Personal Injury - Is Economy Impacting Claims?
Is The Economy Impacting Personal Injury Recoveries?
The economy is in the midst of an historical financial meltdown, bottoming out one day only to break a new low the next. We are left pondering what impact this cataclysm could have in the world of personal injury litigation. None of us have control over how and when one gets injured, as people suffer injuries whether they are able to pay for their medical treatment or not. We do not stop driving or discontinue getting sick, regardless of whether the money is tight. Sadly, personal injury field is far from being recession proof.
The injured rely on the insurance company to cover their personal injury claim. So what happens if, despite the regulatory measures, an insurance company becomes insolvent? No need to hypothesize, as you just need to think back to the recent meltdown of the mega insurer AIG. We never thought it would be possible for a company the size of AIG to wither away on the vine as it did. Today, AIG is propping up its dinged façade. They assure us there is no reason to worry; that we should keep a positive outlook. They say in a brand new disclaimer on their website, AIG, “The insurance companies behind AIG remain strong and well-capitalized to cover every policy they issue” and urge us to “continue to count on AIG to provide you with the very best.” AIG claims that not only are they solvent, but they are prompt in paying most collision claims within two weeks, some even as soon as forty eight hours. It is hard to detect the traces of its “past” troubles from just a couple months ago, when AIG executives came to Capitol Hill, hat in hand, asking for over $120 billion in loans from the federal government. At least for now we have avoided another disaster. While the AIG was able to get a life line from the government, other insurers may have similar problems precipitated by the market woes.
Such near disasters makes us ponder. If the economy worsens, causing one of the large insurance companies to file for bankruptcy, where does that leave the injured parties waiting to get paid on their claims? Unfortunately, the rehabilitation or liquidation of an insolvent insurance carrier usually means a delay in the settlement of outstanding claims. Where a solvent insurance company may settle claims in a matter of weeks, the complications of dealing with an insolvent company can lengthen the process considerably. All 50 states and the District of Columbia require licensed insurers to assume some of an insolvent insurance company’s policyholder liabilities. These funds are the mechanism by which solvent insurers bail out the policyholders of the insurance companies who fail. The policies of an insolvent insurance company are often transferred to a financially sound insurance company.
The process of liquidation may vary in every state, but one thing is certain, the field of personal injury is not recession proof. It is directly affected by the current economic recession. If an insurance company is truly on the verge of bankruptcy, it could mean delay or worse, non-payments of its obligations to its clients who are involved in personal injury suits. This financial crisis affects every person in our society.
To learn more about personal injury issues, please read our website at maryland personal injury issues. To learn more about our personal injury lawyers, please read our firm bio on Andrew Bederman, Roger Greenberg, or Jason Fernandez.
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