An interesting question was posed earlier this month by Alan Shanoff of the Toronto Sun when he canvassed a recent Ontario case where an insurance adjuster reached an “unconscionable” settlement with a claimant which was eventually set aside by Court order. After detailing this case he asked “just how prevalent is this sort of practice? Unlike the Canadian insurance industry’s wild claim of $1.3 billion of insurance fraud per year, there are no estimates of how widespread abusive adjuster practices might be.”
Alan hypothesized as follows “Based purely on anecdotal accounts I suspect for every claimant who tries to exaggerate his injuries there’s an adjuster trying to minimize a claimant’s true injuries or deny a rightful claim.”
I can’t say whether this 1:1 ratio is right or wrong, however Alan’s question could be the beginning of an interesting discussion. If anyone is aware of statistics addressing how often self-represented individuals receive unfair settlements and the global cost of “unconscionable” settlements on the public at large this information should be publicized. If unfair adjusting practices short change deserving claimants anywhere near the figures the Canadian insurance industry claims fraud costs them then that is a story that needs to be told.
Now I’m no fan of insurance fraud, however, when reading stories of the high cost of insurance fraud it’s worth keeping in mind that, unlike the insurance industry, claimants who get stuck with an unconscionable settlement don’t have hundreds of millions of dollars in profits to offset the cost of a raw deal. Also, the insurance industry (to their credit) has a good track record of pursuing civil damages to punish and discourage fraudulent conduct. The same likely cannot be said about individuals who have their insurance claims processed in bad faith. As always, comments and feedback are welcome.