Insurance Industry Insider Richard E. Stewart Confirms Insurers Bad Faith Practices Are Widespread
By FBIC (www.badfaithinsurance.org)
Insurance Industry White Paper Exposes Insurers Mass Denials And Non-Payment Of Claims Practices Providing Documentation, Conclusive Evidence And Undeniable And Irrefutable Proof That Large Insurance Claims Are Not Being Paid ... And Further Confirms And Supports FBIC's Bad Faith Facts, Statistical Data And Allegations. Richard E. Stewart Is A Former Superintendent of Insurance For The State Of New York And Former President Of The NAIC (National Association Of Insurance Commissioners) Is The Author Of The White Paper, "Loss Of The Uncertainty Effect". The "Loss Of The Certainty Effect" Is An Authoritative Insurance Industry Trade "White Paper" Which Provides Substantiated Insurance Data That The Unlawful Non-Payment Of Legitimate Claims, Mass Denials Of Coverage, And The Widespread Use Of Breach of Contract and Bad Faith Insurance Claims Practices Is More The Norm If Not Standard Operating Procedure By Many Of Our Country's Largest Insurers.† The Authoritative "White Paper" Stands On Its Own As An Indictment To The Growth Of Unlawful Bad Faith Insurance Practices During The Past 2-3 Decades Which Today Has Reached Epidemic Proportions. Further Acknowledged By The Executive Director Of A Leading Non-profit Legal Authority Recently Summed It Up For FBIC Reflecting On The State Of The Insurance Industry, "Insurers And Their Attorneys Have Attained The Lowest Levels Of Legal Ethics, The Likes Of Which Have Never Been Seen Before.
FBIC also includes with this feature story, all available reviews and commentaries from the insurance industryís own trade publications and press which are all in unanimous agreement and in full support with the White Paper's findings while also admittedly indicating in some cases that they have suspected the existence of the problem for some time. Initial or final confirmation of the problem is supported and provided by FBIC, the industry's exclusive and only source of numeric and statistical research data available since 1997 on insurers records of bad faith and good faith insurance practices. Despite continued growing pressure for comment by the industry since its Publication debut December 2001 on Pages 29-49 of Insurance Review & Risk Management, the white paper document entitled "The Loss Of The Certainty Effect" remains unchallenged and without comment or response by the industry which one can only judge and deduce that the reason for the industry's and insurers' non-response is apparently and can only possibly be that: (a) many consider these acts to be a normal part of their operations and consider themselves above the law, (b) because they are so powerful, arrogant and so use to getting away with their criminal acts for so long that why should they be concerned now, (c) cannot find any issue in question or to contest with the document and know the findings to be true, (d) as usual, know its best not to comment as it would only bring further attention to the situation.
The FBIC uncovered authoritative white paper document agrees with FBIC data which confirms the mass denials and non-payment of claims by many insurers is both a common and routine practice that has grown to be a widespread insurance industry problem which continues unabated and out of control today throughout the U.S. The referenced white paper document "The Loss Of The Certainty Effect" along with the supporting trade press articles are made available herein for viewing. There is overwhelming and conclusive documentation, key evidence and significant data, in further support and agreement with the referenced authoritative white paper document available, to further validate and confirm that "insurers mass denials and non-payment of bad faith claims practices are pervasive and widespread". These key and highly significant representative examples referenced and offered herein, have been selected from the greater amount of extensive and important information, evidence, exhibits and documentation available which further contribute and validate that bad faith insurer practices are widespread.
"The Loss Of The Certainty Effect" document is co-authored by recognized authorities and insurance industry insiders Richard E. Stewart, whose credentials in brief include that of past President of the NAIC (National Association Of Insurance Commissioners), New York State Superintendent of Insurance, General Counsel of Citibank, and Chief Financial Officer of Chubb Group, and Barbara D. Stewart, Former Corporate Economist of Chubb Group, author of numerous books, periodicals and articles published for the insurance industry. Both are highly regarded by and from within the insurance industry.
