Over the years, I have subscribed to many insurance-related newsletters and blogs. Needless to say, you could spend hours daily just reading the probably hundreds of such publications. So, over the years, I’ve culled my daily/weekly/monthly reading list to just a handful of essential newsletters and blogs. In the next few weeks, I’ll post a list of them. In the meantime, one such daily blog I examine when I boot my PC is from a plaintiff’s lawyer.
The Merlin Group is a Florida-based law firm that represents policyholders in multiple states. Chip Merlin’s daily blog is on my must-read list (and not because they featured my blog in a recent post of their own). The reason I follow Chip’s blog is because it’s not devoted to slamming the insurance industry like much of the attorney advertising we see on TV (especially on the Jerry Springer show…not that I’ve actually watched that show ;-). His blog is truly educational and devoted to examining case law and issues that policyholders can learn from, whether the decision was in favor of insurers or policyholders.
In Chip’s post about my blog, he quoted an excerpt from a post that discussed insurance industry advertising and questioned whether the unfair comparison of dissimilar insurance products might constitute “twisting” under some insurance laws or regulations. I myself have asked the question whether some industry advertising might constitute an unfair trade practice, something prohibited by pretty much every state.
For example, one insurer has used advertising catch-phrases like “SAME COVERAGE, Better Price” and “You get the SAME COVERAGE, often for less.” If you agree with the premise that “coverage” is determined largely by policy form insuring agreements, exclusions, and conditions, along with carrier claim practices, do insurers actually offer the “SAME coverage”? I don’t think so. For examples of auto policy form coverage variations, check out this article. For more information on the commodity myth created by this advertising, check out this area in the Big “I” Virtual University.
But this question is, does this type of advertising rise to the level of an “unfair trade practice” under state insurance laws and regulations? I can’t answer that because it’s a legal question. In my state, this is what the law says:
Misrepresentations and False Advertising of Insurance Policies. Making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison that…
- Misrepresents the benefits, advantages, conditions or terms of any policy…
- Uses any name or title of any policy or class of policies misrepresenting the true nature of the policy or class of policies…
False Information and Advertising Generally. Making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly to be made, published disseminated, circulated, or placed before the public…an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance…that is untrue, deceptive or misleading….
So, is saying your policy provides the “SAME coverage” as everyone else if it really doesn’t an unfair trade practice? If the purpose of the law is to protect consumers from being misled by misrepresentations to their detriment, there’s an argument that it is. But, again, I’m not a legal expert and have no knowledge of whether this premise has been legally tested. But it sure looks misleading, if not deceptive, to me as a layman and I’m convinced it has contributed greatly to the public’s (and too many in our own industry) erroneous perception that personal lines, especially auto, insurance is a commodity distinguishable only by price.
Are you an insurance attorney? If so, what is your opinion? Feel free to Comment below.
Photo by Brett Jordan 
Bill Wilson
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Dear Bill:
I’m not an Attorney, but I’ve been a Legal Secretary/Paralegal since I was 18 and I’m 50 (so for quite awhile). For from age 20-40 I worked for Chip Merlin (was the 1st Legal Secretary for William F. Merlin, Jr., P.A., n/k/a Merlin Law Group). I’m familiar with insurance and personal injury law. Regarding automobile insurance and personal injury cases, I’ve personally been advised by clients that they purchased Joe Blow Auto Ins. because it was the cheapest quote they got on the internet! It fit with their budget. This type of clientele is “prey” for insurance companies because (A) they’re not going to check their reputation and track record with the Florida Dept. of Insurance and/or (B) have the wherewithal or knowledge to find out if its a good insurance company or not. Their education comes when they make a valid claim and have to fight – often with litigation – for their benefits!
Further, the average consumer – in my opinion – believes (or is at least persuaded) by insurance company’s tv commercials promising the “best & most coverage” for the “cheapest” price.
Finally, I know a good carrier from a bad carrier, but that knowledge only comes with working with and around insurance companies for over 30 years!
Respectfully,
SHIRLEY HEFLIN
Tampa, FL
The important thing is, at least from a grassroots standpoint, to educate consumers at every opportunity that there are differences in policies and claims practices. That’s admittedly an uphill battle given the onslaught of industry advertising focused almost exclusively on price. To quote John Ruskin, “There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey.”
It is very difficult for the typical consumer to understand what is and isn’t covered. They see limits for liability, med pay, and UM, and deductibles for physical damage, and just assume that the policies are, for all practical purposes, identical. This is reinforced by well-meaning consumer articles about insurance that caution people to “compare apples to apples” when price shopping. That doesn’t work when the apples look the same from the outside, but on the inside they may have worms or even purposely placed needles.
That’s the main reason insurance not a commodity…even subtle nuances in insurance contract language can be substantial in their impact, down to semi-colons and verb tense. Anyone who has reviewed thousands of court decisions knows that the coverage is in the proverbial “fine print.” That’s the value of a GOOD insurance agent, someone who can assist in exposure analysis, risk treatment/product selection, and perhaps most important, advocacy at claim time, including advocacy when a customer is the victim of a tortfeaser’s insurer that is anecdotally known to restrictively adjust claims on, at best, a comparative negligence basis.