Tuesday, December 14, 2004
Two juries arriving at conflicting verdicts determined that Larry Silverstein, leaseholder on the WTC when the hijacked planes hit, should receive insurance company payouts totaling $4.6 billion. Dwight Meredith is stunned that . . . .
[T]he insurers were quick to note that a payout of $4.6 billion would not materially affect their financial performance. Travelers, on the hook for more than $400 million, said that its liability would be "will be immaterial to the company." The verdict increased Allianz's exposure by $80 million. That payment "would have no material impact on the insurer's 2004 profit."And why is Dwight Meredith stunned again, exactly? Because:
Munich Re now has potential exposure for in the range of $2.6 billion. What effect will that have? Not much, apparently:"The verdict won't affect our 2004 earnings, nor our reserves for the Sept. 11 attacks," Munich Re spokeswoman Anke Rosumek, said. Ms. Romumek also said Munich Re had previously estimated Munich Re's overall burden for WTC attacks at $2.6 billion, and even after this decision, "the burden is still within our reserves, so we don't have to boost them."
For the purposes of comparison, the total amounts paid out in judgments and settlements in all doctor malpractice cases for the year 2002 (the last year for which I have figures) was about $4.2 billion . . . .
It seems interesting that the insurance industry can pay out $4.6 billion to Larry Silverstein and not a single company seems to be adversely effected, but paying $4.2 billion for a year's med mal cases is the end of the world. The market for property and casualty insurance is a heck of lot bigger than for professional negligence but still . . . .
No one suggested that the fact that one jury found one occurrence while a second jury found two occurrences meant that juries are unable to make rational decisions. No one suggested that a verdict imposing an additional billion dollars of liability would prevent other buildings from being insured. No one suggested that that Larry Silverstein should not be made whole if that is what the contract called for. Mort Zuckerman did not make up a bunch of crazy stories about how property owners tried to game the system and stupid jurors went along. Newsweek did not run a cover story in which Stuart Taylor and Evan Thomas just flat lied about the size of the verdict.
Why does the media treat verdicts in contract cases so differently than verdicts in tort cases?
Teresa [Nielsen Hayden] at Making Light knows the answer to that one:. . . These are corporations which stand to have to pay out large sums to satisfy legitimate individual claims. Note that: legitimate claims, as in “the corporation knew their product was lethally dangerous under circumstances that were bound to occur sooner or later, and consciously decided not to do anything about it.” They put millions of dollars into spreading the idea that juries commonly award ridiculous damages in trivial lawsuits, and that we’ve somehow become a lawsuit-happy society. They’re lying...
Never doubt that it’s worth their while to lie to you. When you’re talking about really big corporations and really big money, it’s worth their while to lie to you very, very elaborately.