Vanderbilt Law Review

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A perceived crisis in the nation's liability insurance system erupted in 1986. Some businesses saw their insurance premiums double in a period of two years, and others found the coverages they required to-tally unavailable. While trial lawyers and consumer groups asserted that insurance company investment and pricing practices, as well as huge profits, had caused the crisis, others alleged that an increased"claims consciousness" among the American public had spawned the liability insurance affordability and availability problems. Richard Berman, a national representative of the United States Chamber of Commerce, proclaimed that the judicial system had "gone berserk" and that litigation was "America's equivalent of a national lottery.""The sparse academic literature available on the issue of claims frequency addresses solely those claims that result in litigation. This type of analysis is incomplete and potentially misleading because it does not reflect the larger number of liability claims against insureds that are paid or otherwise closed without litigation. The frequency of litigated cases is not exclusively a function of claims consciousness, but is instead a product of both claims consciousness and the willingness of insurers to avoid litigation by paying claims without a battle. In other words, any observed increase in litigation might result as much from insurers' and defendants' refusing to pay claims without litigation as from increased claims consciousness. In any event, the literature available regarding litigation statistics does not suggest that there has been a litigation "explosion" in the civil justice system.

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