Health care can be central to both the domestic and
foreign policies of the United States, said Tommy Thompson, former
governor of Wisconsin and U.S. cabinet secretary, in an address to the
AAIS Main Event. Thompson, who has formally announced his candidacy for
the Republican nomination for president, was the keynote speaker at the
event, the association’s annual executive conference.
In his remarks, Thompson noted that the U.S.
currently spends nearly 16% of its gross domestic product on health
care, a figure that leads the world and is twice the percentage spent by
Japan, the second leading nation in health care spending.
Yet, he added, if someone were designing a national
system for heath care, “Nobody in this room would set up a health care
system like we have today.”
Thompson told the audience he is seeking to make
health care a central issue in the 2008 presidential campaign, and laid
out four health care principles he would pursue if he becomes president:
·
To devote a greater share of money and resources, both
public and private, to wellness;
·
To promote better management of diseases when people
become ill;
·
To increase the number of people with health insurance
coverage; and
·
To promote more and better use of information technology
in medicine.
If health care reform is not forthcoming, Thompson
said, “the healthcare system we have today has got until 2013 before it
is going to collapse.” That is when the Medicare system is projected to go
into deficit.
Thompson said health care can also be an important
foreign policy tool of the U.S.
Citing experiences in Afghanistan and Indonesia
where U.S. aid to distressed populations helped turn around negative
attitudes toward the U.S., Thompson called on the U.S. to implement
“medical diplomacy,” a program of sending young doctors around the world
on hospital ships to help care for sick people.
Thompson departed from his discussion of health care
to lay out his program for managing the conflict in Iraq, which consists
of three basic elements:
·
He would ask the elected government of Iraq to vote on
whether it wanted American troops to remain in the country. If such a
vote were “yes,” Thompson reasoned that American military operations in
Iraq would be recognized as legitimate. If the vote were “no,” Thompson
said, “then we should get out.”
·
Each of Iraq’s 18 territories would be encouraged to elect
provincial legislatures which would, presumably, be dominated by the
principal ethnic and sectarian groups in each province (Sunnis, Shiites,
and Kurds). Those elections, said Thompson, could help “get rid of the
internecine civil war.”
·
Iraqi oil revenue would be divided roughly into thirds,
one third going to the federal government, one third to the provincial
governments, and one third to individual households. By giving
households a direct share of oil revenues, Thompson said, the Iraqi
people would have capital for business formation and investment, and a
stake in preserving the nation’s oil commerce.
There has been a “sea change” in insurers’ exposure
to personal injury, according to one speaker at the AAIS Main Event.
Charles Kingdollar, a vice president in the emerging
issues unit of General Reinsurance, told attendees at the conference
that there are literally hundreds of millions of “blogs” operating on
the Internet, if one includes all the postings that appear on social
networking sites such as “MySpace.” Some sites, called “gripe sites,”
are set up to gather and post complaints about specific businesses.
Litigation over libel and slander claims arising
from Internet postings is just beginning to establish the legal
parameters of exposure, said Kingdollar, but there have already been
some multi-million dollar verdicts, one for more than $28 million, and
another for more than $11 million..
“When you see large awards like this, they
definitely get the plaintiffs’ bar’s attention,” Kingdollar said. Even
smaller awards that are more typical generally amount to more than the
full limit under homeowners and personal umbrella policies, he said.
“Personal injury coverage has been typically
added to a homeowners policy for little or no added premium or
underwriting, and rightly so,” Kingdollar said. “There was little loss
history, because [previously] an insured would have had to publish
something [to be sued for libel].
“How many of your insureds ever published
anything? Today, however, there’s been a sea change in personal injury
exposure due to electronic communication.”
While individuals have far greater capability than
ever to disseminate injurious comments, courts are also making it easier
to file and win defamation suits.
In particular, some state and federal courts have
begun to recognize the concept of “defamation by implication,” under
which a person can be found guilty of libeling or slandering another if
he or she presents facts in a way that leads to a defamatory conclusion,
even if the facts are technically correct.
In response to the growing exposure, insurers are
starting to refine their definitions of what constitutes a personal
injury offense and are implementing policy language to limit the amount
that is paid to one claimant.
Most insurers have some exposure to food-related
liability claims, and few of them would be surprised to learn that
plaintiffs' attorneys are inventing new ways to expand the notion of
products liability as it applies to food.
David Herman, senior counsel and senior director of
claims for the Food Products Association, reported on the latest trends
in food-related claims at the AAIS Main Event in Charleston, S.C.
At one time, product liability for food was limited
largely to basic defects in the product itself or in its design,
manufacturing, or processing.
"Now," said Herman, "theories [of product liability]
revolve around communications between the buyer and seller."
According to Herman, a food producer or distributor
is as likely to be sued for improper or deficient instructions for the
preparation of a product, or for insufficient warnings of its potential
dangers (such as the presence of allergens), as it is for the quality of
the food itself.
As an example of the trend, Herman cited a $600,000
verdict against Heinz for a woman who injured her finger on a pull-top
can.
The duty to warn food consumers may grow as an
increasing number of substances are identified as hazardous.
Herman noted that researchers have discovered trace
amounts of the cancer-causing chemical Acrylamide in starchy products
that are cooked at high temperatures, such as french fries.
That discovery has led to products liability
lawsuits against producers of French fires and potato chips who have not
posted acrylamide warnings, where a successful ballot proposition has
mandated that all products have warnings if they have carcinogenic
substances.
