William Rabb of the Insurance Journal wrote an article, Study Stirs Debate on Real Impact of Litigation, Fraud on Property Insurance. He noted a post on this blog, Insurance Fraud Cost Statistics Are a Fraud, and stated the following:
An academic paper published in the Journal of Insurance Regulation seems to have rekindled the debate over how much of an impact litigation and fraud have had on property insurance losses and premiums, particularly in Florida.
The paper, ‘The Case for Pausing Any Immediate Embrace of the Social Inflation Argument for Legal System Reforms,’ was penned by Kenneth Klein, a professor at California Western School of Law, who spent much of his career as an insurance defense lawyer. It was published a year ago but was reposted recently by South Florida plaintiffs’ lawyer Chip Merlin. Merlin argued the study shows that claims of excessive litigation, fraud and social inflation have been blown out of proportion by the insurance industry.
In my post, I made the following claim, and nobody from the insurance industry is able to dispute it:
Insurance companies claim that when claims numbers are simply made up, that act constitutes fraud. If that is so, then insurance company fraud statistics are a fraud. The often wrongfully cited estimate of $308.6 billion is an admittedly ‘make believe’ estimate.
Rabb quoted Klein regarding insurance industry statistics regarding litigation decreases:
And Florida’s Citizens Property Insurance Corp., the state-created insurer that tracks a range of data, has reported that litigation rates for non-catastrophe Citizens claims dropped from a high of 14% in 2020 to 6% in 2023.
Klein, of course, might argue that those statistics show only that all lawsuits, not just frivolous or fraudulent ones, are in decline.
He used a sports analogy, comparing the property-casualty insurance industry to a football team that has taken some losses. ‘But when the team loses, the answer is to play better – not to try and fire the other team’s coach.’
Thought For The Day
A lie gets halfway around the world before the truth has a chance to get its pants on.
—Winston Churchill
