More on insurance and catastrophic events: can we expect de facto limits on liability recoveries?

by Kenneth A. Solomon

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Reviews large technological systems to locate situations that have potential for catastrophes in which liabilities exceed insurance or assets, thereby imposing de facto limits on liability recoveries. Such events as an LNG explosion in a population center, or massive nuclear reactor accident near a population center are found to involve potential liability far exceeding available resources, whether they be insurance, corporate assets, or the annual budget of the Federal Disaster Assistance Administration. Liability limits, whether by law or de facto in nature, appear to be prevalent in society. They represent a problem which should be solved in a coordinated way, and include other issues that have been raised, such as the possible loss of incentive for safety improvements.

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