Running an online business or any business these days requires a different mindset. It is vital to understand your actions have consequences. Not only do they have consequences, but those consequences can be spread far and wide very quickly. One only has to look at the way Progressive Insurance recently shot itself in the foot repeatedly in the matter of Katie Fisher to understand as much.
Scumbag Insurance Practices
Insurance companies enjoy putting out marketing pieces suggesting they care for you, the client. They don’t and you should never believe such marketing puff statements. Insurance companies serve only one goal – to make money.
Don’t ever forget this fact.
The Fisher Case
The Fisher case involved Katie Fisher being killed in a car accident when another driver drove through a red light and hit her. The insurance company for the other driver immediately paid out the full value of his policy, but the policy limits did not cover all the damages apparently.
Fisher had taken out an underinsured policy with Progressive Insurance. Progressive was thus responsible for paying the difference between the amounts paid by the responsible driver’s insurance policy, and the policy Fisher had taken out as her primary coverage. Indications are this amounted to roughly $75,000.
In a tactical decision that can only be described as utter buffoonery, Progressive decided to fight the payment. It forced the Fisher family to sue the offending driver and recover a judgment against him before Progressive would pay. To make matters worse, Progressive had counsel sit with the defendant at the trial. Progressive then tried to hide this fact before eventually realizing it had to fess up.
The Viral Effect
As you might imagine, all of this was very troubling to the Fisher family. Fisher’s brother, comedian Matt Fisher, published a number of posts online regarding the conduct of Progressive. He was particularly miffed the company seemed to be helping the defendant in the case so it could avoid paying on the policy.
Matt’s message went viral quickly. Suddenly, you had actors and hundreds of thousands of people becoming incredibly angry. Progressive finally settled up with the Fisher family. You can bet it paid far more than it would have originally in the matter.
This situation bears out a paramount lesson about doing business these days. Just because you have a legal right to do something does not mean you should actually do it. Being ruthless is fine, but not if you end up doing damage to yourself in the process.
In the Fisher case, Progressive followed the correct technical steps available to it from a legal perspective. This approach doesn’t mean doing so was the right thing to do. There is often a difference between these two things. Progressive Insurance is learning this painful lesson now and rightfully so.
Let’s start with a simple, practical point. We are talking about $75,000. Progressive spent far more than this on attorney time. While insurance companies will often try to establish a reputation for being tough to settle with, this is just ludicrous. The lesson? Do not be pound foolish when weighing decisions impacting clients and customers.
The second point is you must take public perception into account in all business decisions. The Progressive Insurance tactics are obviously in very poor taste. While you will probably never make a decision as bad as this one, you need to think through the potential social media impact. Is it really worth fighting over a refund with a client? You might save $25, but what is the cost of them ripping you in the social media environment? A lot more than $25.
Reputation has always been a significant issue for businesses. It is even more so now since vast numbers of people can communicate online so easily and quickly. Will Progressive Insurance recover from this debacle? Sure, but not before it sees a downturn in revenues lasting for many years.
A positive reputation is hard to build but easy to throw away. Make sure to guard yours carefully.
Richard A. Chapo, Esq.
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