If it weren’t for trial attorneys threatening insurance companies with big verdicts, the insurance companies would never pay claims to their policyholders. Mike Maxwell is a personal injury attorney and co-founder of Maxwell Graham based in Issaquah, WA. In this video, he explains how trial lawyers help keep insurance companies honest.
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Video Transcript:
What I've learned over time is that insurance companies are in the business of protecting their own money, so will only pay on a claim, not if they think it's the right thing to do, not if they think that the person was brutally injured, not if they think that the person's life was really badly messed up, not if they think that they're there to serve their insured. They will only pay because they have to.
The only way you can make an insurance company pay is you either have litigation or the threat of litigation. Litigation ultimately ends in a trial. One percent or less of civil cases ever goes to trial. And of that one percent that goes to trial, only 1 percent of the lawyers are trying those cases. So 99 percent of the cases that go to trial are being tried by one percent of those lawyers. And those lawyers are the ones that are responsible for making sure that the entire insurance industry at large is paying these cases because they have the threat of the occasional verdict. And those verdicts can be big. And it's the occasional big verdict which keeps the insurance companies honest and makes the insurance companies pay on all the other cases to prevent them from going to trial to get that occasional big verdict.
If no lawyers ever took cases to trial, there would never be verdicts. There would never be big verdicts. There would never be any risk for the insurance companies. And they would drive down the amounts that they pay lower and lower and lower and lower to the point that they would be paying nothing. That's a great business to be in. If you can be in the business of always collecting the premiums but never paying the claims, that's a great business to be in. And that's ultimately what the insurance companies would like to do. Collect the premiums, never pay the claims. All income, no payment. But the reason why that business model has eluded them thus far is because of the trial attorneys who do occasionally take cases to trial and win these verdicts. And that that's what keeps the insurance companies honest.
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