Article written by Michael Childress.
Presented as a speech at Rutgers Law’s Fragmented Risk Conference March 1, 2013.
The insurance industry operated for centuries under certain fundamental principles. An insured, looking to minimize its own risk, looks to purchase an insurance policy. The insurer issues the policy and remains profitable by spreading risks over as large a population as possible. In the event of a loss, the insurer and insured give effect to the policy terms.
In recent years, however, insurers have employed a cornucopia of cost saving tactics that have turned this elementary understanding of the insurance process on its head. Brokers work to benefit the insurance industry while insurers analyze risk only after issuing policies and shift that risk back onto the insureds. The supposed camaraderie and commonality of interest touted by insurers gives way to an increasingly adversarial process that treats the insured as a foe.
Following a loss, insurers lowball and coerce vulnerable insureds into signing releases and waivers. Insurers cry wolf following a natural disaster and claim that bankruptcy is inevitable if they are compelled to pay claims on a large scale.
Highlighted by recent natural catastrophes such as Superstorm Sandy and the series of Christchurch, New Zealand earthquakes, the insurance industry is in desperate need of reform. Governments across the world have attempted to step in and provide relief for the insureds, and individual states in the U.S. have promulgated statutes aimed at disincentivizing such insurer conduct. These answers have been met with varying success. [Read more...]
Originally published in the January 2013 issue of the King County Bar Association Bar Bulletin. Reprinted with permission of the King County Bar Association.
By Katherine Smith Dedrick and Christina Phillips
One year ago in these pages, several articles explored various aspects of preparing for disaster. The ABA’s Tort and Insurance Practice Section, led by Seattle attorney Randy Aliment, Dedicated a year to the subject. Superstorm Sandy drove home the point.
Your firm is your business. Your clients are hard won, and with ever increasing competition, perhaps even harder to maintain. Your firm most likely owns or leases real property and spent significant dollars on contents, development of intellectual property, and attracting its human assets. There’s no question that your firm earns revenue from delivery of its widget, otherwise known as legal advice, to its clients. A law firm is the same, in many respects and particularly when it comes to protecting itself from manmade or natural disasters, as any other business. However, most firms don’t take the time or energy to protect their assets the same way as other more traditional businesses. This leaves firms at risk for loss of clients and revenue. [Read more...]
Natural disasters have shifted in the cultural mindset due to both increasing frequency and increasing intensity. We now live in an era where natural disasters, formerly unthinkable events which happened to other persons or places, are now seemingly common place, affecting individuals both at home and abroad. The residents of the Eastern Seaboard are experiencing this now more than ever.
In the wake of Superstorm Sandy homeowners and business owners alike are left wondering if they are going to recover any of their losses and damages from their insurance carriers. While recovery is governed by the specific terms of the insurance policy in place at the time of the loss, there are many different buckets of potential recovery under any given policy.
The following is a brief summary of some of the many buckets of coverage available under commercial and residential insurance policies. If you are not certain of your insurance benefits or, if your insurer denies coverage, it is important to ask an expert in policy interpretation to ensure you are not walking away from money. [Read more...]
article via the Press NZ 15.10.12.
Central Christchurch landlords with sites earmarked for Government rebuild projects fear they will miss out on millions of dollars in insurance and be left unable to replace lost buildings.
Some have banked interim insurance payouts, to be topped up by insurers later when they rebuild. They fear their insurers will decline the extra cash once the land changes hands.
“There is a chance that the insurer is going to say, ‘Oh, you don’t have a site, so we are not going to pay out’,” said David Wallace, the Christchurch representative of investor Devonia Holdings, which has close to $30 million worth of insurance claims for land designated for the green frame.
“How do you know you’ll get what you’re entitled to? Sometimes one word can make a lot of difference in an insurance policy.
“I think there will be a huge bunfight, but we would rather it was nice and clean.”
Devonia owns the cleared sites of the Civic, Clinic, Iconic, AMI and Winnie Bagoes buildings between Manchester St and Latimer Square, and is awaiting more than $20m worth of rebuild settlements on top of indemnity payments already received from insurer Vero.
