Leaking Like Progres-sieve?: What’s Next For Insurers After The UIM Claim Heard ‘Round The World

   By Randy J. Maniloff, White and Williams, LLP

Will More Money Now, Err, Flo?

In my house, if my wife says something, and her mother agrees, then it is a fact. I could dig up Aristotle and even he couldn't convince that duo otherwise.

That is not unlike what happened to Progressive Insurance. If you are reading this then you likely took note of the firestorm that erupted after Matt Fisher's Tumblr post contained this, well, not so subtle, headline: "My Sister Paid Progressive Insurance to Defend Her Killer In Court."

That headline was false as a matter of insurance law. But once the post went viral - and boy did it ever - no amount of explanation of the truth, or lessons in insurance law, could change the message and all the negative consequences that came with it for Progressive. The company was powerless to stop the mayhem (oops, wrong insurer). The horse had left the barn. The toothpaste was out of the tube. Choose your cliché. All Progressive could do was pay Fisher and cut bait. And hope that people on Twitter would soon find something else to tweet about. This is a tale that all claims professionals should be aware of.

By way of very brief background, Matt Fisher's sister was killed in a car accident. A indisputable tragedy. The driver of the other vehicle was underinsured. Fisher's sister had underinsured motorist coverage with Progressive. Under Maryland law, to collect on an underinsured claim, the other driver must be at fault. So Fisher's family had to sue the other driver to prove fault in order to obtain payment under her underinsured policy. The other driver was insured by Nationwide and Nationwide undertook the defense. However, Progressive participated in the other driver's defense as it had evidence that the other driver was not at fault. Hence, Fisher's brother's headline on his Tumblr post: "My Sister Paid Progressive Insurance to Defend Her Killer In Court."

A Maryland jury decided in favor of Fisher and awarded $760,000. Progressive's share was $75,000. Progressive paid its share plus, according to Fisher's attorney "tens of thousands" more to settle with the Fishers over the way the company handled the claim. How it handled the claim? As in - by following Maryland law.

Again, Fisher's headline was false because it was Nationwide, and not Progressive, that defended the other driver. And Progressive had the right to prove that the other driver was not at fault. Never mind. Fisher's story, fueled by that attention-grabbing headline, went viral - very viral. The niceties of Maryland insurance law were no match for the power of an internet story gone wild. Progressive took a beating in the court of public opinion - no matter what it did to explain its actions and its rights to take them. The story was featured on CNBC, "CBS This Morning" and Glenn Beck's radio show, as well as umpteen news sites. According to any analysis conducted at the request of Dow Jones Newswires, more than 1,000 people on Twitter claimed to have dropped Progressive as their insurer in a four-day period and 1,600 expressed a desire not to do business with them.

On one hand, the Fisher case is over. The settlement documents are probably being drafted as I type. But is it really over? That's the question that Erik Holm of Dow Jones Newswires and the Wall Street Journal posed in a WSJ story. Calling the situation a "cautionary tale" for insurers, Mr. Holm asked:

Now, the question is whether Progressive's experience will prompt changes throughout the auto- insurance industry as more consumers use the Internet to tell their side of the story when they feel they've been slighted by their insurers.

Mr. Holm observed that "[e]ven when a company's actions are legal and done with the blessing of regulators, it can suffer reputational and financial harm when exposed to harsh cyber- invective." (emphasis mine).

To read more about this "cautionary tale" for insurers, and whether the Fisher claim will have any impact on the handling of claims in the future, check out Mr. Holm's Wall Street Journal piece.

It contains the views of the Consumer Federation of America, a renowned policyholder lawyer, Progressive's Chief Claims Officer, Mr. Fisher himself and yours truly.

Insurers usually get vilified for allegedly not following the appropriate claims process. Here they did so and still got vilified. It's a tough business.

Please let me know if you have any questions. Randy

Randy
Randy J. Maniloff
White and Williams LLP
1800 One Liberty Place | Philadelphia, PA 19103-7395
Direct Dial: 215.864.6311 | Direct Fax: 215.789.7608
maniloffr@whiteandwilliams.com

The views expressed herein are solely those of the author and not necessarily those of the firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. The term "Binding Authority" is used herein for literary purposes only and is not an admission that any case discussed herein is in fact binding authority on any court.

Randy J. Maniloff is a Partner at White and Williams, LLP in Philadelphia.  He concentrates his practice in the representation of insurers in coverage disputes over various types of claims.  He writes frequently on insurance coverage topics for a variety of industry publications.  Maniloff's views on coverage issues have been quoted by numerous media including The Wall Street Journal, The New York Times, USA Today, Associated Press and Dow Jones Newswires.  Randy is co-author of "General Liability Insurance Coverage - Key Issues In Every State," a book addressing the law in all 50 states on twenty key liability insurance coverage issues (Second Edition; Oxford University Press 2012) (with Professor Jeffrey Stempel of the University of Nevada Las Vegas Boyd School of Law).

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