Cedric Stephens | Insurance misconduct fodder for conspiracies

QUESTION: On Thursday, November 17, 2016, at about 6:35 p.m., I was driving my 2013 Mazda CX-5 SUV along Passagefort Drive. I was coming from Municipal Boulevard. My car was in the right lane. When I reached the turn for Augusta Drive, I stopped. A vehicle was directly in front of mine. We were both waiting to turn right. A black 1994 Toyota Corolla was coming out of Augusta Drive to make a right turn on to Passagefort Drive. A white 1988 Toyota Camry was coming up Passagefort Drive. They collided. The Camry careened on to the median and into the driver's side of my vehicle. My insurers paid to fix my vehicle. I incurred out-of-pocket expenses like the excess and car-rental charges. The Toyotas are insured with the same company. My broker said that neither party is accepting liability and that the matter has been referred to a Court of Arbitration. We are now midway through 2018 and the matter remains unresolved. I have lost part of my no-claim discount and therefore have had to pay increased premiums. Can you help?

- kikihutch@hotmail.com

INSURANCE HELPLINE: Dictionary.com offers two meanings for the phrase conspiracy theory. The first is "a theory that explains an event as being the result of a plot by a covert group or organisation; a belief that a particular unexplained event was caused by such a group." The second definition is that it is an "idea that many important political events or economic and social trends are the products of secret plots that are largely unknown to the general public". The key words are 'economic', 'products of secret plots', and, of course, 'largely unknown'.

What is the relevance of conspiracy theory to your insurance claim?

There could be many reasons for the 18-month delay.

One could be ignorance and inefficiency on the part of your broker and the insurer of the Toyotas.

A second could be that since neither party is accepting liability that he caused the collision and the insurer lacks the authority to make decision, the matter must be referred to arbitrators.

The third explanation is that because you, the third party, are ignorant about the insurer's claims process, the insurer is exploiting that ignorance by delaying payment for as long as possible. The expected outcome: the longer the claim remains unpaid, the more interest income the company will earn, and the less the company will end up paying.

Of the three scenarios, which one is most likely to create a theory of how the industry operates?

 

EXCLUSIVE RIGHTS

 

Insurers retain exclusive rights to settle claims under the terms of their contracts. That duty is seldom shared with other parties.

One of the conditions of a typical policy would read: "No admission, offer, promise, payment, or indemnity shall be made or given by or on behalf of the insured without the written consent of the company which shall be entitled, if it so desires, to take over and conduct in the name of the insured the defence or settlement of any claim or to prosecute in the name of the insured for its own benefit any claim for indemnity or otherwise and shall have full discretion in the conduct of any proceedings or in the settlement of any claim and the insured shall give all such information and assistance as the Company may require."

The insurer has "full discretion in the conduct of any proceedings or in the settlement of any claim". It, therefore, does not require any agreement from the other parties to determine which driver caused the accident. It can assign fault without reference to anybody 100%; or 50%:50%; or 60%:40%; or 70%:30%; or whatever.

My guess is that the policies that were issued to the owners of the other two vehicles contain provisions like the one I quoted. The suggestion that the settlement of your claim requires the agreement of the other drivers is a very poor excuse. The money to pay your claim will come from the same bank account. What if both drivers had died in the accident?

Let us now examine the standard arbitration clause of a typical Jamaican motor policy. It would read like this: "If any dispute or difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted), such difference shall, independent of all other questions, be referred to the decision of a sole arbitrator to be appointed in writing by the parties to the dispute".

Another insurer expresses the same idea minus the legalese: "If we accept your claim but disagree with the amount due to you, the matter will be passed to a legally appointed arbitrator. When this happens, an arbitration award must be made before proceedings can be started against us."

 

POLICYHOLDER-INSURER

 

The wording is of the two clauses are similar in one respect. Arbitration is triggered by policyholder-insurer disputes about the size of the former's claim. It has absolutely nothing to do with deciding which driver caused a collision. That is the function of the field of study called accident reconstruction.

Reconstructing accidents begins with "known data such as the final rest vehicle positions, accident scene investigations and vehicle damage. By working with this data in reverse ... along with information relevant to the collision, the reconstructionist can resolve issues such as speeds, collision severity, visibility, driver behaviour, and other causal factors."

There is at least one accident reconstructionist working locally. If the insurer of the Toyotas really wanted to find out which driver caused the accident, they could have done so long ago without resorting to the fiction of a Court of Arbitration.

The way you were treated by the system that is, the broker, your insurer, and the other insurer is scandalous. Their actions suggest a collective lack of interest in your well-being and the exploiting of your misfortune to advance their economic interests.

Experiences like yours are fodder for conspiracy theories about the insurance industry. File a complaint with the Financial Services Commission.

Your case is the worst example of insurance company misconduct that I have seen in over 20 years.

- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com