Insurance Industry Insider Richard E. Stewart Confirms Insurers Bad Faith Practices Are Widespread


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

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:

  • Confirmation and validation by extensive FBIC bad faith insurance research and data (based on insurance department states agencies complaint ratios-rankings, state and federal court records, the frequency, flagrant and extreme nature of complaints and FBIC's "Bad Faith Survey" information submitted by consumers against insurers, other information provided by independent public adjusters, insurance agents, plaintiff insurance attorneys, insurance company whistleblowers and other bad faith related sources.)
  • The response by the insurance industry trade press has been unanimous in their agreement with the authoritative white paper document acknowledging the bad faith insurance practices industry problem is widespread (note: to FBICís knowledge there has been and is no insurance industry trade press, not even one trade publication, that has expressed disagreement or opposition, or offered a shred of evidence questioning the validity of the white paper document).
  • Prominent state attorney generals have also expressed the office's non-surprise and long-standing awareness to insurers increasing bad faith insurance claim practices for "at least the past 20 years" and agreement in recent years to the widespread non-payment of claims insurance industry problem that protectionist insurance industry laws limit them in frustration from their office's prosecution and doing much about.
  • Well respected court judges, highly regarded insurance industry officials and experts on both the insurer and policyholder sides of the table agree with the white paper document.
  • Bad faith insurance practices investigative video exposés (available for viewing on the website "home" or "reference" pages only).
  • Compendium of "telling it like it is" articles and information from insurance insiders such as insurance commissioners and former defense counsel (available for viewing on the website "reference" page only).

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?

SO, THE MAIN QUESTION, SMART, KNOWLEDGEABLE AND AWARE AMERICANS WANT TO KNOW THE ANSWER TO IS:  What have our Federal and State insurance regulatory enforcement agencies, officials, legislators and legislative committee members been doing all this time to protect citizens from the rich and powerful insurers' illegal widespread non-payment of claims, pervasive use of breach of contract and bad faith insurance claim settlement practices, the misdirected and misuse of the insurance industry's and insurer's unparalleled enormous power, special legislation unnecessarily afforded all insurers exempting them from many federal and state laws and that are exclusively and only granted to companies in the insurance industry, their over-excessive use and abuse of the country's state and federal court systems in order not to have to pay a claim or simply to use to delay payment, in some cases up to twenty years and more, or hide behind for their own protection, to use to threaten claimants to succumb to their will or perpetrate ruthless and excessive punishment and victimizations of insureds, consumers and business policyholders and claimants alike, at a time when they need their insurer the most, with the intent that the victimized claimant will tire of the brutal treatment and punishment or not be able to endure or sustain such a fight and go away foregoing payment of their claim? (Note: we estimate from data that there are easily millions of such examples and occurrences. Of those that went to court and were litigated, there are published court cases which exist and examples available in support (i.e. Campbell vs. State Farm) as well as many more that are sealed or unpublished court cases removed from sight through a legal mechanism "vacatur" commonly employed by insurers. These victims that we speak of that were denied on their claims are the same people that we all know wherever you live, that you pass by each day, that are all around us and influence and effect each of our daily lives. They are your acquaintances, your neighbors, friends and family. Counting the odds and if not to protect yourself against bad faith, you and everyone else needs to stop and do a reality check right now to make sure your insurance is with a good faith insurer in anticipation and expecting that you will be a victim sooner rather than later because later is sooner than you think and will be too late.)

THE ANSWER TO THE QUESTION APPEARS OBVIOUS: Our Federal and State legislators diligently worked overtime to pass the pro-insurer McCarran-Ferguson act of 1945 which returned insurance industry regulation back to where it had been for more than 100 years, that is back to each state. The McCarran-Ferguson Act of 1945 overturned a 1944 U.S. Supreme Court decision which declared insurance for the first time as interstate commerce putting regulation in the hands of the U.S. Government and squarely in opposition to the wishes of the insurance industry. Since then (1945 - 1965) we don't know much except that it was around 1969-1970 that the drafting work on what resulted and formed the basis for each of our states bad faith laws originated and developed ... And we can only surmise that at the time it wasn't done without good reason (i.e. that it became obvious that bad faith insurer practices started to occur). It is apparent since then that our state legislators have been doing absolutely nothing or at the very least, very little for the consumer, but hiding their heads in the sand acting as if they didn't know that these illegal practices and harsh ruthless insurer actions were/are pervasive (note: it may likely be they are busy quietly working trying as they do to repeatedly pass what appears to be insurers never ending attempts to increase and make their very high rates higher and get more and more profitable pro-insurer anti-consumer legislation passed). Its the insurance industry and companies influence and regulation that their money and power can buy and has over the system.

