General Motors Company (NYSE:GM) is going through the laborious process of analyzing the hundreds of claims for compensation resulting from defective ignition switches that were installed in 2.6 million of their vehicles. Yet according to Kenneth Feinberg, GM’s Compensation Fund Administrator, on CNBC today, some of the claims being sent in are “woefully inadequate”, and very few have been approved thus far.
“We’ve received these claims, some of them have been woefully inadequate, no documentation, no signatures, no correct addresses. We’re not rejecting those claims, we’re finding 31 are eligible and the remainder are currently being processed, and we’re working with the claimant to firm up those claims,” Feinberg said.
Of those claims that have been approved, which amounts to just 31 of 445 claims processed thus far, claims involving 19 deaths have already been approved. That figure already exceeds the total of 13 that General Motors Company (NYSE:GM) says were caused by their faulty switches, and is likely to rise much higher, given that claims involving 125 deaths are among the 445 claims received so far.
As Feinberg puts it, the reason for the discrepancy is that General Motors Company (NYSE:GM) was only judging deaths that were directly caused by a malfunction of the switch, from an engineering perspective. In the case of awarding claims however, the burden of proof is not absolute on proving mechanical malfunctioning, but rather in determining whether it was likely or not that a malfunctioning switch was responsible.
General Motors Company (NYSE:GM) has set aside $400 million to compensate victims of accidents involving the faulty switch, which the company was aware of for more than a decade before a recall of affected vehicles was finally issued this year. The defect caused the vehicles to essentially shut off without prompting, hindering the ability to steer the vehicle and brake, and preventing the airbags from being deployed.
General Motors Company (NYSE:GM) stock is down 17.54% year-to-date, and entered today trading at $33.47. It is up 1.23% today, in afternoon trading.