Product Description
An expose of insurance injustice and a plan for consumers and lawmakers to fight it
Over the last two decades, insurance has become less of a safety net and more of a spider’s web: sticky and complicated, designed to ensnare as much as to aid. Insurance companies now often try to delay payment of justified claims, deny payment altogether, and defend these actions by forcing claimants to enter litigation.
Jay M. Feinman, a legal scholar and… More >>
Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claim and What You Can Do About It
Tags: About, Claim, Companies, Defend, Delay, Deny, Don't, Insurance
5 responses to Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claim and What You Can Do About It
We buy insurance either because we have to or because we want security just in case something were to happen to us, our property, or to others. Many of us have never experienced a tragic car accident, house fire, or a tornado. If we do, we presume the insurance agent that sold us a policy to protect us against such tragedies and the insurance company will honor their obligations and fulfill their promises to put us “in good hands,” act “like a good neighbor,” and be “the relationship company.”
Yet, when tragedy strikes, all too often, you become a suspect, raising red flags merely because your insurance agent sold you a policy with “higher than normal amounts.” Your insurance company seeks your cooperation in their investigation of your loss as stated in your policy. You are asked to provide an inventory of your personal items with supporting documents showing where you purchased them from and for how much. You are asked to provide your credit card, bank, and utility statements for up to five years prior to your tragedy. You are subject to an examination under oath by an attorney with a court reporter transcribing everything you say, which will be used against you to deny you coverage under your policy.
While the insurance company conducts its investigation for any justification to deny you coverage under your policy, your finances get tight, your claim becomes a drain upon you, your family, your work, and your loss remains unpaid. The longer the insurance company delays, the weaker your financial position and will to fight for your insurance proceeds. Meanwhile, your insurance company maintains control of your insurance proceeds and earns interest on its investments. You receive a low ball offer, if any, or your claim is denied.
Next, you can choose to hire an attorney to pursue what is rightfully yours with the knowledge that they do not come cheap and any recovery will take another several months to a year. The attorneys representing your insurance company pay for themselves by chipping away at your claim until you lose the will to continue with a trial where you be treated like a criminal defendant, trying to defraud your insurance company.
Delay, Deny, Defend spells out this scenario for all of us who had not yet had this experience and to put us on guard for when we make a claim. Because when we make an insurance claim, our insurer becomes our adversary. Whether we acknowledge that or not, our insurance company thinks this way. I can affirm this, because I am an attorney who has worked as in-house and outside counsel for insurance companies, and I have done it. I have had several insurance claims of my own, and I represent insureds seeking to recover under their insurance policies. So, when you make a claim, don’t wait until it’s too late. Read this book and be on guard for when you become the victim of tragedy and your insurer treats you with boxing gloves.
Rating: 5 / 5
In the movies “The Incredibles”, the former super-hero father becomes an insurance claims adjuster. He lives in fear of being taking to task by his boss who constantly berates him for paying legitimate claims. Our hero’s breaking point comes when an innocent crime victim is denied any payment by the insurance company and is instructed by his boss how to deny her claim. Sure, the insurance industry is an easy foil. What could signal a more tragic downfall for a former super hero than to work for the insurance industry? Is that insurance bashing or just a reflection of the common experience of many people with insurance companies?
Bill Moyers recently interviewed Wendell Potter, a former insurance company executive, who revealed the enormous funds for ad campaigns and lobbyists paid by the insurance companies to make sure that the current system remains in place. Americans have the highest health care costs in the world yet we have a health care system that ranks 37th in the world. (look it up!) Every year thousands of Americans die or go bankrupt because we live in a system controlled by the insurance industry’s ability to profit from our misfortune. The difference between what we pay and the care that we receive is called “profit” by the insurance industry.
This book addresses this situation. It gives you an inside peak at how the insurance companies justify their decisions that may mean life or death and what you can do about it.
Rating: 5 / 5
Feinman writes that too often your insurance company will delay paying for your loss, deny payment of part or all of your claim, and/or aggressively defend the lawsuit you’re forced to bring to make the company live up to its promises. While he repeatedly cautions readers to not assume all companies are bad, it’s hard to conclude otherwise while reading “Delay, Deny, Defend.”
A major change in insurance practice occurred when Allstate and others hired McKinsey in the 1990s to develop new strategies for handling claims. Computer systems were put in place to set the amounts policyholders would be offered; settlements would be offered on a “take-it-or-litigate” basis. Insurance adjusters’ role would become more clerical, exercising less judgement.