(Important Note And Request For Consumers: This well documented, first of its kind, bombshell story continues, but first, one very important consumer note and request. Much of the U.S. insureds public may have little or no significant claims experience or possibly just some very small claim(s). Consumers and businesses in general are completely unaware of the insurance industry "trade press" as to what is really going on in the industry and know little if anything about the serious bad faith insurance problem that exists and lurks closely over each and everyone of us ... that when something happens, and it will, it will impact and change your life as you know it, forever. And then, now after its too late, FBIC is always first to read the words in a communication from the victims "I've read or heard about this happening to others, but I didn't think it would ever happen to me or my family". ... Please read here about the growing pervasiveness of bad faith insurance claim settlement practices to epidemic proportions and hopefully learn what bad faith insurance victims have experienced, so hopefully you won't have to live through your own similar experience and misfortunes: "yes, that it can happen and it will, and that when it does, you want and you need the best good faith insurer behind you, otherwise you will wind up like the many thousands who regularly visit this website in desperate need of help and having to read all about breach of contract and bad faith insurance practices which may be happening to you right now as you are reading ... After and when it may be too late to do anything about it except fight back and then with contributions from the public (please make a contribution now) and your donation, we are here and asked by you for our help." if you still think it can't happen to you, be advised that our members stories are just as likely to be from both the rich and/or poor, as well as include insurance company executives, defense attorneys, adjusters and other insurance company employees that have insurance with a bad faith insurer and thought it couldn't happen to them.

Most importantly, FBIC needs each of your help locally. There are several ways you can help and play a part to stop the widespread use of bad faith insurance practices from continuing in your area and contribute to helping stop and bring attention to consumers, businesses and the public at large as to this nationwide epidemic feeding on the public. We ask:  (1) that you make sure that you buy and have insurance with a Good Faith insurer ... and not with a Bad Faith insurer; (2) for your help and support by making a donation to FBIC by using our secure online website Donation page facility ... your contributions are very important to FBIC as the Public has made it possible for FBIC to impact and bring attention to this very important problem through donations and because we are a non-profit, your donation is tax-deductible; (3) that you be an advocate and tell as many people as possible and send them to the '' website; and (4) we ask that you contact the writers, journalists and editors of your local newspaper(s) (most now have websites where you can do this online) and ask them to investigate and report on this most important story and write an article and apprise their subscribers and readers to this critical problem potentially effecting everyone in your area and all Americans nationwide. All of the evidence including the white paper document referenced and each of the supporting industry trade documents are included herein and on the website to be viewed and/or printed for use in their newspaper story or editorial. FBIC welcomes working with all media. (FYI FBIC, in working with the network television broadcasters, have done their part and are doing their fair share of reporting on the subject of the widespread use of bad faith insurance practices by many of our country's major insurers as exemplified by the investigative video exposés available for viewing on this website.)  However, we would like to do more and work with newspapers recognizing that they need to do more as they may have been reluctant up until now and reticent to go up against and expose some of the powerful bad faith insurers for their illegal practices, and henceforth have done little or nothing on the subject to make their readers aware of this serious problem. We've broken the ice with the media in this regard since 1998 mostly with the network broadcasters and this story along with all the supporting evidence and documentation represents just such a unique and rare opportunity for newspapers to do so for their readers. In addition, there are many other media articles on the subject that can be viewed by going to our website or clicking on our
"Reference" Website Page.


(White Paper Introduction, Actual Text Of The White Paper Document and Related Industry Commentary Continue Here.)

