Lawsuits and Insurance....?

[Gulfman]

I just saw that someone was suing Starbucks for putting too much ice in their Iced Drinks.

Someone must have got hurt....maybe chipped a tooth chewing ice!

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I'll take a stab at a few of your questions.

1) Remember many politicians start out as attorneys and move into politics. Because of that they have strong relationships with large legal firms. I would guess that those legal firms helped get those people into office. Don't bite the hand that feeds you.

2) Most insurance companies don't have in house legal council so they pay for it per hour just like you or I would to a third party firm. Maybe they negotiate a better rate because of the volume but they are still paying a lot of money to attorneys. Insurance companies aren't dumb (or are they?) so they know what cases should be settled and which ones should go the distance.
Personally I've gone the distance in some legal cases and spent $50k+ in attorneys fees alone.

3) I've noticed over the years that many insurance companies make money on their investments, bonds, stocks...etc. Let's say they invest 5% of their gross sales per year. If it were a perfect world and there were no fraudulent claims the average auto premium would be $500 a year. Because of all the fraud they are $1,000 a year. What do you make more money on, 5% of $500 or 5% of $1,000?

Thanks Arn,

1. Yes---but worse is that members of CONGRESS are attorneys...and they pass the laws (under the guise of public protection)---what a SCAM they got going. Auto accidents are the #1 Claim for PI attorneys.

2. This is a Big problem. Its in the interest of Civil Defense law firms to see more and more lawsuits filed. I once sat with my attorney defending me in a frivolous lawsuit and we walked outside. He looked up at the billboard signs and said "hey, there's "so&so" advertising to get more business for me. More lawsuits filed, more defense money for my firm." This guy had a Hugh operation,---he has the state farm account for my county. He was DEAD SERIOUS.

3. (sigh)---yep, that's what i thought. Unless consumer advocate groups get involved, this trend will continue. Soon, most will have to go "naked" like many doctors have done and are doing. They've insulated themselves by showing little cash and putting all their $ into irrevocable trusts, offshore money havens,etc. Many Many MANY doctors have sought out tax shelter advisors and told the system to go to hell.



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[Matt37]

I remember talking with a veteran claims adjuster for a small RRG in NJ..

I asked him how they managed to stay profitable writing risky classes like Taxis and trucking at competitive pricing.. he said "low limits and fight claims like hell" .. he said the rule was the first letter of representation from attorneys went in the trash, the first phone call you let go to VM, the second phone call you say you will get back to them... THEN if they continue to call you start getting serious.

He said if you write low enough limits and actually make attorneys work to get their checks .. most go away.

Unfortunately the large carriers make it to easy on the attorneys and just pay right away..

 

[Arnage150]

I remember talking with a veteran claims adjuster for a small RRG in NJ..

I asked him how they managed to stay profitable writing risky classes like Taxis and trucking at competitive pricing.. he said "low limits and fight claims like hell" .. he said the rule was the first letter of representation from attorneys went in the trash, the first phone call you let go to VM, the second phone call you say you will get back to them... THEN if they continue to call you start getting serious.

He said if you write low enough limits and actually make attorneys work to get their checks .. most go away.

Unfortunately the large carriers make it to easy on the attorneys and just pay right away..

I've heard this as well. Funny how the little companies know this and the big ones just write checks.