CHICAGO – Insurers must push back against frivolous litigation if they want to halt rising legal costs, according to Prime Property & Casualty Insurance Inc. President and Chief Executive Officer, Rick Lindsey.
But in his view, legal costs keep mounting because the insurance industry settles frivolous litigation.
“The profit’s in being better claims managers, not being naive and not being abused by the legal system,” he told Best’s News Service. “Once you’re running away from the fire you have no chance in hell of putting it out. Any insurance company can collect money and issue paper. They do that at the carnival and the train station. To add value what we should do is know how to manage claims, and we don’t know how to do that anymore.”
Lindsey, who owns a majority of Prime Holdings voting common stock, said plaintiff attorneys have threatened to take his company. He vows to keep spending $200,000 to defend a lawsuit rather than settle it for $50,000 because it’s the right thing to do.
“This is frivolous litigation, and we need to stand up to it … We need to fight as hard as the plaintiff attorney is fighting for their client so it’s balanced. Now it’s not.”
Lindsey, who has taken cases to the state Supreme and Appellate courts and won at least eight decisions, has been deposed more than 70 times and testified nearly 100.
Prime focuses on the facts, he said, “not the fear and intimidation the lawyers want you to focus on. I’ve had truck accident after truck accident where we have had successful outcomes after the lawyers said we would lose.”
For instance, he said an attorney offered to settle a suit for a client who “had no drivers license, was drunk, had cocaine in her system, was going 30 mph over the speed limit and crossed lanes” to hit a policyholder’s truck. “If anything, we should be suing her for damage to our truck and downtime. And this is just one case.”
Prime will write any line except workers’ compensation and war, said Lindsey. Recently, it expanded commercial automobile to North Carolina and New Mexico. Last year, it was approved to offer surplus lines coverage in California, enabling it to write property/casualty insurance nationwide (Best’s News Service, Aug. 16, 2018).
Prime speaks directly with policyholders prior to starting the quoting process. “If they won’t talk during the quoting, can you imagine what a nightmare they’ll be during a claim?” Lindsey said.
He refers to policyholders as partners but admitted his company “isn’t the easiest on the planet to get along with” on the underwriting side. Prime’s premiums are higher and require insureds to place their self-insured retention with the company.
It verifies conditions in person, down to the wording on a watercraft rental company’s release form. “The issue isn’t property, it’s liability,” said Lindsey.
The company prices on the assumption that a policyholder, even those with solid risk management and prior records, will incur a loss. Prime tells customers to report any and all accidents immediately, regardless of severity, so that it can do its job and manage the claim.
“We won’t cancel you because we wouldn’t write you if we couldn’t insure you,” Lindsey said. “Unfortunately, we’re catching you at a bad time, from a bad claim, because you’re growing, or you’re in a bad county or a bad state. I want to insure you for the next 10 years. But to do that I need someone I can have a strategy with.”
The U.S. legal system “is a great system if you embrace it. And you don’t price too low. There’s no ‘just hoping for the best.’”
Prime Holdings’ subsidiaries offer underwriting, risk management, claims, brokerage, and financing services nationwide. It wrote $117.1 million in premiums in 2017 and $174.5 million in premiums in 2018. Prime Property & Casualty is an admitted carrier.
Prime Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent).
Thank you to Best’s News Service for providing this write-up and allowing us to use it.
(By Renée Kiriluk-Hill, associate editor, BestWeek: Renee.Kiriluk-Hill@ambest.com)
BN-NJ-5-5/22/2019-2019 1514 ET #
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