(Because the nature of the White Paper document is substantive, technical in places and lengthy, FBIC has written the following encapsulation for those that prefer not to read the whole document and related trade commentaries.) Follow this insurance industry story from the inside and view the white paper document which on it's own confirms proof that insurers mass denials and non-payment of claims practices is widespread. In addition and furthermore, view other conclusive evidence and related referenced document(s) confirming the widespread unlawful activities by insurers and the lack of action by our enforcement officials and authorities to date to curb or stop the unlawfulness or take any steps to protect Americans. All of this and more is made available by FBIC on it's website www.badfaithinsurance.org.
The conclusive and extensive evidence and documentation made available by FBIC which addresses the "insurance industry mass denials, non-payment of claims" and widespread bad faith insurance claims practices problem includes:
For FBIC, its confirming data and growing consumer interest and support, it has become apparent that
our states insurance regulatory enforcement and legislative committees and offices have had more than plenty of time to
have direct intimate knowledge of the referenced "widespread mass denials and non-payment of claims practices" problem
and know that "bad faith insurance practices" are unlawful but despite this have done nothing to address the issue or
resolve the problem. Could it be that they are personally enriched and benefit more to have it be this way rather than
correct the situation and appropriately represent the citizens they are in office to protect against such abuse and corruption?
... Undeniable Irrefutable Proof That Bad Faith Insurance Is Widespread
The referenced insurance industry White paper document uncovered by FBIC and made available herein for viewing is entitled ""The Loss Of The Certainty Effect"". It is co-authored by recognized insurance industry authorities and insiders, Richard E. Stewart, whose credentials in brief include that of being Past President of the NAIC (National Association Of Insurance Commissioners), New York State Superintendent of Insurance, General Counsel of Citibank, and Chief Financial Officer of the Chubb Group, and by Barbara D. Stewart, former Corporate Economist of the Chubb Group, author of numerous books, periodicals and articles published for the insurance industry, and President of Stewart Economics, Inc., a consulting firm specializing in insurance. Both are highly regarded and respected by and from within the insurance industry.
The White Paper document stands on its own as conclusive proof. However, in addition, FBIC also provides herein several reviews and commentaries published by a number of the insurance industry trade press publications that address the White Paper document. The trade press has published reviews which notably all are in agreement with the findings of the White Paper document (FBIC was not able to find a single insurance trade publication that was not in agreement with the White Paper.). Most importantly, FBIC's research, data and statistics on bad faith insurance, the only that now exists nationally, supports and confirms the White Paper's findings. Together, the documents provide conclusive undeniable evidence and irrefutable proof attesting that insurers bad faith and non-payment of claims practices today and in the past number of more recent years have grown and today are widespread. The controversial insurance industry white paper reflects and documents evidences past and present and affirms that the current widespread unlawful use of breach of contract and bad faith insurance claims practices by many of our country's leading insurers are routinely denying payment of businesses and consumers legitimate claims. The insurance industry trade press continues to publish ongoing acknowledgements and commentaries from within the industry, that are in complete agreement with the white paper's findings but yet nothing is being done to stop the bad faith insurers ongoing victimization and abuse of power against the claimant consumers and businesses. In further response to the white paper, FBIC interviewed a major state Attorney General official, who indicated the office's long standing awareness to the insurance industry's illegal bad faith claims settlement practices (acknowledging its existence at least during the past 20 years) indicating it to be both a very troublesome and escalating problem. The Attorney General voiced the office's distress and growing concern to the increasing bad faith insurers illegal practices problem indicating that it has gotten very much worse in recent years. The Attorney General further referenced the difficult legal prosecutorial obstacles and limitations that beset the Attorney Generalís office and inference to the poor relationship and lack of co-operation it has with their state's insurance regulatory agency, the department of insurance. This same scenario and theme is expressed repeatedly and validated by the many numerous documents, videos and articles available and referenced on this website that are further documented and confirmed by leading industry experts to include judges, insurance commissioners, attorneys (from both sides), the insurance industry trade press, and other insider officials.
The insurance industry white paper uncovered by FBIC documents overwhelming evidence of bad faith insurers mass denials to pay claims, affirms the public's low but increasing awareness to this very serious and widespread problem, and accordingly confirms the industry's growing concerns that businesses and consumers will start to question and lose confidence and credibility that their insurance will cover a loss. The document indicates that payment of many, if not all, large claims are routinely being withheld and coverage unlawfully denied. These are the same infinite number of allegations that have been made, many proven in court, against bad faith insurers over the past two to three decades but increasingly so in the most recent decade when insurers have had to repeatedly deny and defend against their increasing use of the illegal practice amounting up to hundreds of billions of dollars of claims being withheld and not paid. In defense of these allegations and serious charges, bad faith insurers generally respond by only limiting their comments to the amount of alleged claims they have paid.
