Insurance questions in the employment law industry are hotting up.
Employment law workers - lawyers and advocates - are reporting more and more insurance representatives attending employment mediations. The representatives take part in negotiating settlement agreements between employers and employees. Why would that happen?
It appears that the employer and employee may agree, for example, that the employee will leave for "medical" reasons and take six months' sick pay from the insurer. That is, the payout that used to be disguised as "future salary" will be disguised as "sick pay" - and will be paid by the insurer.
If they write this up on a standard MBIE template form, and MBIE then signs as well, the agreement will be kept confidential but will still be enforceable.
Nobody at the insurance company will know that the employee is actually perfectly well and healthy.
Probably nobody from the insurance company except the representative who went to the mediation will ever see the Record of Settlement, because it will have its standard clause about "confidentiality".
It may look like a victimless con, but it's a fraud on the insurance company by the representative.
Or if it's not, because the insurance company knows what the representative is doing, it's a fraud buy the insurance company on its reinsurers.
The employer gets to pay off an unwanted employee using someone else's money. We don't know whether the insurance representative gets a payout from the employer for that or is just happy to help. We don't know whether the insurance company knows about it at all.
But we must all be paying for it in our insurance policy costs. There isn't such a thing as a victimless con just like there isn't such a thing as a free lunch.