DELAY, DENY, DEFEND in ACTION!
State Insurance and AMI in New Zealand have clearly demonstrated the Insurance Australia Group’s company policy used to avoid meeting claims in the way they dealt with and continue to deal with our case.
Read the following very carefully before you decide to take our an insurance policy from an IAG operated insurance company or if you are considering buying shares in IAG.
Ignoring this warning could lose you your fortune, freedom or even your life!
Some people reading this may not have heard of the DELAY, DENY, DEFEND system employed by all IAG operated insurance companies to increase profits and the expense of policyholders.
During the last several decades, insurance companies have turned the basic insurance model on its head. When you purchase homeowner’s insurance, you are essentially purchasing security against financial risk caused by damage to your home, or liability claims brought by third parties who are injured on your property. The insurer collects premiums for providing this form of financial security. The insurance industry strategy for handling claims that has basically re-defined the relationship between policyholders and insurance companies is referred to as the “DELAY, DENY, DEFEND” strategy.
Although insurance companies are vast bureaucracies, the departments and personnel traditionally have clearly defined roles:
Underwriters calculate the appropriate price for a policy based on an evaluation of applicants and potential risks;
Actuaries assess the risk based on factors and information provided by the insured;
Agents market insurance policies and assist consumers in selecting the appropriate coverage;
The claims department pays claims.
Although this delineation of roles indicates the role of the claims department is to pay claims, the delay, deny, defend strategy turns the claims department into a major profit center for insurance companies. This basic approach to generating increased profits involves delaying payment of valid claims, denying payment entirely, and defending the claims handling process by tenaciously defending against lawsuits.
Insurance Industry Model Shifts to Focus on Denying and Underpaying Claims
In the USA, several large insurance companies hired mega-consulting firm McKinsey and Company to develop claims strategies that would generate increased profits. McKinsey concluded that insurance claims constitute a “zero sum game” that pit insurers against insurance carriers who compete for the same dollars. The consultants sold insurance carriers on redefining the game by altering their whole approach to the business of claims. The following strategies were widely adopted by insurance carriers:
Relying on computer programs to calculate the amounts insurers would be offered.
Dragging out the claims process to increase the financial pressure on
policyholders to accept low ball offers.
Deterring policyholders from retaining legal representation.
Providing insurance adjusters with financial incentives to underpay claims.
Making settlement offers on a “take-it-or-leave-it” litigation basis.
Despite iconic promises in advertising slogans, such as IAG’s “We make your world a safer place” homeowner’s insurers often handle property damage claims or liability claims according to this time-tested profit generating strategy. Insurance companies are in a unique position to utilize this strategy.
When a homeowner hires a contractor to perform work on his or her home, the homeowner can refuse to pay the full contract price if the work is not properly completed. However, homeowners cannot compel payment of a claim by threatening to take their business elsewhere after their insurance company refuses to pay the claim.
I now look at the actions taken by IAG in dealing with our claim. Initially IAG sent a Loss Adjuster, he immediately offered us ‘around $1 Million for the house claim’, the classic ‘low ball’ offer. When we refused that, IAG reverted to the three D’s strategy.
The first of the three D’s is to Delay. When we submit even the most straight forward case for review, many insurance companies say they need 30 days to review the claim. Why? Many of these cases could be thoroughly reviewed in an hour or two. The reason for this delay is that insurance companies know that the longer they wait, the less resolve remains in the person making the claim. Studies have shown that the longer insurance companies delay paying a claim, the less they pay.
There was a massive volume of evidence that intruders caused the fire at Killara, FSO Craig Bain told us that ‘Vandals’ had caused the fire on 10 September 2011 and he showed IAG’s investigator, Russell Joseph the forced entry into the property on 14 September. The actual investigation was complete at that point, no need for any delay at all but IAG went into serious DELAY mode at this point.
Months passed with no word from IAG, we finally consulted a lawyer, Andrew Hooker, insurance specialist who warned us that this was a common ploy by IAG and it could take years to sort it out. He suggested taking action in the High Court, we agreed and in March 2012 he filed a case against IAG for repudiation. The initial Delay stage was limited by this action, IAG had 25 working days to file a defence against the case but there really wasn’t one.
‘Independent’ investigator’s, Russell Joseph and Maurice Fletcher, had been hired by IAG, their job was to create a case against me to allow IAG to decline the claims and following the filing of the case against IAG they earned their generous salary. With Martin Jorgensen, Joseph’s computer ‘expert’ they created a scenario attempting to discredit the evidence of the intruders and went on to ‘adjust and create’ the evidence to ‘Frame’ me for arson.
IAG’s companies are ruthless and will stop at nothing in their pursuit of profits, usually employing the slogan of “profits over policyholders.” To this aim, with no actual evidence to support it, on 17 April 2012, I was arrested for Arson just days before the 25 day deadline for filing the defence was reached.
You will have got the idea. Insurance companies will fight at any cost to
defend their “lowball” line in the sand.
Why? Because the savings are not viewed on an individual case basis.