... 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 white paper document briefly aside for a moment to cite but one piece of important evidence expressly communicated and one example out of many regarding bad faith insurance), the following excerpt and quotes are from insurance commissioner Herb Denenberg's Column Of July 01, 2003, entitled:


"Insurance companies just donít want to pay meritorious claims, even to each other. Hereís the latest proof of that conclusion from a Commonwealth Court judge who ordered the liquidation of another Pennsylvania Insurance Company. Listen to this sentence from the opinion of the judge ordering the liquidation:" "The failure of the reinsurers to honor their contractual obligations is not limited to Legion Group (Insurer); it is endemic to the industry." "Reinsurance is insurance for insurance companies. The judge, who ought to know (she is a former general counsel of the insurance industry), is saying insurers donít pay their claims properly or promptly even when dealing with each other (through reinsurance). I would have thought there would at least be honor even among thieves, and that insurance companies would at least pay claims when due to each other. But according to the Judge of the Pennsylvania Commonwealth Court in the Legion insurance liquidation that is not the case. This sentence in the Judge Hannah Mary Leavittís legal opinion is important, as it shows how deep and pervasive is the failure of insurance companies to pay their claims. This failure should be a high priority of insurance regulators. But unfortunately, history demonstrates the insurance regulators donít regulate the insurance companies; it is vice versa Ė that is the insurance companies regulate the commissioner." (Note: FBIC data and industry experts agree that this problem is national and has no boundaries ... although we should note that Canada for one lets us know they share many of the same problems and complaints with many of FBIC's U.S. Bad Faith problem insurers which appear to parallel FBIC's U.S. insurer rankings.)

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.)
  • Published by Risk Management Reports, a well-regarded insurance industry trade publication. Of note, the editor states: "Can the commercial property/casualty insurance business in the United States be in a death spiral? Economists Richard E. Stewart and Barbara D. Stewart suggest just this in an explosive article entitled "The Loss of the Certainty Effect" in the Fall 2001 issue of Risk Management and Insurance Review. In the past seven months Iíve commented on some of the disturbing signs of self-destructive behavior. My fears are now confirmed by this masterful exposition, complete with references, footnotes and historical perspectives by two knowledgeable and experienced executives." Click here to view the commentary and review, entitled "A Death Spiral?" written by H. Felix Kloman, Editor and published in its June 2002, Volume 29, Number 6 Edition.
  • Published by International Risk Management Institute Click here to view another trade publication review and commentary from "IRMI Update" June 18, 2002 written by Jack P. Gibson, President and Editor.
  • Published by Risk Management Magazine Click here to view further confirmation by another industry trade publication commentary entitled "The Decline of Certainty" written by recognized distinguished attorneys Eugene Anderson and Alice Oshins, February 2003 which also concurs and is in agreement with the Stewarts' authoritative document.
  • Published by The Insurance Forum entitled "The Non-Payment Of Insurance Claims" October 2002 Edition. The Insurance Forum is a very well known and a highly regarded independent periodical continuously published since 1973 ... its Editor is Joseph M. Belth, Ph.D.. Joseph M. Belth, Ph.D. is professor emeritus of insurance at the Kelley School Of Business at Indiana University (Bloomington). He is the author of several books and numerous countless articles, and has received many awards for his writings. He notes in his commentary that the Stewart's prepared "a shortened, non-technical version" of "The Loss Of The Certainty Effect" at his request "for publication in The Insurance Forum". (The abridged version written by the Stewarts and published by The Insurance Forum and their commentary can be purchased directly from The Insurance Forum or contacted through its website The Insurance Forum's commentary, (on "The Loss Of The Certainty Effect") entitled "The Non-Payment Of Insurance Claims" written by its Editor Joseph Belth states: "I have known and respected the Stewarts for many years. I first met Mr. Stewart shortly after he was appointed Superintendent of Insurance in 1967 by Governor Nelson A. Rockefeller of New York. I found the article provocative. In my view, the implications of widespread claim denials extend well beyond commercial property-liability insurance lines. I think many of the ideas presented by the Stewart's also apply to such individual lines as medical expense insurance, disability income insurance, homeowners insurance and automobile insurance." (Of FBIC note: Mr. Belth's view and insight in this regard is correct as FBIC research and data supports and confirms his thinking. FBIC data indicates and reveals that the greatest amount of illegal insurer mass denials, bad faith claim settlement practices and insurer abuses are in the following insurance lines: disability, auto, homeowners, health and workmen's compensation.)

Click here to view "The Loss of The Certainty Effect" co-authored by Richard E. Stewart and Barbara D. Stewart published in its original version by Risk Management and Insurance Review. (Note: Adobe Reader is required to view the document. Download here a free version of Adobe Reader.)

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