The response by Robert Hartwig of the Insurance Information Institute to the landmark Corban decision typifies how executives at many insurance companies feel about their customers. If not, Hartwick would be out of a job. Here is his quote taken from Anita Lee’s article:

Robert Hartwig, who heads the Insurance Information Institute, said the ruling could affect the cost and availability of homeowner policies on the Mississippi Coast.

“What this basically suggests is that the cost of claims is going to be higher than insurers anticipated,” Hartwig said, “so there are direct consequences for the price of insurance in Mississippi and potentially for the availability as well.

If the state of Mississippi is going to take a different tack from the federal courts, the policies will have to be priced and underwritten appropriately. It makes selling policies in Mississippi risky and, on average, more expensive. There’s just no other way around that."

The propaganda threat and point is obvious—suggest to those who interpret policies against the insurance industry’s version (judges) that the case is wrongly decided and that those venues with a similar view will have unaffordable insurance, if any at all. This has been the mantra of his propaganda and that of the insurance industry wherever repeated catastrophes have occurred.

My response is:

How affordable is insurance that does not pay fully and promptly after a catastrophic loss?


Why does the insurance industry find that “good” judicial decisions only happen when denials of coverage are upheld and customers get nothing, unless the insurance industry is more interested in its own profits than caring for its customer and providing a product that serves a purpose after a catastrophe?

Many of my retail corporate clients and their general counsel have told me that if they advertised and then performed in the manner of their insurer, the federal and state trade commissions would be holding “bait and switch” hearings. But, this is exactly the type of treatment insurance executives are calling for when they support the propaganda against their own customers through spokespersons such as Hartwig.

I am not the only one to have noticed this. Slabbed had two posts on the topic, The Push Back on Corban – “You’re gonna pay for this” and Da Corban spin continues: AIA prefers denial while the National Underwriter carries III press release calling it news. The editors of Slabbed were pretty blunt about what they think about Hartwig:

The ink was still wet on that post when 2 days ago the Mississippi Supreme Court ruled that the ACC clause as interpreted by the notorious, corporation loving 5th Circuit ain’t the law in Mississippi. The tragedy is that hundreds of thousands of claims were illegally mishandled for 4 years before we got word. Anyway, State Farm, Allstate, Nationwide and USAA got bitch slapped, and they’re some kinda pissed. I knew there’d be press statements coming, all calculated to terrorize homeowners as soon as the shills got their poison pens loaded. We all know who they are: Robert Hartwig being foremost among them….

You see how this sick SOB thinks nothing of threatening us? What he’s saying is “you’re gonna pay for this . . . we’re gonna jerk policies if we have to, or raise rates on you . . . but one way or the other, you’re gonna pay for this!”

In other words, if policyholders dare invoke the rule of law to reign in these monolpolies, they come back with “You’re gonna pay for this!” See how this is just like “whipsawing” rate increases? I’ve said it over and over, big insurance is openly engaged in racketeering…

I think it is time we put such intellectually dishonest drivel to bed. Long standing legal principles were restored with the Corban decision which overturned the flawed anti concurrent causation analysis contained in Leonard as well as firmly setting out well established legal principle that insurers have the burden of proof to establish a non covered peril caused a loss on a all perils policy. Insurers, knowing full well the meaning of their policy language were no doubt overjoyed at the gift Edith Jones gave them in Leonard overturning literally hundreds of years of case law but make no mistake they knew the risk they were taking in Mississippi and Louisiana way before Katrina ever struck. To assume these highly paid execs were ignorant of their own policy langauage or that Corban somehow changes the coverage equation is wacky.

I agree completely with the highlighted portion of the quote from Slabbed. However, the equally important aspect of its post should be how insurance customers and regulators throughout the country should start to view most of the property and casualty insurance companies—they are purely interested in their own profits and self interest and do not look at the historical role of insurance as a social product. Insurance companies advertise peace of mind and all kinds of emotional messages. The truth is that many are engaged in a social propaganda campaign to make it appear as if their own customers are wrong to get fully and promptly paid after a disaster strikes. It is almost as if the intended message is that customers suffering a catastrophe are “bad” and getting their benefits is wrong because the poor insurance companies will leave markets or raise rates for the customers that did not suffer a loss in that catastrophe. The message is clear—try to pit the customers that did not suffer a loss that day against those that did to gain additional allies to the insurance industry agenda.

We need political, regulatory and thought leaders, like Slabbed, to make certain that the insurance industry propagandists are called out when they engage in a war against their customers. Until insurance industry executives accept the ethical obligations they have to their customers, there is an ever increased need for strong regulations and legislation mandating honest and fair conduct by this industry. We cannot trust insurance companies to be honorable or do the right thing when the moment of truth is at hand.

  • Although I didn’t write either post, I thank you for the mention of SLABBED.

    It was all I could do to post the “breaking news” as I was already late leaving town – and when I arrived at my son’s, I discovered his dog had eaten the end off the computer cord!

  • Barbara Brecker

    There is no doubt that what you are alluding to appears to be racketeering. Not only that but it is the same kind of fraudulent activity that transpired when HMOs took over the Florida market. Insurers were always ready with vulgar excuses to deny care when people needed treatment. From the denial of care, too many people died or did not recieve proper medical treatment for medical conditions.

    I can only wonder how many people have not only been financially ruined by denied homeowner policies provisions, but have suffered adverse health consequences due to horrific living conditions. You are correct. We do need strong regulations and legislation mandating honest and fair conduct by this industry.

    Clearly, they have shown they do not have the integrity to do things with a proper moral compass otherwise.

  • Barbara,

    The denial of medical bills and the questioning of treatment has been a vicious cycle in the health insurance industry.

    Many people have been financially ruined from the denial of their homeowner or commercial insurance claims. The press just not report on those instances, and the insurers certainly do not want that type of information to get out unless it has to do with a claim denied for fraud.

    It does not take a genius to figure out why insurance companies want to advertise about claims denied for fraud but keep secret the more significant amount of claims denials based upon the small print of the contracts.

    There are some companies that write a much broader form of coverage than others. Policyholders should consider purchasing those policies.

    Thanks for reading and your comments.