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NEW YORK, January 13, 2004 - A partnership approach is key to solving the tort crisis in the United States, a group of legal experts told industry executives attending the eighth annual Property/Casualty Insurance Joint Industry Forum, held here.

In a session entitled "Insurance and the Civil and Criminal Justice Systems," a panel comprising two judges and a district attorney agreed that ÌìÃÀ´«Ã½ industry and the judicial system need to work together to remedy a system which they characterized as "out of control."

Jess Dickinson, Mississippi Supreme Court Justice and Paul Niemeyer, U.S. Court of Appeals, Fourth Circuit, gave the judge's perspective on civil litigation and tort reform.

Justice Dickinson said the lack of fair, balanced and reasonable judges in the legal system is a growing problem. "In Mississippi our system is set up such that our judges are elected at every position from trial to appellate courts. When judges are placed in that position because of an election and those elections are guided by contributions, those contributions are always jealously guarded and put together by people who want to control the judicial process."

Justice Niemeyer said awards for pain and suffering and punitive damages had become totally irrational, with no sense of planning or predictability. "If someone breaks a leg and the jury awards $50,000 for pain and suffering and we as a court are going to review that on a rational basis, what is the standard we are going to apply? What are the criteria, what is the measurement?"

Justice Niemeyer questioned whether juries had adequate tools available to enable them to make rational decisions when it comes to awarding damages. "The juries are well-motivated but they have zero tools. We should give them the rules in advance and say if you find this circumstance you can award a bonus of pain and suffering in this amount," he said, adding, "the problem with run-away jury awards is there are no standards and we haven't imposed them as part of our rule of law."

Panelists agreed that businesses and ÌìÃÀ´«Ã½ industry are often too quick to settle cases and claims. Richard Brown, District Attorney, Queens County, N.Y., noted that auto fraud is a serious problem that is directly related to the no-fault system of insurance. "The no-fault system provides in essence the first $50,000 medical expenses paid for by your own insurance company. As long as courts and juries and ÌìÃÀ´«Ã½ industry continue to go ahead and feed the monster out there, there is little doubt in my mind that these no-fault rings, the doctors and lawyers who are involved in this process of staging accidents and submitting bogus claims are going to continue."

According to Brown, recent success in tackling the auto fraud problem in New York is the result of a working partnership with law enforcement officials, the department of insurance and ÌìÃÀ´«Ã½ industry. "What we have got to do all together is let it be known that this kind of activity is just not going to be tolerated and that people are going to go to jail for it, the same way as we sent people to jail for auto theft."

Justice Niemeyer spoke of the growing problem posed by class action lawsuits, noting that class action is a new and very powerful institution, more powerful than any aspect of government. "We have never been able to regulate tobacco in Congress and yet it is being regulated in the courts," he said. "We are going to have guns regulated and alcohol is on the threshold. This regulation comes from the power of the class action and as a consequence the attorneys who initiate the class actions are initiating the agenda."

Panelists expressed concerns that the bill before Congress to limit class actions might remove cases from state to federal court at a very low threshold.

"The danger of a bill that is too aggressive in this regard is that it will automatically take any state tort action and pull it up into the federal courts," said Justice Niemeyer. "This presents a conceptual problem of destroying the tort system in the states."

Justice Dickinson added that legislative reform was unlikely to make a difference unless the people involved in the judicial system had integrity. "The bottom line is that you have to have participants in the system - voters, jurors, judges and lawyers - who have integrity and are willing to make the system work the way it is supposed to work rather than take advantage of it," he said. "Until you get to that point, people are always going to take advantage of the system."

The panel was moderated by James Copland, Director, Center for Legal Policy, The Manhattan Institute.

The Property/Casualty Insurance Joint Industry Forum was created to provide leaders form the widest spectrum of the p/c insurance and reinsurance industry with an opportunity to meet with each other in discussion of topics of general interest.

The organizations jointly sponsoring the Forum represent a broad base of insurance interest and audiences. In addition to the Insurance Information Institute (I.I.I.), they include: The American Institute for Chartered Property Casualty Underwriters (AICPCU), American Insurance Association (AIA), Association for Cooperative Operations Research & Development, The Geneva Association, Institute for Business & Home Safety (IBHS), Insurance Services Office, Inc (ISO), International Insurance Society (IIS), National Association of Mutual Insurance Companies (NAMIC), National Council on Compensation Insurance (NCCI), National Insurance Crime Bureau, Property Casualty Insurers Association of America, and the Reinsurance Association of America (RAA).

Panel: Insurance and the Civil and Criminal Justice Systems

From Left to Right: James R. Copland, director of the Center for Legal Policy at the Manhattan Institute for Policy Research; Richard A. Brown, district attorney of Queens County, New York; Jess H. Dickinson, Mississippi Supreme Court Justice; Paul V. Niemeyer, United States Court of Appeals for the Fourth Circuit.