Monthly Archives: November 2008

How Insurance Companies Deny, Delay, Refuse, and Reuse

The latest American Association for Justice report on the insurance industry is especially revealing.  It is titled, “Tricks of the Trade: How Insurance Companies Deny, Delay, Refuse, and Reuse.”  Here are quick summaries of each section:

Denying Claims:

Some of the nation’s biggest insurance companies – Allstate, AIG, and State Farm among others – have denied valid claims in an attempt to boost their bottom lines.  These companies have rewarded employees who would not, and when all else failed, engaged in outright fraud to avoid paying claims.

Delaying Until Death:

Many insurance companies routinely delay claims, knowing full well that many policyholders will simply give up.  Some have gone as far as to lock paperwork away in safes.  Undoubtedly, the most shameful use of delay tactics has been by long-term care insurers, who often take advantage of their policyholders’ age and ill health.  In the words of one regulator, “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.”

Discriminating by Credit Score:

Increasingly, insurance companies are using credit reports to dictate the premiums consumers pay, or whether they can even get insurance in the first place.  The practice penalizes the poor, senior citizens with little credit, and those who have suffered financial crisis through no fault of their own.  Insurance companies have denied fiscally responsible people who paid their bills in cash, but refused renewals because of a lack of credit history.  Others have seen auto rate hikes near 600 percent despite clean driving records after falling on economic troubles.

Abandoning the Sick:

Health insurers looking to cut costs have taken to canceling retroactively, or rescinding, the policies of people whose conditions have become expensive to treat.  Some insurance companies have even offered bonuses to employees who meet “cancellation goals.”  Rescission targets patients in the midst of treatment when they are at their most vulnerable – even cancer patients in the midst of chemotherapy have been targeted.

Canceling for a Call:

Many people are rightly reluctant to make small claims on their home insurance for fear their insurance company will raise their premiums.  But few realize that insurance companies often refuse to renew a policy because the policyholder did as little as inquire about the possibility of making a claim.  Many times an insurance company will count an inquiry over the phone as the same as a claim, and then they will do everything in their power to drop the policyholder.

Certainly the most pertinent section of this report for West Virginia auto accident cases is the “denying claims” section.  The section details one particular case involving Farmers Insurance.  They egregiously denied the policyholder coverage, and it was later disclosed that Farmers was in the business of denying claims as a way to boost its bottom line.  Apparently, Farmers even ran an employee incentive program, “Quest for Gold,” that offered incentives, including $25 gift certificates and pizza parties, to adjusters who met low payment goals.

But as the report details, Farmers is by no means the only insurance company systematically denying claims.  Some of the nation’s biggest insurance companies – Allstate, AIG, and State Farm among others – have earned reputations as aggressive claims fighters in an attempt to boost their bottom lines.  Allstate gave employees who denied valid claims rewards such as portable fridges, and used a “boxing gloves” approach to policyholders who refused to accept lowball offers.  When AIG units lost money, former CEO Maurice Greenberg would put in place new teams of staff to systematically reject thousands of valid claims. 

It just goes to show the importance of finding a good West Virginia trial lawyer if you are involved in any type of insurance dispute – especially involving an auto accident or personal injuries.  These insurance companies will take you to the bank if you are not represented by an aggressive trial attorney.

 – John H. Bryan, West Virginia Car Accident Attorney