Liability Insurance:

Effects of Recent 'Crisis' on Businesses and Other Organizations

HRD-88-64: Published: Jul 29, 1988. Publicly Released: Aug 29, 1988.

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Pursuant to a congressional request, GAO provided information on liability insurance for U.S. businesses and other organizations for 1985 and 1986, focusing on: (1) availability; (2) cost; (3) coverage adequacy; and (4) state regulatory actions.

GAO found that: (1) most insurance buyers surveyed maintained liability insurance coverage throughout 1985 and 1986, but cancellations and nonrenewals occurred for some less frequently purchased types of coverage; (2) large organizations had difficulty purchasing adequate primary environmental liability coverage; (3) the percentage of large organizations whose coverage was adequate declined from 1985 to 1986 for some types of insurance; (4) although costs increased for the types of coverage purchased most often, the cost of liability insurance as a percentage of annual gross receipts was relatively small; (5) large organizations experienced larger premium increases than did smaller organizations; (6) despite increased costs, coverage amounts generally remained the same or decreased; and (7) some state insurance departments adopted programs to assist buyers in locating insurers offering coverage and believed that availability problems were easing. GAO also found that the increased insurance costs probably did not: (1) have a large effect on the costs of goods and services that large organizations provided; or (2) threaten the viability of the organizations surveyed.

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