50 Trial Lawyer • Spring 2023 By Travis Eiva OTLA Guardian As tort attorneys, none of us as a child dreamed, “When I grow up I want to regulate insurance companies.” However, in almost every tort case (whether it involves professional malpractice, a workplace injury, a trucking collision, product liability, race or sex discrimination, crime victim rights or an automobile crash), we somehow also find ourselves regulating insurance company behavior. We must manage the myriad of issues related to our client’s personal insurance to cover the losses suffered and manage a subtext dispute (a proxy war) between our client and the tortfeasor’s insurer. In our practices, we have no choice but to develop some understanding of the insurance industry and its motives. So, I thought it worthwhile to take a moment to discuss some unique aspects Travis Eiva of the history and framework of insurance company greed and how that greed manifests in our cases. This information will not be new to many of you and in some regards it is simplistic. But greed often is simplistic and to prevent it from doing harm it is important to revisit where it comes from. After all, the greed of billion-dollar companies is a peculiar thing. Understanding how insurer greed translates into bad behavior is critical for all our cases. A brief history Some date the concept of insurance to Hammurabi’s Code, which provided a law of debt relief when the debtor suffered a catastrophic disability or an “act-of-god” event such as flood or famine. Some date the concept of insurance to the medieval craftsperson’s guild system, where guild members paid dues to the guild, and in turn, the guild would pay to cover the master craftsperson’s business obligations or family costs when the craftsperson’s practice burned down or was robbed, or the craftsperson was suddenly disabled or killed. Although Hammurabi’s Code and the guild system share some parallels with life, disability, natural disaster and theft insurance, the practices they represented were motivated by social justice concepts of reasonable debt forgiveness and mutual aid, which play no role in the profit driven models of modern insurance. Modern, profit-driven insurance derives from a nonintuitive concept that, once recognized, opened the door to profit in almost every corner of modern life. The concept is that profit (absurd amounts of profit) can be realized from predictable losses. Even more nonintuitive is that such profit can be realized by simply promising to pay for those losses (which is different than actually paying for them). There are many origin stories to the birth of that profit concept. I can’t help but gravitate to one that starts in an English coffee house. It goes something like this: By the mid-1600s, English merchants and investors realized there were enormous profits to be had in the resources found in the Americas and other non-European lands. But such ventures shared a common predicament. To reap the wealth of those far off places, ships and cargo not only had to travel back and forth across perilous oceans, but also expeditions had to be undertaken into unknown lands that held a multitude of untold risks. Small and great fortunes were periodically lost in the process. At the same time that English merchants were turning their focus on such overseas, colonial ventures, London burned. Most of the formal halls of business were reduced to ash. Commerce sought temporary lodging. Investors, merchants, entrepreneurs and commercial clerks stationed themselves in coffee houses to informally conduct business and while away the day. This created a boom where a hundred or so coffee Fighting Corporate Greed
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