Risk Management: Balancing The Costs-Requiring Insurance Di

The liability insurance industry is suffering a crisis causing a lack of availability, reduced coverage, and expensive premiums. Factors contributing to this crisis include: 1. the litigious mindset of the American public, 2. the lack of tort reforms to limit awarded damages, and 3. the broad scope...

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Bibliographic Details
Published in:The Woman CPA 1988-04, Vol.50 (2), p.8
Main Authors: Gurganus, Frankie, Holley, Charles L
Format: Article
Language:English
Subjects:
Captive insurance
Claims made coverage
Disclosure
FASB statements
Insurance coverage
Insurance industry
Liability insurance
Litigation
Risk management
Self insurance
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Summary:The liability insurance industry is suffering a crisis causing a lack of availability, reduced coverage, and expensive premiums. Factors contributing to this crisis include: 1. the litigious mindset of the American public, 2. the lack of tort reforms to limit awarded damages, and 3. the broad scope and definition of liability. Among the current insurance options for companies are occurrence policies, claims-made policies, self-insurance, and captive insurance companies. Financial Accounting Standard Board's (FASB) Statement of Concepts 1, FASB Statement 5, and the final report of the Accounting Standards Executive Committee support the disclosure of self-insurance, but none explicitly requires such disclosure. To protect the financial statement users, the disclosure of risk management via insurance should be required, not just encouraged, for publicly held companies. The following disclosures should be required of publicly held companies: 1. insurance premiums paid, 2. the amount and description of coverage, 3. the amount of settled claims, and 4. the amount of recoveries.
ISSN:0043-7271