Plaintiff Profiles Can Help Risk Managers: Expert

By Caroline McDonald

NU Online News Service, May 14, 12:03 p.m.EDT?Risk managers and insurers who understand a customer'spropensity to sue are better equipped to assess future losses andquantify exposures, said the author of a study of the psychologicaland demographic factors of individuals who file lawsuits.[@@]

Results of the study, "The Propensity to Sue: Why Do People SeekLegal Action?" were released earlier this month by NationalEconomics Research Associates Inc., in New York.

Persons who are younger, poorer and less educated, who suffermore serious injuries are likeliest to sue, the report by FatenSabray, Ph.D., found.

Ms. Sabray analyzed raw survey data from a Rand Corp. study ofabout 3,000 individuals who experienced an injury. She found thepropensity to sue to be linked with the perception of fault and thetype of accident as well as individual demographic data.

The findings contrast, she said, with previous studies, whichexamine the cost and severity of an accident when trying to predictlitigation behavior.

Ms. Sabray told National Underwriter that in response tosuffering ill affects from a pharmaceutical, "you could have 100people who use a drug but only 15 of them could make a claim,"whereas another drug could potentially have more claims madebecause of the different demographic of its users.

"The personal characteristics of the people exposed could bevery important," she said, "their income group, their level ofeducation and their age."

She said risk managers and insurers could use the information tobenchmark the level of their claims. For certain products therewould be "no reason to expect a high number of claims," shenoted.

In general, across different types of personal injuries, "lesseducated people and lower income people are more likely to fileclaims," she noted. She said she suspects that "this has somethingto do with whether or not they have insurance, but I haven't beenable to verify that with this study."

Ms. Sabray added that even though older people are "less likelyto claim, on average, whether it's a products liability or a caraccident or work related," their propensity to claim has little todo with insurance.

The likelihood of actions being filed was found to be somewhathigher in Texas, Mississippi and California.

The propensity to sue was strongly associated with:

? Perception of fault: On average, a person who blames anotherparty, no matter the extent of injury, is about five times morelikely to sue than someone who attributes no blame. An injuredperson who misses 10 days of work and blames another for his or herinjuries is eight to 10 times as likely to sue as someone whomisses 10 days but does not attribute blame.

? Lower income: Individuals in the survey's lowest income groupwere 55 percent more likely to sue than those in the highest incomegroup.

? Age: The probability of a 40-year-old filing a claim is 25percent higher than a 60-year-old, according to the report.

? Level of education: An individual with more than a high schooleducation is 40 percent less likely to sue than someone with lessthan a 12-grade education and a similar injury.

? Severity of injury: The predicted claiming rate for a minorinjury is 11 percent, 14 percent for a moderate injury and 39percent for a serious injury.

? Type of accident: The probability for claiming action from acar accident is 3.5 times higher than for any other type ofaccident, the study found.