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A&A SURVEY: DOMESTIC ISSUES UNDERMINE U.S. COMPETITIVENESS IN GLOBAL MARKETPLACE

 /ADVANCE/NEW YORK, April 26 /PRNewswire/ -- American companies are plagued by a crosscurrent of forces that undercut their ability to compete globally, according to a national survey by Alexander & Alexander Services Inc. (A&A).
 For the sixth consecutive year, A&A's Government & Industry Affairs office polled those responsible for risk management and related financial decisions. More than 1,900 executives were asked to rate the importance of 84 public policy issues.
 "Our findings highlight volatile sociopolitical and economic issues that are undermining U.S. businesses," reports Robert H. Moore, A&A senior vice president. "Most devastating is the whiplash effect of skyrocketing health care and workers compensation costs in combination with an inefficient tort system. These burdens handicap American companies that compete with foreign corporations operating without such constraints."
 CONCERNS AMPLIFIED BY NEW ADMINISTRATION
 In addition to such tangible issues, the advent of the Clinton administration is ushering in the specter of more taxes and regulations. Dr. Moore reports, "The mere prospect of possible Clinton administration tax and regulatory initiatives ranked 10th in our findings."
 The survey also underscores business apprehensions about President Clinton's pledge to finance health care for all Americans. Spiraling health care costs -- which may approach $1 trillion by the year 2000 -- tied tort reform as the number one issue.
 Ron W. Forrest, chairman and CEO of Alexander & Alexander Inc., A&A's U.S. risk management and insurance services subsidiary, notes, "Health care costs are growing at twice the rate of the rest of the economy. The nation is facing conflicting pressures to reduce costs yet provide protection for nearly 37 million Americans with no health insurance."
 Compliance with the Americans with Disabilities Act (ADA) and AIDS workplace safety ranked in the top 15 -- further evidence of anxiety over potential costs from regulation and court rulings.
 "If there are new regulatory initiatives, costs will inevitably be passed on to employees through lower benefits and pay, and to customers through higher prices," reports Dr. Moore.
 THE TROUBLED WORKERS COMP SYSTEM
 Five of the top 15 issues were related to the nation's struggling workers comp system:
 -- Cost-shifting to compensate for underfunding in group medical and public programs.
 -- The increase in claims for mental and nervous disorders.
 -- Limiting employers' ability to review workers comp claim histories of job applicants.
 -- Implementation of cost-containment strategies.
 -- Easier proof for occupational disease claims and higher benefit requirements.
 "Unfortunately, most Americans don't understand this national crisis. The deterioration in the workers comp system is not only eroding corporate America's bottom line, but it undercuts our international competitiveness and is hampering economic recovery," Dr. Moore said. He noted that the system cost employers nearly $70 billion in 1992.
 LEGAL COSTS HAMPER U.S. COMPETITIVENESS
 Tort reform, which has ranked prominently in the survey findings each year, is another particularly troublesome area. Capping non- economic and/or punitive damages and modifying the joint and several liability doctrine were among businesses' foremost concerns.
 Recent data suggest that in 1991, U.S. tort costs totaled $132.2 billion. By the year 2000, expenditures are forecast as high as $300 billion annually.
 SELF-INSURANCE TRENDS
 Self-insurance trends, including state regulation and identifying tax efficiencies, ranked fifth in importance. Despite generally favorable insurance market conditions, many large companies continue to investigate ways to use or expand self-insurance alternatives.
 NO FUTURE RELIEF
 A&A asked executives to predict which issues would be the most troublesome in the future. Overwhelmingly, they indicate that in three to five years they still expect to be facing the need to reform and rein in the costs of America's workers comp and health care systems.
 A&A's survey focused on legislative and regulatory issues. Typical respondents represented companies with sales of $500 million and higher, with half generating sales of at least $1 billion.
 The research was conducted by A&A Government & Industry Affairs Inc., Washington, D.C., and Radford Associates, part of the Alexander Consulting Group Inc., a human resource management consulting company.
 A&A Services Inc. is a global organization of professional advisers providing risk management, insurance brokerage and human resource management consulting services from offices in more than 80 countries.
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 /NOTED TO EDITORS: Copies of the survey report are available from Allison Hayes, A&A Services Inc., Corporate Communications, 1211 Avenue of the Americas, New York, N.Y. 10036. Phone: 212/840-8500./
 /CONTACT: Allison Hayes for Alexander & Alexander Services Inc., 212-840-8500, or home, 201-792-5363/


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Date:Apr 23, 1993
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