A Business Insurance article by Sarah Veysey reports that news is expected "soon" on British regulation of solvent schemes of arrangement, a scourge for companies and persons that purchased insurance policies. The comments follow up on September 2013 "consultation" on the solvent schemes. In brief, a solvent scheme is a proceeding in which an insurer seeks to run away from its prior promises, without paying fair value for running away from its prior promises. As some may rec

The Blue Cross Blue Shield of Illinois web site for health insurance is poor in design and operation. Today it refuses to accept an electronic signature for no visible reason. That requires a call to "customer service." That meant 4 minutes of voicemail prompts followed now by an estimated wait time of 1 HOUR. So far, the wait time is at 50 minutes and counting. BCBS has been in business for decades, but is not ready and its systems are at best poor. I’m an existing customer

The dysfunctional nature of insurance companies never ceases to amaze. This month, tens (hundreds?) of thousands of 18 year olds are heading off to colleges away from home, and their parents are thinking about health insurance in some new location. I’m one of those parents as my eldest daughter heads off to Boulder to study biology. Knowing that "college kid" questions must be common at this time of year, I (foolishly) hoped/expected to find that that the "customer advocates"

After its runaway train train killed 47 people last month in Quebec, there’s been a Chapter 11 filing by Montreal, Maine & Atlantic Railway, a subsidiary of Rosemont-based Rail World Inc. The filing arrives after assessing its likely liability from a derailment and explosion last month that killed 47 people in Quebec. Companies that underinsure create involuntary creditors when they injure or kill people, and leave the financial cost to fall on the injured person or co-defen

The West Fertilizer plant explosion in Texas killed 15, injured many more and destroyed or damaged dozens of adjoining buildings. Now, word is out through the LA Times that the plant operated with only $1million of liability insurance. One might conclude the owners at Adair Grain are irresponsible and/or were badly advised. One also could conclude there is a Texas-sized hole in Texas regulatory law. One suspects the same flaw exists for other large industrial plants in other

Insurance can make anyone nuts. It’s both invaluable and maddening. Sheafs of paper with words written in phrases that only occasionally read well or make sense to anyone without years of insurance experience. And on top of all that, the coverage – or lack of coverage – is seldom apparent until one deciphers the coverage parts and the exclusions, and more. Happily, insurance experts are talking more often and in plainer words about why insurance does and does not work. To th

Why is collecting on insurance so tough? Is insurance being sold in the right way? Some thought leaders are asking great questions about insurance. One of the leaders in that area is Jay Feinman, a distinguished law professor at Rutgers, and the author of a great book on the claim denial practices instituted by the industry to manage earnings and generate additional profits – the book is: Delay, Deny, Defend. Jay and others are putting on another academic insurance conference

The media this week has been full of a great example of the power of social media to inflict a major reputation hit. This week’s target was Progressive car insurance, of tv ad fame. The social media attacker was a grieving brother of a woman who died, and the attack was both personal and successful. The attack began with a Tumblr post titled: My Sister Paid Progressive Insurance to Defend Her Killer In Court. Progressive earned its pain by failing to act in good faith while h

Selling life insurance rights. Some says it’s great. Some says it violates contract law. Some say it’s a bad idea. Whatever your view may be, the NYT includes a wide-ranging August 10, 2012 article on the topic. The article is by James Vlahos. #Insurance

Insurers like caps on payouts. Why? Because it makes life easy for the actuaries. X number of incidents for an insured population of Y times a max of $ ZZ means that total risk is quantified. Contrary to Wall Street myths aboyt swash buckling risk takers, the financiers hate risk – they like to eliminate risk and make certain money. That’s why they like caps on medical malpractice awards. But, thanks to Twitter, one insurance cap has fallen. The fallen cap? A lifetime maximu

ACE insurance has been fined in Texas for violating state laws regulating insurers. The story is told on the ACE Litigation Watch, a web site and blog devoted to tracking litigation against ACE. As explained there: "ACE American Insurance Co. has paid an $8,500 fine to the Texas Department of Insurance after having admitted that it violated numerous provisions of the state’s workers’ compensation laws. The Philadelphia-based unit of ACE Group was cited by the Texas Commission

And from the NYT and the the offices of several state Attorney Generals, here is story detailing yet another example of Wall Street businesses failing to act in good faith. The story also illustrates why most (not all) insurance companies have lousy reputations. In short, numerous life insurers (e.g Met Life) fail to pay out hundreds of millions of dollars even when they know or are using data which shows: 1) the person is dead, and 2) the company issued a policy covering

A new idea that is now a business in the UK – car insurance priced based on driving low-powered cars, plus actual driving data transmitted by chips embedded in the car’s electronics. Speed freaks and frequent drivers should pay more. The business is online here. Hat tip to the Marginal Revolution blog for flagging the topic based on a tip from a reader. The online version of the article is here, and is pasted below: Young Marmalade offering to provide low-cost car insurance

Insurers like to complain about fraud by policyholders, but here’s the story of gross fraud perpetrated by a nationally prominent insurance company issuing automobile warranty policies. The entity – U.S. Fidelis – was run by previously convicted felons, and marketed itself as a "faith based" business. Key excerpts are as follows: "The former president of US Fidelis, once one of the nation’s largest sellers of auto service contracts, admitted in court here Thursday that he bi

Time and again insurers tell us that litigation is wasteful and all claims should settle. And we are often told that insurers and others in the financial industry are swashbuckling entrepreneurs embarked on bold courses, and that handsome financial returns are therefore well earned in return for taking supposed risks. Contrast those spins against the following insurer comments following their resounding loss in a six year legal journey that ended yesterday with a ruling by t

Kevin LaCroix has an interesting new post linking to a useful article on managing D & O insurance through a corporate transaction. #Insurance

Does this story sound familiar? Tort claiming, constitutional law, and demands for tort reform are now playing out in Argentina. Under the heading "Compensation Culture," LATAM Insurance Review includes an interesting article on the rapidly increasing rates of litigation in Argentina. The article also ncludes numerous comments from a representative of Australia’s QBE, including the thought that perhaps there is a need for additional intelligence in underwriting now that dama

Insurers frequently complain loudly about "trial lawyers" and too much litigation. But they like litigation when they are plaintiffs. Consider, for example, MassMutual’s evident pleasure in successfully moving forward with nine lawsuits targeting uber banks for securities fraud. The quoted text is from an AmLaw article by Ross Todd on the substance of the ruling denying motions to dismiss: "The MassMutual suits target a huge swath of Wall Street, including units of Credit Sui

"Direct actions" allow an injured plaintiff to file a lawsuit directly against the insurer for a defendant. Direct actions are not allowed in many jurisdictions, but some do permit direct claims. When a direct action remedy is available, the FDIC is using it in bank failure cases. Kevin LaCroix has the story in a recent post at The D & O Diary. #Insurance

Insurer "bad faith" has been a significant and growing problem ever since consulting heavyweight McKinsey & Company advised various insurers on financial engineering, and how to "manage" claims. For the history, see Professor Jay Feinman’s great book – Delay, Deny, Defend – here is the web page for the book. Jay is a Distinguished Professor at Rutgers. The short-hand term "bad faith" actually is a misnomer. The real issue is that many insurers (not all) and their agents have