On the Hawaiian island of Molokai, pregnant women who want a doctor in attendance when they give birth fly to neighboring Oahu or Maui. The five Molokai doctors who once delivered babies have stopped doing so because malpractice insurance would cost them more than the total of any obstetrical fees they could hope to collect. Will County, Ill., last week closed its forest preserves until it can get a new liability policy on them–if that can be done at all–and Blue Lake, Calif. , has shut its skating rink, parks and tennis court. Hundreds of other towns in California and in New York State are “going bare.” That is, they simply cannot get liability insurance. The Texas sesquicentennial cattle drive, part of the state’s celebration of 150 years of independence from Mexico, bogged down this month after one day on the road because liability insurance covering the 49 longhorn steers that were involved was doubled and the organizers could not afford it. The drive resumed last Friday with only 28 steers, whose owners agreed to pay for the insurance themselves. Century Cartage Co., a small truck line out of Atlanta, is still in business only because the Georgia Public Service Commission approved an “emergency” 5% rate increase for its customers. But that boost came nowhere near meeting the cost of liability-insurance premiums that doubled to $48,000 last year and then leaped to $114,000 at the start of 1986. Outrageous? Yes. Ridiculous? In many cases. Unreasonable? Certainly. And yet the examples represent just a small sampling from a rising flood of problems growing out of what has become a new national crisis. Given the litigious nature of American society these days, just about any kind of business, profession or government agency is likely to become the target of a suit alleging malpractice or negligence resulting in personal injury. That makes liability insurance, the kind that pays off on such claims, just about as vital as oil in keeping the economy functioning. But in the past two years, liability insurance has become the kind of resource that oil was in the 1970s: prohibitively expensive, when it can be bought at all. The result is a pinch from which few can escape–not even liability specialists like J.B. Spence or Robert Rearden. Spence, a Miami lawyer, is the kind of attorney insurers often blame for their troubles. He has won and earned a healthy slice of several multimillion-dollar awards for clients who suffered personal injuries. But if Spence should be sued for malpractice or negligence, as is happening to lawyers more and more, he would have to pay any court-ordered damages out of his own pocket. “There is no market that will sell me liability insurance,” says Spence. “I am going bare, and it is a frightening prospect.” Rearden, president of Duncan Peek Inc., an Atlanta insurance brokerage, earns commissions selling policies at soaring premium rates. But when the time came to renew his own professional liability policy, his carrier wanted to jack up his $13,000 premium by 861%, to $125,000; Rearden had to scramble to find another company that would only triple his premium cost. “And that’s me, and I’m in the insurance business!” wails Rearden. “That’s what I mean when I say this crisis is affecting everybody.”
