The Malicious Motivations Behind Insurance Company Settlements

There are several truisms that people must understand about big insurance and their malicious, profit driven motivations. It’s all just a “big game” to them that they are trying to win. A win is maximizing profits for their shareholders.

1.  Insurance companies do not care about compensating injured victims.
2. Insurance pay claims because of “leverage” which in other words is exposure to pay more, later.  Leverage has little to do with the pain and suffering of the accident victim. Indemnity corporations also pay claims based on a cost / benefit analysis which means- will it cost too much to fight the claim considering the expected payout. Costs include out of pocket expenses, staffing resources as well as their hired gun litigation injury lawyers.
3. Indemnity companies are most worried about exposure. Exposure means that they could have settled for a small amount and then a judge or jury whacks them for hundreds of thousands of dollars after a car accident jury trial on the merits.
4. At the end of the day, the most important motivation of big insurance is a ruthless cost benefit analysis of every claim. Sadly, such analysis does not include any caring about helping the injured victim.

Insurance company settlements

Liability companies often settle claims with a small policy limit in relation to very high damages even when there is little to no meritorious claim of negligence. If there is no negligence, they should not have to pay, right? But they often pay this claim because it is too costly to litigate. They do this because it just is not worth their trouble and the expense of litigating the cause of action.

But if you take the same accident with the same amount of damages (very high) and you change two factors (their insured is 100 percent at fault) and the policy limit is high (2 million). Since their insured is at fault and there is clear negligence and enough insurance to pay the claim, shouldn’t the insurance company offer a fair and reasonable settlement? Indemnity companies will make low-ball offers, stonewall the Rhode Island personal injury lawyers, delay the claim and make life difficult for the injured victim.

“The countrywide average auto insurance expenditure rose 3.3 percent to $841.23 in 2013 from $814.63 in 2012, according to a January 2016 report from the National Association of Insurance Commissioners. In 2013 (the latest data available), the average expenditure was highest in New Jersey ($1,254.10), followed by the District of Columbia ($1,187.49), and New York ($1,181.86). To calculate average expenditures the National Association of Insurance Commissioners (NAIC) assumes that all insured vehicles carry liability coverage but not necessarily collision or comprehensive coverage. The average expenditure measures what consumers actually spend for insurance on each vehicle. It does not equal the sum of liability, collision and comprehensive expenditures because not all policyholders purchase all three coverages.”  Insurance Information institute, Auto Insurance COSTS AND EXPENDITURES

While most insurance companies operate ethically and fulfill their obligations to policyholders, there have been cases where malicious motivations or unethical practices have come to light in the context of insurance settlements. Some of the common malicious motivations behind insurance company settlements include:

1. Maximizing Profits: Some insurance companies may aim to maximize their profits by minimizing the amount they pay out in settlements. This can lead to unethical practices like denying valid claims, delaying payments, or offering inadequate settlements in the hope that policyholders will accept less than they are entitled to.
2. Avoiding Legal Consequences: In some cases, insurance companies may engage in unethical or illegal practices, and they settle claims to avoid litigation or regulatory scrutiny. Settling claims can be a way to prevent policyholders from pursuing legal action that could expose the company’s wrongdoing.
3. Bad Faith Practices: Some insurance companies may engage in bad faith practices, such as intentionally misrepresenting policy terms, failing to investigate claims properly, or unreasonably delaying settlements. These practices can result in policyholders receiving less than they are entitled to or being unjustly denied coverage.
4. Delaying Settlements: Deliberate delays in processing and settling claims can be a malicious strategy. This can put financial pressure on policyholders, forcing them to accept lower settlements out of desperation or frustration.
5. Pressuring Policyholders: Insurance companies may employ aggressive tactics to pressure policyholders into accepting lower settlements. This can include constant communication, threats of claim denial, or offering quick, low-ball settlements.
6. Redlining and Discrimination: Some insurers have been accused of engaging in redlining, a practice where they avoid selling insurance or settling claims in specific geographic areas or to certain demographic groups. This discriminatory behavior is illegal but has occurred.
7. Fraudulent Claims Handling: In rare cases, insurance companies’ employees or representatives may engage in fraudulent activities, such as creating fake documents, manipulating evidence, or colluding with policyholders to file false claims. This can result in fraudulent settlements.
8. Lobbying and Political Influence: Some insurance companies may use their financial resources to influence lawmakers and regulations to their advantage. This can lead to policies that favor the industry over the interests of policyholders.

It is important to note that the majority of insurance companies operate within the bounds of the law and ethical standards. Regulatory bodies and legal mechanisms are in place to address and penalize companies that engage in malicious or unethical behavior. Policyholders who believe they are being treated unfairly or maliciously by an insurance company can seek legal recourse, file complaints with regulatory authorities, and consult with consumer protection agencies to ensure their rights are protected.

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