system?
Big business resents being made to pay for shortcuts and mistakes they
try to hide. The privileged begrudge citizens who come from modest backgrounds
challenging - in a court - the most powerful corporations and sometimes
winning.
Big business has gained a huge amount from the courts being closed to
consumers and their lawyers being muzzled. Their massive investments in
front groups, lobbying soft politicians and in misinformation campaigns
to undermine the public confidence in the justice system has paid huge
dividends.
It was all designed to get people to say: "Gosh our legal system
is bad! Golly, let's fix it by making sure there are no more lawsuits
against our friends, the big corporations." And it worked. New laws
passed in 2002 and 2003 have permanently removed citizens' rights that
took a century to achieve.
What about insurance company profits?
All four Australian insurers have boasted record profits during 2003 and
2004.
QBE posted an annualised profit of $626 million after a wave of gouging
exorbitant premium increases from customers. Suncorp stunned with a 112%
surge in its insurance result to a record of $233 million, part of the
company's overall record of $582 million profit. IAG is also swimming
in cash with a 400% profit increase to nearly $300 million and Promina
Insurance announced a $292 million profit for just 6 months.