The FBIC uncovered "White Paper" document now available on this website for viewing recognizes and admits to the increasingly troublesome problem and validates the frauds that are bringing increasing pressure to bare upon the industry by the public as to their growing loss of confidence that insurance will pay for a loss. Now with the extreme seriousness and truth about the widespread use of breach of contract and bad faith insurance practices finally being exposed, the imminent and devastating impact this brings to all of the insurance industry needs to be taken seriously by Congress and acted upon immediately requiring Federal and State Government intervention. The white paper document reflecting on the current bad faith insurance environment and problem is written from an historical perspective to further prove its point and basis for the article. Historically, the white paper document indicates from experience that the serious widespread bad faith insurance problem cannot resolve itself and requires extreme Federal government intervention to be stopped. Just the threat of this widespread present day bad faith insurance fraud and epidemic not only threatens the viability of all insurers and the industry, but seriously puts in jeopardy the underlying structure and foundation of the American system, all levels of government, and questions the loss of confidence by all Americans and businesses that they can no longer confide in or depend upon all insurances to protect them.
The co-authors of the White Paper document "The Loss Of The Certainty Effect" published late Fall 2001 by Risk Management and Insurance Review (RMIR) are Richard E. Stewart, a former New York State Superintendent of Insurance and former President of the National Association Of Insurance Commissioners (to view Richard E. Stewart's Bio, click here) and Barbara D. Stewart, a former Chief Economist at Chubb with a significant number of insurance industry authored publications with equally celebrated credentials in her own right (to view Barbara D. Stewart's Bio, click here) are both experienced knowledgeable executives, economists and highly regarded insurance industry insiders.
Described by some insider insurance industry experts as a "significant masterful exposition", the text of "The Loss Of The Certainty Effect" is 16 pages long and includes 29 referenced footnotes. Inclusive in these pages and reflecting on today's current widespread bad faith insurance practices, the text provides illuminating historical perspectives and examples of documented times in our history when bad faith insurer claim practices occurred in abundance (or, as described from the insurer perspective, "responses to unexpectedly heavy claims" or the loss of the certainty effect or threat thereof occurred). Inclusive in the 16 pages, it further cites 5 individuals "for reviewing the article in draft form and making very helpful suggestions", and an "anonymous referee at Risk Management and Insurance Review for helpful comments". Additionally, there are several pages which cite a total of 74 very impressive many highly recognizable insurance industry expert references and sources utilized. The publication is known to cater to a small select number of insurance company CEOs, Executive Senior Vice Presidents and other high ranking management personnel of the insurance industry. Reflective of the readership it was meant for, the article delves into a number of technical areas and issues (as it appears it also is certainly not meant for our consumer eyes). As such, some of these technical issues, beyond the interest of many, could easily lend the article disinteresting to the reader (as it did for us on the first read). Regardless, the read is absolutely essential as the documentís brilliance and tremendous value and worth was quickly recognized and realized. So now that you have a description about the read of the article and before we offer it to you for your own reading enjoyment, if by chance you start to read and meet up with disinterest, we have chosen to first reference and offer several reviews, commentaries and quotes of the white paper document as published by separate insurance industry trade publications Risk Management Reports (RMR) "A Death Spiral?", June 2002, Volume 29, Number 6, International Risk Management Institute's "IRMI Update" June 18, 2002, Risk Management Magazine "The Decline of Certainty" February 2003, and quotes from The Insurance Forum "The Non-Payment Of Insurance Claims" October 2002 Edition which concur and are in agreement with The Stewarts' "The Loss Of The Certainty Effect" authoritative document. These trade publication reviews and commentaries follow the next several paragraphs where FBIC cites sections and renders some of its own thoughts on the referenced white paper document and its subject.