In other communications-related litigation, Herman
noted that Kraft Foods was hit with a class action lawsuit for promoting
a product as guacamole when avocado accounted for less than 2% of the
product. Kraft was also sued for advertising its Capri Sun beverages as
"all natural" when, in fact, they contain artificial ingredients.
Food producers have generally prevailed against
plaintiffs who have tried to make them responsible for obesity in
individuals. Yet, one negative impact of those suits is that sellers of
food products may be found liable for damage or injury that is tied to
marketing to individuals--particularly children--who are more likely to
injure themselves by using a product.
According to Herman, plaintiffs have recently begun
to allege that alcohol manufacturers target youth through deceptive and
negligent advertising, and parents have sued seeking to recover money
their underage children spent on alcohol promoted in that fashion.
Awards granted for food-related claims can be very
high, Herman noted.
Among the more recent cases he cited, in 2003 a
California court awarded $16.7 million to the parents of a girl who
choked to death on a gel candy, and in 2001 Subway Corp. settled a case
for $10 million in favor of the family of a child who contracted
hepatitis A from one of the chain's products.
"Juries are ruling on these cases, and giving
away some substantial money," Herman said.
There may not be a lot of people outside of Florida
with much sympathy for the residents of the Sunshine State, but Florida
has experienced some genuinely bad luck in recent years.
Seven hurricanes struck Florida in a 13-month period
of 2004-05, causing $37 billion in insured losses, according to Sam
Miller, executive vice president of the Florida Insurance Council, in an
address to the AAIS Main Event in Charleston, S.C.
Historically, to have three hurricanes make landfall
in one state in one year is something that typically happens once every
35 years, Miller said, and the last time four hurricanes made landfall
in one state in a 12-month period was 1885, in Texas.
With 80% of its building property on or near its
coastlines, there's little wonder that property insurance has become a
consuming issue for the state government.
"Polls show that insurance rates are the number one
issue in voters' minds, even more than education," Miller said. "That's
never happened before."
Unfortunately, said Miller, the state government's
reaction to the problem is not likely to help matters.
Recent legislative measures requiring companies to
provide premium discounts for mitigation measures and make available
policies without windstorm coverage amount to "micro-managing the
property/casualty business in Florida," Miller said.
Although Florida was spared a hurricane hit in
2006, "we cannot be so lucky as to have another year without a hurricane
landfall," he added.
When that happens, the state-sponsored reinsurance
program, to be funded in the wake of a catastrophe by the sale of bonds
that will be paid off by assessments on policyholders, could incur
liabilities of unforeseeable dimensions.
"Somewhere down the road we're going to have a
category 5 financial catastrophe," he said. "A huge bill is going to
come due some day."
Fortunately, said Miller, neighboring states seem
to be copying the most constructive aspects of Florida's response to
hurricane losses, and avoiding the worst types of market controls and
distortions.
According to Miller, Louisiana, Alabama, and
Mississippi have all adopted or are considering statewide building
codes, and several states are creating catastrophe funds to have money
on hand in the event of a devastating natural disaster.
Some of Florida's newspapers have come out loud and
clear against the state's heavy-handed intervention in the insurance
market.
Miller quoted from an editorial published by the
Scripps newspaper chain, saying, "There's not much government can do
other than have unintended consequences. Legislators must be realistic
leaders, not pandering populists."
Nanotechnology involves working at the smallest
level imaginable to humans, but it is poised to institute very big
changes in the way materials are manufactured and processed--and in the
risks they will pose to society.
Attendees at the AAIS Main Event heard an overview
on nanotechnology and its implications for risk management and insurance
from Dr. Robert Blaunstein, a physicist who worked for several insurers
before starting his own firm, Nanotechnology and Insurance, based in
Santa Monica, Calif.
According to Blaunstein, nanotechnology entails the
engineering and fabrication of structures with one dimension between one
and 100 nanometers, a nanometer being one billionth of a meter.
To illustrate just how tiny nanoparticles are,
Blaunstein told the group that a human hair is 60,000-80,000 nanometers
wide, and a white blood cell is about 10,000 nanometers long.
Using atomic force microscopes, scientists and
engineers are able to see nanoparticles, however, and manipulate them to
create new substances that are being used to diagnose and treat
illnesses, accelerate the speed at which information is processed and
communicated, generate energy, and enhance properties of tangible
products.
For example, Blaunstein said, cylindrical
constructions called "carbon nanotubes" have been designed to create a
metal that is less dense than aluminum yet stronger than steel and
capable of conducting electricity more efficiently than copper.
According to Blaunstein, there are about 700
consumer products currently available that incorporate substances
engineered at the "nano" level, and the number is increasing
exponentially.
"The money being spent on research is being
increased substantially," he said. By 2015, Blaunstein estimates, there
will be at least $1 trillion spent worldwide on goods and services
derived from nanotechnology.
While Blaunstein is generally well-disposed toward
the benefits of nanotechnology, he acknowledged that it entails a range
of risks that are not known at this time.
In particular, the "ultrafine" particles created by
nanotechnology can enter the human body and, thus, interfere with
biological processes. They can even penetrate the substantial blood
barrier that shields the human brain, Blaunstein said.
This is an important consideration, he said, when
one considers that sunscreen and cosmetics are among the products that
use substances engineered, in part, at the nano level.
Equally important, he said, are questions concerning
the impact of nanomaterials on ecosystems.
In all, nanotechnology could result in new risks for
human health and safety, the environment, and products liability.
"There's a lot we don't know about," he said. "As
insurers, we've learned from asbestos and other materials that we had
better be ahead of the game."
