Тема: The Insurance Crisis of the 1980 s.
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The Insurance Crisis Of The 1980 s.
The management of risk has become a major issue for businesses throughout the country. Every day you read or hear about a major earthquake, flood, fire, airplane crash, or truck accident that destroyed property or injured someone. Such reports are so much a part of the news that we tend to accept these calamitous events as part of everyday life.
Such events mean much more to the businesspeople involved. They must pay to restore the property and compensate those who are injured. In addition to the news making stories, there are thousands of other incidents that might involve businesspeople in lawsuits. They include everything from job-related accidents to people being injured from using a business’s products.
What businesspeople are learning is that the courts are awarding higher and higher dollar awards to people who are hurt. Often the amount paid to policyholders is very high because the court tacks on „punitive damages” to the payment. Punitive damages means payments in excess of the loss to warn companies not to endanger people with their products.
Organizations must recognize this upward trend in insurance claims and develop strategies for dealing with it. One way to manage risk is to buy insurance, but insurance is getting very expensive. The experience makes insurance unaffordable for many businesses and created what was considered an insurance crisis in the 1980 s.
Insurance losses had risen dramatically, and insurance companies were losing money in 1984 and 1985. That led to huge increases in insurance rates in 1986. The insurance companies raised premium prices high enough to cover all the risks, so coverage for day-care centers, bus lines, nurse-midwives, commercial fishing companies, and others were simply not being renewed. Many other companies could not get insurance at all because their risk of loss was also too high. One way insurance companies increase profits is by minimizing losses. They do that by refusing to insure high-risk products and/or companies.
If insurance could be found, it was at unbelievably higher prices. For example, the Southern California Rapid Transit District had no accidents during the year and its insurance went up from $67,000 to $3,2 million, a 4,700 percent jump in one year! The tripling of costs for Mr. Popp’s Porsche-Audi dealership seems cheap by comparison.
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