FBIC immediately noticed that the authors write "The Loss Of The Certainty Effect" from the insurance industry's, insurers' or insurance company's perspective. So FBIC, as a consumer insurance medium and advocacy, is able to compare the perspectives from both the insurer and consumer points of view. It first noticed the differences in terminology or the wording used. The article and term, "Loss of the Certainty Effect", is indicated when the public loses confidence that insurance will pay a claim for a covered loss or as we know it when it becomes commonly known to the public that insurers unfairly refuse and/or willingly (aka intentionally) deny en masse to pay claims. FBIC prefers to simply call this result by its legal term "bad faith insurance". We also noticed that the authors chose to focus the article on what it refers to as "large claims", although it never defines the term in dollar amounts or just how much or what "large' means. For example, it references the first episode of "The Loss Of The Certainty Effect" occurred during and after the Civil War with life insurance. Now when they reference and use the term "large" do they mean the measly or small amounts of money they cheated or tried to cheat widows and widowers while they mourned the loss of their life partner? FBIC, knows from thousands of consumers that breach of contract and bad faith insurance practices are common across all dollar denominations and running rampant from "large" claims in the hundreds of millions or billions of dollars right down to the single digit thousand dollar claims amounts and sometimes even lower. FBIC bad faith insurance complainants and member victims can confirm their own insurers' meaning of the term "large" as it relates to their bad faith insurance experience and refusal to pay their low double and single digit thousands and lower dollar amounts claims.
The following four historic episodes which are cited in the white paper document "The Loss Of The Certainty Effect" reflect todayís current fifth episode widespread bad faith insurance claims settlement environment. As they are only lightly referenced in the RMR review and commentary, FBIC thought them significant enough to recall and review them here in more detail. The white paper documented article, "The Loss of the Certainty Effect" indicates the problem of the loss of the certainty effect is not new as the authors document and cite numerous other occasions in the past" referencing in particular four occasions, when the loss of the certainty effect or threat thereof occurred. "On four occasions in the past, insurers' responses to unexpectedly heavy claims (FBIC: translated from the claimants perspective, "policyholders responses to the insurers non-payment of their claims") "have led to major changes in the law and practice of insurance in the United States. One could see all four as examples of what was done to head off the loss of the certainty effect at the time."
"The first episode was after the Civil War, when life insurance became the leading way for families to provide for the early death of the breadwinner. When death claims came in, some insurers looked for ways to avoid paying. A favorite way out was to assert that the deceased insured had not made full disclosure when applying for coverage many years before. Since the cause of death was usually known once the claim came in, the insurer could often quite truthfully (FBIC: an overwhelming number of plaintiff experts agree that instead of the words "quite truthfully", this statement would be much more accurate and to the point by substituting "untruthfully" or "falsely" as it relates to how the insurer otherwise could possibly know with few or rare exception that the deceased had the disease if it wasn't disclosed when the application was submitted) say that the fatal disease, or a predisposition to it, was not disclosed in the application. This was particularly true where the applicant did not know about it either." (FBIC: this is characteristic, typical and exactly the type of the many responses in the bad faith insurers arsenal today when trying to avoid payment of a life insurance policy)
"Popular resentment grew so harmful to life insurance marketing that, in 1879, the largest life insurance company introduced the "incontestable clause," in which the company gave up all defenses, except nonpayment of premium, once a policy had been in force for a few years. After New York's 1906 Armstrong Committee investigation into life insurance abuses, the law of that state and many others required an incontestable clause in all life policies."
"The second episode also occurred in the second half of the nineteenth century. Then, fire insurance was by far the largest property-liability coverage and was essential to the development of cities and factories. Competition among fire insurers was intense. One way to compete was to pay agents high commissions and not to restrain their sales efforts by underwriting."
"After a large fire of the sort that destroyed entire cities in that era, some insurance companies looked for ways out. One popular way was to invoke obscure warranties, limitations, and exclusions in the fire insurance policy, the "fine print" of insurance song and story. The result could be to deny funds to rebuild cities or factories just when the money was needed most." (FBIC: Gee, this sounds very familiar ... now where have we heard this before?)
"As with life insurance, public resentment of abusive claims practices threatened to undermine the value, and the sales appeal, of this essential coverage. The principal reform was to take away from fire insurance companies the power to write their own policies. State legislatures either enacted the full text or delegated to the insurance commissioner the authority to do so. Either way, the laws required the enacted policy wording, and nothing else, to be used for all fire insurance on properties in the state."
