Liability Crisis: Is it Over?

June 24, 1988

Report Outline
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Is the liability insurance crisis of a few years ago over? Maybe. Insurance is more widely available, rates have stabilized and industry profits are up. But the controversy continues. Many consumers are finding that insurance isn't equally available everywhere; others point out that if rates have stabilized, it is at the high levels they reached in the midst of the crisis. And critics note that the cyclical nature of the insurance industry means that when one crisis ends, another may not be far behind.

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Little is heard these days about the liability insurance crisis. Only two years ago, the nation's newspapers were filled with horror stories about small businesses, medical practitioners, day-care centers and municipal governments that were facing ruin because their liability insurance premiums had doubled or tripled in cost. In some cases, they were unable to find coverage at any price.

Judging from the diminished media attention, the crisis appears to have abated—a view supported by the insurance industry. “Availability in most lines of insurance is no longer a problem,” states a recent flier put out by the Insurance Information Institute, a membership organization based in New York that represents the nation's insurers. The National Association of Insurance Commissioners reported at the end of 1986 that some previously hard-to-insure groups, such as day-care centers, nurse-midwives, restaurants serving liquor, truckers and exterminators, were finding liability insurance easier to obtain in at least a quarter of the states the association surveyed.

ISSUE TRACKER for Related Reports
Consumer Protection and Product Liability
Health Insurance and Managed Care
Insurance Industry