Monday, September 24, 2018

[Annotation] The Modern-Day Robbers

By on August 17, 2018

Editor’s note: The following originally appeared in the Aug. 16-23, 2018, issue of Caribbean Business.

For everybody who paid his or her business-interruption insurance in the past on time, in many cases for years without needing it, the ridiculous game that insurers are playing in Puerto Rico must almost seem like fraud. In law, fraud is defined as a deliberate deception to secure unfair or unlawful gain. At least from where I sit, where the livelihoods of hundreds of people depend on an insurance company to simply do what they said they would, it sure looks like that!

Anybody who intentionally provides a client a proposal to do something if A, B or C happens, and takes that client’s money for it, and then comes up with 100 hurdles and excuses at the moment of truth, should not only lose his or her license to be in that business, but should go to jail. It’s modern-day robbery. An aggravating circumstance in the case of business-interruption insurance is that once you need it, some catastrophe has already happened to you. In the case of Puerto Rico, the aftermath of two major hurricanes is worse than the actual hurricanes.

Whereas the law makes a distinction between “unintentional” manslaughter and intentional murder in different degrees, nothing comparable exists in the insurance industry. The insurance companies can propose a policy with premeditation and malice, hidden from you when you sign, and silently commit their deed by delaying your claim once you call upon them, and thus they get away with murder, metaphorically speaking.

It is a pity, and every single person participating in that scheme should wear shame hats when stepping onto the streets anywhere. The bet of all these white-collar robbers is that if they only delay long enough, one will get more and more desperate and, at one point, accept a fraction of what the rightful claim is—and the gain is theirs. I’m not even saying they should have an obligation to accept whatever a client presents, but what good is it to show up with a plastic spoon for a gunfight? The insurance companies have all advantages on their side.

In a very concrete case, a team of several people under the guidance of CPAs, lawyers and seasoned executives has worked for months on end to present the case exactly according to the instructions of the insurance company’s adjuster, to then have it taken apart and be offered the misery of less than 30 percent of the claim. That adjuster, some CPA paid by the insurance company, has the right to question every single assumption or conclusion just based on his gut feeling—whereas the client isn’t even awarded the opportunity to argue logically. In that case, positive numbers from a period after the hurricanes, which would be working against the insurance company’s goal to minimize the claim, will at best find their way into a footnote of the adjuster’s report. The balance of power and the entire process are out of whack, so the insurers have all the power; the clients have none.

A portrait of Bernard Madoff, the financier convicted for running possibly the largest Ponzi scheme in history. (Abode of Chaos on VisualHunt.com)

In our case, we’re going down the road of litigation with full force now and have found what we think is the very best representation available in the United States, with an armada of lawyers and consultants. After consultation with that new counsel, we believe more than ever that we have a very strong case. Did it have to be that way? Not from our end. But after unreturned calls, emails and canceled meetings, excuses and more excuses for months, and then offering an insulting fraction of our claim, all that salted with a taste of arrogance, the insurance company left us no other option.

Unfortunately, that ruling in our favor down the road will not even bother them—with what they have made from deferring our and all other payouts, they and their accomplices will always come out OK. I estimate that for every $100 million in deferred claims, the insurance companies make at the very least $400,000 per month, and more likely than not, much more than that. And the claims totals are in the billions. Unless they receive a real threat to THEIR business continuity and schemes, they will continue pocketing that dough no matter the damage to their clients, individual companies and the island, exactly like any other robber would not care about the damage caused to his victim.

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