Hurricane Katrina led to 120,000 complaints to the Louisiana Department of Insurance, and 6.6 thousand federal court cases as well.
Unum, the largest seller of disability and Long-Term-Care insurance in the U.S. was forced to review claims denied between 1997 and 2004, and reversed its decision in 42% of the cases – paying out $676 million in added benefits. UnitedHealth, Aetna, Guardian and others were forced to recalculate their “reasonable and customary” fees for out of network claims.
Feinman’s book depends on the accounts of insiders who became whistle-blowers, information revealed in litigation against insurance companies, and documentary evidence of the redesign of claims practices to increase profits.
Insurance companies now use attorneys contracted over the Internet, and audit their billings with the computer.
Feinman suggests checking “Consumer Reports” and “Consumer Federation of America” websites for advice before buying insurance. He also recommends state insurance departments provide increased surveillance of insurance company payout practices.
Rating: 3 / 5
Jay Feinman teaches insurance law at Rutgers University. As you read this book you will become convinced that he knows what he is talking about. However, as you read along you will also see that he is writing from a particular viewpoint and that he is an advocate for a certain position rather than a balanced analyst of the issue of insurance claims payments. While he admits in passing that the vast majority (read almost all) insurance claims are paid promptly and without any delay, denial, or lawsuit, this book makes a big mountain out of the relatively small number of claims cases that are, indeed, handled badly by the insurance companies. They are colorful and heart rending anecdotes, but we never get any context for the percentage of claims they represent. And while Feinman paints a picture of rapacious insurance companies he never shows us how big a problem the insurance companies face from rapacious customers making fraudulent claims.
His basic thesis is that when you bought your health, home, and auto insurance from the old style mutual insurance companies they paid what they owed and used talented claims adjusters to meet those payment obligations fairly while balancing company responsibilities and interests. Then the insurance companies became public corporations and their need for ever more profits pushed them to totally revamp their business. They brought in McKinsey and Company who completely revamped that way insurance companies operate including turning claims into a profit center.
They did this by turning to expert systems and replacing experienced claims adjusters with people who basically entered data into the computers for those expert systems. They also extended the float by slowing down the payment process, denying more claims, offering less for the claims to be paid, and going to court even for small claims in order to raise he costs for anyone resisting the lower payments offered. To the extent this story is true, and I have little doubt it happens at times, it is awful and customers need to punish these companies by taking their business elsewhere. A friend of mine in the insurance industry told me that in his decades in the business he is utterly unaware of this practice. I believe him because I know him and his integrity. However, it is a big industry and I am sure there are some rotten apples out there.
Feinman also decries the way insurance companies are debasing the legal profession in the claims process. You would think that lowering legal expenses would be good for customers, but Feinman says it harms claimants because they would get, on average, twice as much from the insurance companies if they were represented by good legal counsel. OK. I have no idea if this is true, but I do know that good legal counsel costs a huge pile of cash, too. So, what is the real net in time, cost, hassle, and stress for the average person who doesn’t want to go anywhere near a courtroom and just wants to get on with their life?
The author does urge us to take more time investigating our insurance purchases, to be more careful in getting coverage that fits our real needs, and that we take the time to be completely aware of what is being covered and what is not covered in our policies. Getting the wrong policy for a low price is no bargain when you need to make a claim and find out what you lost is not covered. This is great advice. And to the extent that reading this book will make you more cautious and aware of your insurance needs and purchases, I think it could be very valuable to you.
However, in the end, he offers a solution to this problem. Can you guess what it is? Ready? Let’s say it all together: ***More Government Regulation!*** Gack. That can’t screw anything up can it? Regulation is what makes most legal contracts and insurance policies harder to decipher than the Venona papers without a key.
Reviewed by Craig Matteson, Ann Arbor, MI
Rating: 4 / 5
Very much a one sided, unbalanced viewpoint of the industry. Seems to be written by someone with an axe to grind. While insurance comapnies likely do chisel away on claims, trying to pay out as little as possible, this book does not convince me that this is an epidemic problem sweeping over the country. The evidence sited seems very much anecdotal. The recommendation about insurance companies reporting their claims resolution metrics, however, is very good and would create such a transparent environment that would lead well informed customers to make better choices.
Rating: 2 / 5
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