Archive Report
Archive Report
Causes of Insurers' Problems
Losses Attributed to Jury Awards, Inflation
Ajury in Brooklyn, N.Y., awarded singer Connie Francis $2.5-million as compensation for being raped in a Howard Johnson's motel room. In Alaska, a jury awarded $2-million to a man who had been shot in the ankle by a defectively designed revolver. In California, a jury awarded $4-million in punitive damages for a company's failure to pay a disputed auto liability insurance claim. A 19-year-old boy in California won $3-million after being paralyzed following a dive off a railroad trestle—a jury found the railroad company liable for not posting a “no driving” sign.
Those cases made headlines in 1976. They reflect a phenomenon that insurance companies call “social inflation,” the tendency of judges and juries to make larger ...