"The third episode was in accident and health insurance, a line that was a principal insurance protection for workplace injuries before workers' compensation. The policy contained prohibitions against increasing the risk, such as changing occupation, without the consent of the insurance company. Once claims came in, insurers that were disposed to get out of paying could look closely at what the worker was doing at the time of the accident that might differ from what he or she did when the insurance was sold."
"As with life and fire insurance, these claims practices led to resentment and loss of confidence in the coverage. They also led in 1911 to a major investigation by the National Convention of Insurance Commissioners. From the investigation came crackdowns on individual companies, a proposed standard policy form, and prohibition of such practices as profit sharing for loss adjusters." (FBIC: Is this to say that all loss adjusters presently have no incentives to either not pay a claim or minimize the amount the insurer has to pay to settle a claim?)
"The fourth episode concerned cancellation and claims practices in automobile insurance. In the late 1940s, most companies cut back on their automobile writings, and those that stayed open got more business than they could handle. For a time, insurers coped by getting tougher on cancellations and claims. Responding to the public resentment, regulators and legislatures restricted cancellations and prohibited unfair claims practices."
"Two of the four remedies-for accident and automobile insurance-were moderate and in the regulatory tradition of general guidelines and specific enforcement. The other two were radical and self-enforcing. Life insurers lost even the defense of fraud. Fire insurers lost the power to write their own contracts. On the historical record, the two radical reforms worked better."
"Despite this difference, the four episodes have two features in common. One is that the problem was a decline in public confidence that insurance would pay - the loss of the certainty effect. The other feature is that insurers or the government or the two together responded by imposing a remedy that applied to all insurers, either legally or competitively or both. No one company could unfairly refuse to pay claims and thereby offer customers lower prices and increase its own profits."
FBIC would like to thank the anonymous party who made us aware of the white paper whom without this person's contact we would not have had this most significant and rare opportunity. FBIC wishes to express its gratitude and recognize the authors for their efforts. FBIC is especially appreciative for this very rare opportunity to expose select insider insurance industry information to the public and consumer which otherwise would clearly not be available and are able to read about the insurance industry freely admitting for the first time to massive and repeated occurrences of bad faith insurer wrongdoings ... as it also strikes home the misfortunes to today's mass numbers of people experiencing the same or comparable present day insurer practices and wrongdoings. It's truly incomprehensible to believe the bad faith insurers usual repeated denials of wrongdoings especially when now we can observe and view the actual acts of many of their bad faith claims wrongdoings and mass denials of claims being performed from the number of network media investigative video exposés available for viewing in addition to reading examples of sworn court testimony and media transcripts as are also available on this website Ö along with the white paper and related document(s), the evidence to the contrary is overwhelmingly conclusive.
FBIC knows and can attest to the fact through its growing consumer support, membership and extensive research and data that today's bad faith insurance claim practices do not discriminate against the rich or poor or the big and little ... bad faith insurers practice opportunistic breach to businesses and individuals, policyholders of all sizes as a general practice." To today's many hundreds of thousands to the recent millions of breach of contract and bad faith insurance victims still alive, who know, have felt and/or experienced the victimizations and suffering, perpetrated on them by unconscionable bad faith insurers' and the cognizance of their shameless and ruthless defense attorneys' actions, this article serves not only as an affirmation and acknowledgement to these victims current days plights, but screams out to confirm FBIC's mission to stop and correct this most serious and major problem, blight and threat on our American society and all of its people. To those we know who have died and past on under such difficult circumstances at the hands of bad faith insurers, let it act as a heart warming, kind and loving remembrance as well as a reminder to ourselves not to forget that just as they died as a result ... that rich or poor it can happen to you or anyone of us anytime anywhere in an instant which is exactly what we all buy and count on insurance for.
Of recommended reading, and now as referenced earlier, here are the several trade publication reviews, commentaries, and quotes regarding the article "Loss Of The Certainty Effect" that we have found ... all are in agreement and concur with the Stewarts' "The Loss Of The Certainty Effect" authoritative document. (Note: FBIC would also like to know about and add any other trade press or independent publication reviews and commentaries published on "The Loss Of The Certainty Effect" that are not referenced or included herein. FBIC would greatly appreciate hearing from you, if you know of any other reviews and commentaries not referenced or included herein. Thank you.)
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