In the movie with John Wayne and James Stewart there is a famous line at the end of the movie, “When the legend becomes fact, print the legend”
In other words when fiction becomes fact, print the fiction. That is what is happening with the insurance industry when they are talking about Consumer Legal Funding and Social Inflation.
In a recent paper titled: Social Inflation: What it is and why it matters it references “litigation lending” as a cause for why there are increase to consumers for the cost of insurance. But the document that they are referencing is over a decade old that was written based upon information that was gathered on the internet three years before that. Not a single consumer legal funding company was directly contacted for the paper. All the data that was referenced was taken off websites. The information was not verified by outside sources. As we all know, information published on the internet is ALWAYS factual and TRUE.
What they are saying is that the reason consumers are paying more for insurance is because of consumers getting financial help because the insurance industry is taking so long to settle the legal claim. So, let me get this right, the industry that is causing the problem, is blaming those who are solving the problem? This is like blaming your doctor because you fell and broke your arm.
In fact, the Consumer Federation of American published on the topic. The conclusion of the paper: How the Cash-Rich Insurance Industry Fakes Crises and Invents Social Inflation, states:
For five decades, businesses and consumers have been victims of periodic eruptions in insurance premiums caused by the property/casualty insurance industry’s economic cycle, the industry’s unique accounting methods, and laws that allow anti-competitive pricing by this industry. While insurers try to convince the public that lawsuits and juries, or “social inflation,” are to blame for this, historical data are clear that this has never been true – and it is not true today. The only way to stop volcanic eruptions in insurance premiums is through better oversight and regulation of the industry’s mismanaged accounting and the cyclical nature of the insurance business.
So, I guess the Insurance folks want you to live by the words of “The Man Who Shot Liberty Valance”, “When the legend becomes fact, print the legend”. They believe that eventually people will believe it is true if they say it with such authority and gusto. Remember what Elvis Presley once said, “Truth is like the sun. You can shut it out for a time, but it ain’t goin’ away.”