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...]
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