Business coverage disputes could tar all insurers
Perceived unfairness over coverage for struggling businesses may rationalize revenge scamming of all insurers.
Millions of Americans largely hung up their car keys as driving quickly dwindled when we moved deeper into pandemic lockdown.
Two national consumer-advocacy groups called for state insurance regulators to require that auto insurers return a portion of premiums to their policyholders. Drivers deserved a break because they weren’t on the roads nearly as much, urged the Consumer Federation of America (a Coalition founding member) and the Center for Economic Justice.
Whatever the cause and effect, many auto insurers quickly lined up to voluntarily announce billions of dollars in much-needed premium breaks.
Quickly cutting drivers a break may have largely preempted punitive action by state regulators to force premium returns. Auto insurers may not get much credit for playing fair. Yet for now, the volatile premium issue appears to have been defused in a hurry.
Nightmare just beginning
For insurers that cover businesses, the nightmare may just be starting. And it could hand consumers yet another reason to rationalize defrauding any insurer that Americans perceive as greedy and uncaring.
Take the nation’s small businesses, especially restaurants and bars. They’re hemorrhaging money and may stay shuttered for weeks or months to come.
“We all paid (commercial premiums) faithfully, with the expectations that we would have someone on our side. We thought we were in good hands,” blogs chef Thomas Keller, who owns several high-end restaurants around the U.S. “But now when restaurateurs are contacting our insurers, we’re being told that the civil authority shutdown orders are not covered. Why? They tell us that all policies exclude pandemics. We’ve read our policies; that is simply not true.”
Keller and several high-profile chefs such as Wolfgang Puck have hired heavy-hitting insurance attorney John Houghtaling, who helped win the $246-million tobacco settlement.
They’re trying to force commercial insurers to pay for more COVID-19-related damage. At least 1,000 restaurant groups and associations support the campaign to demand that “insurers honor their business interruption policies, and acknowledge that the state-mandated closures of our businesses are covered by the civil authority clauses in those policies. We want them to play fair,” Keller writes.
Public dispute could grow
This dispute could grow very public and very ugly. Untold numbers of restaurant employees, farmers, suppliers and others have a big stake in the outcome.
High-profile lawsuits and negative publicity campaigns by other sectors of the business community may spring up as well. The debate over how much business-interruption coverage protects COVID-damaged businesses may play out for a long time to come. It’ll play out on the evening news and in the courts. It’ll buzz through our vast social-media networks, where consumer opinions are really formed — and acted on.
Commercial policies vary widely in their terms and interpretations. The debates will be unimaginably complex, densely technical and rely heavily on the definition of medical and scientific terminology.
Legislation already has been introduced in several states to require some COVID-related business claims. A bill in the U.S. House weighs in as well.
Huge dollars are at stake for commercial insurers — and the millions of businesses they insure. Many are the small, community businesses that average Americans everywhere rely on for jobs and incomes.
The debate over commercial policies is shaping up as a potential public relations and legal nightmare for insurers if this dispute continues. They could be perceived as unfairly defiant and uncaring during a national crisis when their policyholders need help the most.
Defrauding for revenge
So how does all this relate to insurance fraud? “We all paid faithfully,” chef Keller blogs. He could speak for homeowners, drivers and average consumers around the U.S.
Revenge and feelings of aggrievement are popular reasons for people to rationalize defrauding their insurers. “Gee, I paid my auto premiums for 10 years and my insurer canceled my policy after one claim.” Fair or not, many people justify bilking their insurers because they perceive that their insurer — and insurers in general — are greedy and don’t give enough honest Americans a fair shake.
Insurers are hardly innocents or angels on many consumer and claims issues and disputes. Yet insurers don’t get full credit for the many breaks they do give policyholders — and for how hard insurers generally try to resolve claims by desperate homeowners after hurricanes and floods.
Still, insurers are on a short leash of credibility no matter how much good they do. Their own mistakes and the sensitive nature of insuring people at desperate times make insurers almost permanently vulnerable to being tarred as uncaring. Karma just comes with the territory.
It’s doesn’t take much to trip that aggrieved hair-trigger urge to defraud an insurer. A lengthy fight over business-interruption insurance could confirm, to many people’s minds, the trope that all insurers are greedy and fair game for fraud payback.
This is more than a niche dispute. The fate of many millions of employees will hinge on whether the commercial policy helps keep their employer solvent.
Public-opinion dynamite
The Coalition Against Insurance Fraud projects a sharp spike in fraudulent claims by Americans whose finances are fast-crumbling during the pandemic shutdown. The more public, widespread and heated the battle over commercial policies, the more we may see many Americans flooding social media with comments like, “See, the insurers are trying to stiff us again. Now it’s my turn.”
Every damning retweet, editorial and news story about the commercial policy dispute is potentially a stick of public-opinion dynamite for the entire insurance industry. As more states weigh in with legislation to force commercial insurers’ hands, the momentum already could be skewing against these insurers.
It’s hardly my place to judge the right and wrong of the unfathomably complex disputes over business interruption coverage.
It’s enough to say that if the issue plays out with the nasty public edge that’s brewing, the jury of public opinion may quickly convict insurers across the board.
The result will be more consumer grudges and more rationalizing that it’s perfectly fine to defraud insurers — in any line. Punitive state legislation against insurers could be easier to introduce on other issues down the road. Maybe it’s coldly unfair, but the public-opinion brush that tars commercial insurers could tar all insurers.
James Quiggle is the senior director of communications for the Coalition Against Insurance Fraud. Contact him at jamesq@insurancefraud.org.
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