Product Liability and Innovation Managing Risk in an Uncertain Environment (1994) / Chapter Skim
Currently Skimming:
Insurance: The Liability Messenger
Insurance: The Liability Messenger
Pages 131-137
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 131... ...
Insurers send a message to insurance buyers whenever they set premium rates and establish the terms and conditions of coverage. When, for example, a company manufactures a product that causes injury to a consumer, compensates the consumer for his or her loss, and is itself indemnified under an 131
|
From page 132... ...
Life insurance is probably as near to a science as the art of insurance underwriting comes. It is relatively easy to determine actuarially sound rates for particular individuals based on a great deal of experience with people of similar ages and lifestyles, for example.
|
From page 133... ...
In the pharmaceutical, chemical, automotive, and aviation industries, it is impossible to develop very useful risk assessment procedures because the number of variables is too great and the opportunity to isolate and analyze individual factors, and individual victims, does not exist. But the usual difficulties of underwriting product risks are compounded manyfold by factors external to the nature and harmfulness of the products themselves.
|
From page 134... ...
In one case, a dice manufacturer was sued when its dice allegedly emitted toxic fumes during a casino fire. While it was clear that the tiny volume of toxic fumes emitted by the dice did not contribute to any injury, that did not prevent the court, in a compassionate mode, from trying to arrange a nice compensation package for the injured party.
|
From page 135... ...
In the United States, putatively harmful substances are well publicized and presumed to be lurking everywhere. As a result of this generalized paranoia, underwriters must also factor into their risk assessments the possibility that a court will impose a large bodily injury judgment on an insured based on what is either minority-supported evidence or, in some cases, just main "junk science." Hence, uncertainty is piled on top of uncertainty.
|
From page 136... ...
For insurance to work as a message-bearer, it must be possible for insurance buyers to take measures to improve their loss experience. But the existence of a legal liability system that punishes good behavior as often as bad discourages insurers from staying in the game and leaves corporate risk managers with little to do but lobby their congressional representatives for national tort reform.
|
From page 137... ...
The continued growth in product liability awards and in statutory and judicial liabilities poses a major threat to a company's financial health. Insurers, who are in the business of responsible risk-taking, are understandably reluctant to sacrifice their own financial health to save their clients.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.