As an attorney representing people with serious injury cases in Georgia, I have to keep an eye on the solvency of the insurance companies that are contractually obligated to pay legitimate liability claims against their policyholders.  For most of my career, the solvency of insurers was seldom if ever a big concern.

In today’s economy, however, we can’t take anything for granted.  With the giants of industry and finance in deep trouble, insurance companies are not immune.  Heavily invested in stocks and commercial real estate, insurers are vulnerable to the downdraft in those sectors.

Reinsurers face similar problems. Reinsurance is a means by which an insurance company can protect itself with other insurance companies against the risk of losses. Insurance companies offset some of their risk exposure by selling it to reinsurers.

Due to the recession, the bear market and the credit crisis, more insurance companies are looking to reinsure more of their books of business in order to free up capital. But the reinsurance companies are facing all of the same problems, plus in some cases poor international currency exchange rates.

Reuters reported on April 1 that reinsurance rates for property catastrophe insurance rose by an average 8% worldwide based on January renewal rates. Reuters also reported in the same news release that reinsurance costs for US catastrophe risks rose by as much as 40% in 2008. So, it is clear that insurers around the world, and especially in the US, are struggling to find ways to reduce their risks in this very bad economic and financial time.

In this highly integrated world economy, everything is intricately interrelated. Problems in financial markets and real estate hurt insurance companies, which in turn hurts anyone who relies upon payments by insurance companies.

And when insurance companies experience financial problems, even in relatively ordinary times, they typically blame people who have been catastrophically injured for running up "frivolous" lawsuits, and push for new rounds of "tort reform."  In other words, bad things roll downhill.

So what are mere mortals to do about this?  I have my own ideas, but don’t choose to publish them and give the other side of my cases a window into my mind.


Ken Shigley is a trial attorney in Atlanta, Georgia who was recently listed for the fifth consecutive year as a "Super Lawyer" (Atlanta Magazine).  He is also included among the "Legal Elite" (Georgia Trend Magazine) and in the Bar Register of Preeminent Lawyers (Martindale).  Mr. Shigley is a Certified Civil Trial Advocate of the National Board of Trial Advocacy. With longexperience representing parties in trucking and bus accidents, products liability, catastrophic personal injury, wrongful death, brain injury, spinal cord injury and burn injury cases, he now serves as Secretary  of the 40,000 member State Bar of Georgia.