The Boy Scouts of America’s sexual abuse compensation fund may force insurers to make payments they can’t negotiate over, even if the claims are fraudulent, a group of the companies argued in court.
Insurers, including American International Group, Liberty Mutual Insurance and Travelers Casualty and Surety, began their case against the biggest-ever compensation fund for abuse victims by presenting an academic on Tuesday who argued the plan creates a “moral hazard” for insurers.
Proposed rules for paying victims take away the right of insurance companies to defend themselves and remove any incentive for the Boy Scouts to fight for reduced payout, said Scott Harrington, a professor of insurance and risk management at the University of Pennsylvania’s Wharton School.
