SAN FRANCISCO -- Close to 200 mostly risk managers, but also brokers and insurers learned how easy it is to underestimate the total liability for an accident or other event.

Executive vice president and chief underwriting officer of ACE Ltd., Mr.

William Loschert, was one of the speakers on a RIMS Conference seminar on liability insurance, addressing the question "Do You Know How Much Insurance is Enough?' He stated that the global settlement of $4.2 billion was only the tip of the iceberg in terms of the total cost of the breast implant litigation.

He said: "There are 16,000 people opting out of the settlement. I think the settlement will end up costing twice that.'' He said that suppliers of raw materials for the product, for example, will also be affected.

The discussion coordinator was Mr. Lawrence L. Drake II, managing director of Marsh & McLennan Inc. and moderator was Mr. Richard Heydinger, risk manager at Hallmark Cards. Another speaker was Mr. Bob Booher, managing director of Marsh & McLennan.

The discussion included how companies learned that so much public goodwill could evaporate when there were claims. Mr. Heydinger talked of Hallmark's experiences when he said: "It's not always about fairness, but what juries do. It could be a spin of the wheel in terms of who gets blamed and how high the jury award is.'' Mr. Loschert pointed out how people in the real estate business often underestimated public exposure.

He also asked if risk managers knew what the value of a loss of life would be during an earthquake at a major manufacturer if the quake occurred during the change of shift of workers.

"I've raised that question for many years in the workers compensation business,'' he said. "Everybody in California who wants to self insure their workers compensation knows the value of the building, but they can't tell me what the deaths will cost if there is 200 people in the plant and its a change in shift and their are 400 people there.

"I think that's a major underestimation of potential losses to your corporation.'' The panel agreed that risk managers need to review a number of internal exposures, as well as external exposures and the extent of social inflation, as measured by recent settlements and judgements.

They were told to look at a larger picture when assessing a risk. For example, they heard of an expensive out-of-court settlement in one accident, that was acceptable to those insurers paying the claim, simply because the case was in Texas.

Jury awards there are much higher than in other US states.

A key point was that many companies faced exposures that they had not thought about and therefore failed to adequately insure themselves. No matter how remote an incident may be related to one company, there is no guarantee that that company won't face liability for it.

Risk managers heard that there could even be crime or terrorism on one's property, yet later the question could arise whether the owners took adequate steps to provide security.

The panel considered the case of the fatal bus crash in the Texas accident that occurred when a delivery truck ran a stop sign and hit a bus full of students, pushing the bus over an embankment into a water-filled excavation pit.

After the bus came to rest in 10 feet of water, 21 students loss their lives, 49 others were injured, three seriously.

The National Transportation Safety Board (NTSB) found no negligence on the part of the bus owner, and said that it was the inattention of the truck driver and his subsequent failure to stop at a stop sign that caused the accident.

That same truck driver was acquitted in a jury trial. The NTSB attributed the 21 drowning deaths to a lack of emergency exits on the bus. The negotiated settlement was in the region of $225 million.

Mr. Heydinger commented on how Hallmark bought into broadcasting concerns and thought that they had considered all of the relevant risks.

But he said: "What we missed focussing on was some public exposure that some of our television broadcasting stations had in the way of sponsorship of major public events.'' One example was the sponsorship by their Los Angeles station of a major weekend festival over a large area of inner city LA. He said that it was thought that all of the exposures were covered, but he advised that it would be important for anyone to look into "nooks and crannies'' of exposures that are not at first very apparent.