The Insurance Company “Float” As Incentive To Deny Claims

The modus operandi of the property-casualty insurance industry in cases where claims are disputed and later, sometimes after years of litigation, resolved in the policy holder’s favor, gets a critical look from Barnes & Thornburg coverage attorney Thomas Mielenhausen. In many states, he writes, insurance companies get what amounts to a cheap loan at the policy holder’s expense, because only nominal pre-judgement interest is added to the recovery. In those states, he maintains, legislation mandating higher pre-judgement interest is needed in order to reduce the insurer’s incentive to delay resolution of the claim. This post includes an excerpt from an insurance company letter to its shareholders that the writer marshals as an exhibit A for his argument.