BREAKING DOWN HOW INSURANCE IS PLAYING BOTH LITIGANT AND DEFENDANT AGAINST EACHOTHER AND WHY…

f you have ever been involved in a lawsuit where insurance is involved and thought, “Why does this feel so opaque?” — you are not imagining it.

The answer is the tripartite relationship.

It is a standard, legally recognized structure in insured litigation, but one that most people are never taught to recognize. Once you understand it, many of the frustrations people associate with insurance companies suddenly make sense.

What Is a Tripartite Relationship?

A tripartite relationship exists when three parties are legally and functionally intertwined in a lawsuit:

  1. The Insured
    The company or individual being sued (for example, Bayport Laboratories, LLC).

  2. The Insurance Carrier
    The company that issued the liability policy and will ultimately fund defense costs, settlements, or judgments (for example, Nationwide).

  3. Defense Counsel
    Lawyers who appear in court on behalf of the insured, but whose fees are paid by — and whose authority is constrained by — the insurer.

On paper, this looks balanced.
In reality, it creates layered control and diffused accountability.

How It’s Supposed to Work (In Theory)

In theory:

  • The insurer provides coverage.

  • Defense counsel represents the insured.

  • Everyone works toward an efficient resolution.

Courts allow this structure because it is common and lawful.

But theory and practice are not the same thing.

How It Really Works (In Practice)

In practice, the tripartite relationship operates through controlled visibility and delayed authority.

1. The Insurer Controls the Levers — Quietly

Even when an insurer is not named in court filings, it often:

  • Pays all defense fees

  • Sets litigation budgets

  • Approves or denies settlement authority

  • Dictates whether a claim is tendered or delayed

  • Determines when coverage is acknowledged publicly

Yet the insurer rarely appears in court.

This invisibility is the first source of frustration:
the party with the money is not the party speaking.

2. Defense Counsel Speaks — But Often Lacks Authority

Defense counsel communicates with opposing parties and the court as though they are fully empowered.

But when key moments arise — settlement offers, mediation, case narrowing — the response is often:

“We don’t yet have authority.”

That authority typically sits with an insurance adjuster or internal claims committee.

This is the second frustration:
the person talking is not the person deciding.

3. The Insured Absorbs the Pressure

Meanwhile, the insured:

  • Faces reputational risk

  • Bears business disruption

  • Is publicly associated with the litigation

  • Often claims financial distress

Yet the insured may not control:

  • Litigation pacing

  • Settlement timing

  • Disclosure decisions

  • Strategic posture

To outsiders, it looks like the insured is driving the case — but they often are not.

This is the third frustration:
the visible party is not the controlling party.

4. Insurance Disclosure Is the Pressure Point

Civil procedure rules require disclosure of any insurance that may satisfy a judgment.

This rule exists for a reason:

  • To allow informed settlement

  • To prevent litigation by ambush

  • To ensure courts understand the real financial landscape

When insurance disclosure is delayed, narrowed, or withheld:

  • Opposing parties cannot evaluate risk accurately

  • Courts may issue orders without full context

  • Individuals bear pressure meant for insurers

This is where the system starts to feel sneaky — even if no single step is overtly improper.

5. The “Now You See It” Effect

A familiar pattern follows:

  • Early filings claim no insurance or minimal coverage

  • Litigation proceeds aggressively

  • Discovery or court pressure forces disclosure

  • Policies or endorsements suddenly appear

  • Settlement posture shifts

Nothing new happened.

What changed is visibility.

Once insurance is exposed, the case dynamics often change overnight.

Why This Creates Public Frustration With Insurance

People don’t resent insurance companies because they lose claims.

They resent them because:

  • Decisions feel delayed without explanation

  • Responsibility keeps shifting

  • No one seems to be accountable

  • The real decision-maker is never in the room

The tripartite relationship allows all of that to happen structurally, not emotionally.

Why Courts and Regulators Care

This is why disclosure rules exist and why courts scrutinize insurance issues closely.

The goal is not punishment.
The goal is transparency.

When transparency arrives late, trust erodes — even if every actor insists they followed the rules.

The Bottom Line

A tripartite relationship is not a conspiracy.
It is a system. A SYSTEM THAT BAYPORTS OWNERS ARE FALLING FOR AND THEY’VE BEEN TOLD!

But it is a system that:

  • Benefits from opacity

  • Dilutes accountability

  • Frustrates individuals

  • Shields insurers from direct scrutiny

Once you understand how it really works, the confusion disappears.

And once insurance becomes visible,
resolution becomes possible.