The point for insurance companies is that if it becomes known they will fight all the
way to the end and spend any amount of money to hire “independent experts,” people
will be less likely to challenge them and settle for the lowball offers presented.
These “independent” experts, who testify that the innocent victim is a liar, cheat and fraud out to scam their way to the litigation lottery, in truth they earn hundreds of thousands of dollars a year testifying for insurance companies. Of course, these skillful character assassins are too smart to define exactly how the fire or accident was caused. Instead they cloak their allegations with indirect inferences that leave them options of modifying their evidence if facts emerge to refute their initial accusations.
In our case, the experts initial evidence was based on a theory based on me ‘hacking’ the printer. This was detailed at the Police interview after my arrest and I pointed out immediately that my ink-jet printers did not have a heat source or user programmable firmware. All the disclosure I was given after the interview was ‘lost’ from the Police Station whilst I appeared briefly in Court.
Once delay fails, insurance companies often then employ the second D: the Deny stage. There are, of course, many variations of denial. Sometimes it is an outright denial of the claim whereas other times it is a “low ball offer.” Studies again show that some people simply accept the denial without resistance. Contrary to the general public perception, most people are not “litigious” and only reluctantly hire lawyers or file suit in insurance cases.
In our case it was just a simple denial of the claim, based solely on the fact that I had been arrested for ARSON quoting that the printer had ‘triggered’ the fire, no mention of me hacking the printer here.
False evidence, wrongful arrest and malicious prosecution abounded but IAG are confident that they have full support from the NZ Police and Government so are immune from any actions against them.
Remarkably, the evidence was all changed by the time the disclosure reappeared, the dates on the documents were prior to the police interview but the theory had totally changed, now the printer had been rigged to act as a trigger for another ignition device. Again, no actual evidence existed. Even the DVD recording of the Police interview had been edited crudely showing just how much influence IAG have over the NZ Police and Government.
Denial is fine if it is backed by evidence, just making it up based on thin air leads to credibility issues. We had a pre-trial that was meaningless with a Judge who couldn’t accept IAG could do any wrong.
Fortunately, the Court of Appeal didn’t agree but even they gave IAG the chance to produce further evidence. We went back to the Delay phase, years passed and IAG took extreme measures to attack my every action.
A simple Settlement Offer was twisted by the IAG lawyers into a blackmail charge, even more court hearings, even more stress and time spent in jail with IAG resisting bail at every step. I was even beaten to near death by DS Bill Dawson with some other members of the NZ Police after my arrest. Eventually, I was taken to the hospital where they told the medical staff that I had resisted arrest, a seriously ill, 68 yo man resisting arrest?
IAG took a no-holds bared, win at any cost approach to defending our claims.
Barefaced lies piled on top of incredibly stupid false evidence supplied by the ‘independent experts’ in the attempts to get me convicted for arson and solve their problems with our ever growing claims.
We didn’t just give up, we fought even harder.
IAG ramped up their actions, we ran into loads of lawyers in very expensive suits. Lawyers who were willing to sell their souls, telling Judges the lies that IAG needed to avoid meeting our claims.
We had entered the third stage of the three ‘D’, the DEFEND stage!
The lawyers lied to Judges at hearings, outrageous lies, clearly and easily shown to be utterly false but the Judge usually wouldn’t even listen to us. The Judgments were GIGO, Garbage In and Garbage Out but IAG was happy to quote those words endlessly to build a wall around their position, ignoring us, blocking our every action and continuing to avoid the claims.
Thousands of people are now reading these pages, subscribe to the blog and the publicity is hurting IAG but it is like a nat bite on the arse of a rhinocerus, they feel they can take the pain until it just goes away!
As detailed in the document of the American Association for Justice, IAG’s computer selects the easiest targets for the 3 D strategy, the old, the weak and the dying being the top of the list! I guess they thought I fitted the criteria but I will not give up, the Killara Trust that owned the property cannot die, my son will continue this campaign for tens of years to come and that is a serious DANGER to the future of IAG!
On the US Property Insurance Law Blog they make the same point I have stated on this website and in the Courts for many years.
‘Establishing an action for bad faith or other wrongful behavior is important; making the action effective is equally important. Making the action effective requires that the policyholder or victim be fully compensated for the harm suffered, and that the economic incentive for delay, deny, defend be taken away from the company. When a company violates fair claims practices, the harm and the incentive should be reflected in the damages. Many courts and legislatures have responded, and all should provide a comprehensive approach. When a policyholder sues for bad faith, the damages start with payment of the full amount of the loss that she was entitled to receive under the policy. If that’s all the company has to pay, the company has an incentive to delay, deny, defend. More is required.’
In New Zealand I have been attacked by IAG’s lawyers and the Judges themselves for suggesting that PUNITIVE DAMAGES need to be massively increased to prevent the insurance companies undertaking these actions. The maximum ever awarded in NZ was $50,000 in 2016 and in a case such as ours were the claim would now top $3.5M including interest that is insignificant as a deterrent!