Insurance Industry Exposed - Tricks Of The Trade
In this, its fourth report on the multi-trillion dollar insurance industry, the American Association for Justice (AAJ), an association of trial attorneys, is making no friends with the insurance industry.
Entitled, "Tricks of the Trade: How Insurance Companies Deny, Delay, Confuse and Refuse," the new report describes some of the most egregious ways the insurance industry puts profits over people. This, despite the fact that the industry makes about $30 billion in profits a year and pays its CEO more than any other industry.
How is the consumer hurt?
AAJ researchers studied thousands of claims and news reports spanning a decade across the country.
Last July, “The Ten Worst Insurance Companies in America,” named Allstate Insurance at the top of a list of insurance companies that employ tactics to reduce payments to customers.
In both 2006 and 2007, “A Pattern of Greed” reports also criticize the insurance industry.
In “Tricks of the Trade” AAJ found a similar pattern including:
Denying Claims - While the big insurers such as State Farm, AIG and Allstate deny claims to consumers, they reward employees who deny the claims. Employees who do not agree are dismissed. AAJ says “When all else failed, [the companies] engaged in outright fraud to avoid paying claims.”
Example – 60-year-old Ethel Adams of Seattle had a $2 million policy with a subsidiary of Farmers. The company denied her auto accident claim, saying that the driver of the car who caused the accident was acting deliberately in a moment of “road rage”.
Delay Until Death – As many claimants are in ill health and are elderly, to delay is often to deny. AAJ says that insurance companies have locked paperwork up indefinitely. A claimant will either give up, or die.
Example – Some of the most “shameful” delays of coverage are in the area of long-term care, the report says. The case of 77-year old Mary Rose Derks from Montana is one example. Her family sold their small business after Conseco denied the claim for more than four years.
Employees at Conseco have testified deliberately mailing the wrong forms and then denying claims based on incorrect paperwork.
Discriminate by Credit Score - It’s not commonly known that insurance companies will use a credit score to determine if you should receive insurance at all. People with little credit, such as the poor and senior citizens, or people who pay with cash, are disproportionately discriminated against under this policy.
Example - When Kathryn Perry, a Wimberley, Texas nurse fell behind on her bills after her daughter was murdered, her credit score suffered. The insurance company raised her auto insurance rate nearly 500 percent. Her yearly premium went from $437 to $3,000. “They are victimizing the victims,” Perry told lawmakers before the Texas House of Representatives.”
Canceling on the Sick – Some policies have been canceled retroactively or rescinded when someone is sick and their condition makes treatment expensive. Often employees who meet the “cancellation goals” are offered bonuses.
Example - Patsy Bates, a 51-year old hair dresser from California was suddenly without insurance after Health Net, Inc rescinded it in the middle of breast cancer treatment. Health Net said her application information wasn’t correct. A sales rep had filled out the paperwork while she styled someone’s hair. Bates had to stop chemotherapy until she could find a charity to help pay for it.
Last February, Bates won a $9.4 million judgment against HealthNet after it canceled her policy during chemotherapy treatment.
Following the negative publicity that surrounded her case, California health insurers were told to reinstate the health policies of 26 people who were thrown off the roster for coverage after the insurer claimed they lied.
Canceling for a Call – Need to ask a question of your insurer? You might rethink that. AAJ finds that the insured can have their policies canceled if they even inquire about making a claim.
Some insurers consider inquiries the same as filing a claim and have dropped customers.
Earlier this year, the Consumer Federation of America (CFA) came to the very same conclusions about the insurance industry as AAJ. The group was joined by several state and national consumer organizations in issuing its report and finding that during a three-year period, from 2004 to 2007, the industry recorded profits at more than $253 billion.
The South Carolina State Supreme Court sums it up best. “Insurers generally are attempting to convince the customer when selling the policy that everything is covered and convince the court when a claim is made that nothing is covered.”
So What Can You Do?
Reading your policy carefully is a good start. Know what is covered and what is not.
Know how to appeal a denial from your insurer.
When filling out any insurance form, make sure all of the information is correct. An error might serve as a basis to cancel the policy.
If you get a check back after being canceled, do not cash it. That might send the message that you have accepted their offer.
Everything should be put in writing including the name of the company representative and what they told you. Keep records of all correspondence and bills.
Do not give up, AAJ recommends.
And when you hit a brick wall, contact your state insurance department. While they will not represent you in a private matter (only an attorney can, or you can represent yourself), they may still help you. #