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Steve Badger got rep-a-doped by Chip Merlin! | Property Insurance Protection Law Blog



Insurance industry guru and advocate Steve Badger admitted that one of the first things he does each day is read this blog – while on his morning toilet after pouring his morning coffee. You might be there with him. But few would admit it, especially to an insurance industry audience that is the insurance industry’s general counsel.

Insurance companies’ general counsel are people who can influence social results. I joined this debate because that audience is sophisticated and can create positive change for policyholders. As I told them, my focus is always, “What’s best for the policyholder?” Unfortunately, I believe that many in the insurance claims industry fail to take this position.

Discussing academic issues often takes on a historical context. For example, I made a point without rebuttal that in the mid-1

800s, many insurance companies wrote policies and lowered their rates so that the policyholder had illusory coverage or an insurer that was on the verge of bankruptcy. That’s why we established insurance rules that protected insurers from their own competitive practices.

The same concerns exist today with insurance companies competing on prices and advertisements trying to make losses look like a comedy. The problem is the ethical degradation of those in charge of their own industry. They joke about their own customers’ losses and advertise that price is more important than ethics and trust. It’s shameful, but insurance executives allow it to meet their revenue targets and incentive bonuses.

Do Steve Badger and many of the general counsels publicly agree with me? Only if they want to be fired from their jobs.

While Steve Badger is sitting on his toilet reading this, many in the insurance claims industry are following processes and claims rules without any thought of whether what they are doing is getting policyholders full and prompt payment. The claims procedure rules can make it impossible to pay claims immediately or in full. These are big issues that need to be addressed.

At the same time, abuse and gamesmanship are wrong. While I fully support restoration contractors who make a valid margin for their work, can anyone honestly say that all seminars about leveraging and publicizing insurance windfalls are correct? When did accidental payment become acceptable rather than full payment? There are a number of fake and fraudulent vendors of greed that need to be called out in the insurance restoration industry because they are hurting legitimate restoration companies, which I fully support.

Who supports full and prompt payment for policyholders? My hope is that the general counsel will ask their claims departments what their processes are after our debate. I think claims processes are to blame for late and underpaid claims. Badger seemed unmoved until I suggested he read his own client’s internal claims handling guides on why they should delay claims to gain “leverage” on the policyholders. Maybe the general counsel can suggest change, and that’s what I’m hoping for.

Insurance is an important social product. Insurance companies must make a profit. I expressed a concern that interest rates and premiums were far too low. Few are value insured. Climate change and the increased frequency plus severity of losses have made it impossible for insurance companies to make money. Premiums need to be raised, but no one seems to have the guts to say so.

The bottom line is that citizen dialogue followed up with action can lead to positive change. I hope that my debates with my distinguished and opposing colleague will result in a better insurance environment for all. Insurance is an important social product that must succeed.

Steve Badger is not a junkie. He is a painstaking advocate for insurance companies. But our property insurance industry is on a tightrope in many places. We agree on that. We all need to do our best to make this work for those who invest in and consume the property insurance product.

Today’s thought

They call it rope-a-dope. Well, I’m baptized. Ali just laid on the rope and I, like a junkie, kept hitting until I got tired. But he was probably the smartest fighter I ever got in the ring with.
—George Foreman


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