Insurance Companies Delay, Deny and Defend to Prioritize Profits over People
By Sean Lally, Staff Writer
In the 1990s, insurance companies that were supposed to offer protection to their clients started utilizing tricks to avoid paying money to claimants. Why? In an economy dominated by Wall Street and private interest, short term profits became the name of the game, which meant doing whatever it took to keep the ledger tipped in favor of insurance companies. Of course, this meant sacrificing the livelihood of people who relied on insurance coverage – coverage that they paid for with expensive premiums – sometimes over many years.
These profit-driven practices persist today. Trick after trick, lie after lie, insurance companies continue to make one-sided decisions in the name of the almighty dollar. By now, most of us are familiar with the many reckless decisions made by the too-big-to-fail American International Group (better known as AIG), a major player in the events that led directly to the sub-prime mortgage crisis of 2007-8. But perhaps fewer realize that the company was rated the third worst insurance company by the American Association for Justice (AAJ) in 2008 – just under Allstate and Unum. It was one of many companies who employed a set of devious tricks known as the “Deny, Delay, Defend” strategy.
A lot has been written about this strategy. One such text was authored by Jay Feinman, a Rutgers professor who specializes in insurance and tort law. In Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It, Feinman explains how insurance companies went from being customer-driven to profit-driven starting in the mid 90s. Organizations like AAJ have published reports outlining the various tactics that fall within the three-D strategy. Additionally, countless news articles have circulated, offering detailed accounts of people who have suffered at the hands of insurance companies.
There are a number of actions an insurance company might take to deny, delay and defend claim-related issues. One such tactic is outright denial. There’s not much more to it. An insurance agent may be offered incentives to tell clients they have no right to coverage when in fact they do. And according to AAJ, companies have been known to replace unwilling employees with new lackeys who will do their boss’ bidding.
Taking Advantage of the Elderly
Insurance companies may also indefinitely delay the distribution of funds, sometimes until the claimant is deceased. In 2007, Mary Beth Senkewicz, who used to be an executive at the National Association of Insurance Commissioners, told the New York Times, “The bottom line is that insurance companies make money when they don’t pay claims. They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.” And according the NYT report, in 2005, almost a quarter of claims related to long-term-care were denied in California. This was (and continues to be) partially due to purposefully confounding paperwork and the fact that someone with dementia is more likely to make a mistake on a form. The bottom line: insurance companies are not afraid to take advantage of the fragility and incapacity that comes with age.
Intentionally Confusing Terms
According to AAJ’s report, insurance companies have been known to use incredibly confusing contracts when taking on a client. As these contracts are difficult to understand, customers may not be aware of the many risks associated with certain insurance policies. For that reason, it is incredibly important that you take some time reading over the terms of the agreement before signing your name. Otherwise, you may eventually end up in court, where insurance companies will defend their unscrupulous actions.
In fact, diligence is key. Sadly, the tactics discussed here (and these are only a few) force customers into a defensive position. It shouldn’t be this way. But since the system currently operates in this manner, it is important to look over everything with a fine-tooth comb. Of course, this is stressful labor for which there is no compensation. So in some cases you may want to consult with an attorney to make sure that you’re not getting a raw deal. Insurance companies may try to talk you out of this (if not intimidate you with threats of going to court), but if there’s one thing you should understand, it’s that you shouldn’t pay attention to the advice of insurance companies. It’s better to trust the counsel of an experienced attorney who understands the ins and outs of insurance law.