Wallace said Devonia’s owner, Sydney-based investor In Shik Hong, wants to keep his capital in Christchurch. They want an assurance from Vero they can build elsewhere once the land is taken for the green frame.
“We are still waiting. They aren’t telling us anything,” Wallace said.
A Vero spokesman told The Press claims were being handled on a case-by-case basis.
“We cannot give a general statement on how things stand. We are working through each of the issues with our customers.”
The Canterbury Earthquake Recovery Authority (Cera) has indicated the Crown does not want to handle insurance claims and property owners should sort payouts with insurers. However, any sites taken by compulsory acquisition would bring unsettled claims with them.
The Government has set a December deadline for the first batch of purchases.
Claims advocate Katherine Smith Dedrick, of insurance recovery firm Risk Worldwide, said time was important and insurance companies were not moving quickly enough to settle claims before Cera deadlines.
“They have to play ball – they have an insurance contract that owners have been paying premiums on for years and years.”
Smith Dedrick said owners needed to be pro-active and remove insurers’ hurdles by arranging their own reports.
“They need to be able to quantify their loss, or the cost of rebuilding, if they are to negotiate. And they have got to get in and get it done now.”
She was aware of confusion over rebuild insurance among property owners. She said entitlements depended on individual policies, but believed most allowed construction on another site.
One insurance broker said the issue affected several clients negotiating now, but did not want to comment publicly for fear of jeopardising relationships with insurance companies or property owners.
Vero and NZI are the biggest commercial property insurers in central Christchurch.
Investor Antony Gough, whose site at the corner of Armagh St and Oxford Tce will be swallowed by the new convention centre, was optimistic his rebuild insurance would transfer to another site.
“Supposedly the money can be transferred. I know everyone is nervous that their insurance companies won’t allow it.
“Insurers will try and wriggle everywhere they can – I think owners need to be bolshie and stand their ground.
“They are paying premiums and it’s time for a payout,” Gough said.
Link to article:
- Fears for ‘green frame’ losses (stuff.co.nz)
The war of attrition between the insured – you and me – and the insurers has intensified in the past six months. Three industry professionals give us their views.
Michael Childress, a consultant with RiskWorldwide, doesn’t pull any punches.
“If you’re a really sceptical human being you would look at an insurance company as nothing more than a public relations company and a litigation company: that’s what they are really good at and of course, a money collection company . . . That’s not all insurers but the ones we run into often at the end of the day.” [Read more...]
Policyholders concerned that coverage for loss of rents and loss of profits will end with the one-year anniversary of the February 2011 earthquake may have reason for optimism, says Michael Childress, of Risk Worldwide.
With the first year anniversary of the February 22, 2011 earthquake, business and commercial property owners in Christchurch are collectively holding their breath in anticipation of their insurance cover for lost rents and lost profits being pulled out from under them. [Read more...]
We live in an age of disasters. Devastation to manufacturing facilities by fires, tornados, explosions, floods, hurricanes, earthquakes, tsunamis, etc., is now commonplace. So, you have sought to protect your business with an expensive insurance program. While it is hard to predict when and how a calamity will affect your business, you should know now the steps that you will need to take immediately after disaster strikes. The preparedness of your company’s response correlates directly with the extent and speed of your recovery, including funding by your insurance policy. [Read more...]
The growing awareness in the United States regarding carbon emissions and their effect on the environment and weather patterns, have produced an increase in environmental litigation and some important decisions from the United States Supreme Court. Many states and environmental groups have filed lawsuits in an effort to get the judicial system to force cuts in greenhouse gas emissions. On June 20, 2011, the high court issued an 8-0 opinion (with Justice Sonia Sotomayor recused) in the case of American Electric Power Co. v. Connecticut. The unanimous decision reversed the Second Circuit Court of Appeals in New York and reaffirmed the Supreme Court’s 2007 decision that carbon dioxide emissions are subject to federal regulation under the Clean Air Act. The Court further held that the Environmental Protection Agency (EPA) has the sole authority to regulate the greenhouse gas. [Read more...]