Washington, D.C. – A comprehensive new study of the property/casualty insurance industry, How the Cash Rich Insurance Industry Fakes Crises and Invents Social Inflation, was released today. The study shows that this industry is, once again, in the process of deceiving businesses, consumers, and regulators in preparation for a national insurance crisis of skyrocketing rates, while sitting on more cash than at any time in its history.

The Consumer Federation of American (CFA) and the Center for Justice & Democracy (CJ&D) prepared the study. Written by J. Robert Hunter, CFA’s Director of Insurance, Joanne Doroshow, CJ&D’s Executive Director, and Douglas Heller, CFA’s Insurance Expert, the study exposes the industry’s long history, in the mid 1970s, mid-1980s and early 2000s of creating crises that blame lawsuits, juries, and injured victims for premium hikes even though litigation data and the industry’s own loss data show that claims were actually stable throughout each of these crises. Research has shown that rate increases during each crisis were driven by insurers’ economic cycle not spikes in insurance claims.

Co-author Joanne Doroshow said, “It is appalling that, for decades, the insurance industry has gotten away with victimizing U.S. businesses by creating crises in insurance affordability and availability, while falsely blaming juries and victims for the industry’s own mismanagement. The public has had enough of this endless cycle and the periodic crises that accompany it. We hope insurance regulators finally take some steps to reign in the excesses of the insurance industry, whose business practices are wreaking havoc on both businesses and injured victims who are falsely blamed for this.”

Click here to read the full press release.

Businesses facing huge losses from pandemic thought their insurance would cover them – Not really

Government-ordered closures of restaurants, stores and other businesses because of COVID-19 are not enough to trigger coverage, insurers say

As the frantic queries for financial help came flooding in from business facing huge losses following the coronavirus shutdown orders, Holly McGlinn speedily assembled a spreadsheet to help her track the now 125 claims — and counting — for coverage of business losses sought by her insurance agency clients.

“I’m filing as fast as I can,” said McGlinn, whose firm, Breakwater Strategic Insurance Solutions that she owns with her husband Ryan, represents a broad swath of local businesses — restaurants and bars, event planners, retailers, pilates studio operators, and tech companies.

So far, all the responses have been the same — denial of coverage.

Despite a still rapidly expanding coronavirus pandemic that has financially ravaged businesses locally and across the nation, companies are quickly finding out that their property insurance policies, which include protection against the interruption of business, simply don’t apply in the world of COVID-19.

In many instances, claims are rejected because the policies include a specific exclusion for losses due to “virus or bacteria,” a legacy of the SARS outbreak of the early 2000s. Insurance company adjusters are also citing a more nuanced explanation, namely, that the shuttering of businesses due to coronavirus was not related to nor did it cause actual property damage, as in the case of a fire or hurricane.

Click here for full story