Insurance companies garner a considerable amount of notoriety because of the perception that they deny claims — even valid claims — submitted by consumers. Insurers are said to be committing other inappropriate practices harmful to the public as well.
As is oftentimes the case, a business gains notoriety in some manner precisely because they are involved in the activity being spotlighted.
The reality is that insurance companies of all types can be found engaging in practices and employing strategies that are harmful to consumers. In some cases, this conduct arises to the level of unfair claims settlement practices or unfair trade practices as defined by law in each of the 50 states.
The Mammoth Insurance Industry
The insurance industry in the United States is mammoth. The insurance industry has trillions of dollars in assets (no one knows the precise amount with any real certainty). Profits to insurance companies top $30 billion annually. Insurance company executives are among the highest past of those in any industry in the United States.
Although the insurance industry has been adept and somewhat successful in marketing itself as being composed of companies that care about consumers, insured people are not the industries number one priority. In reality, the most fundamental objective of insurance companies is to make money and turn a profit for investors, who usually come in the form of shareholders. Mutual companies are “member owned. Nonetheless, the primary goal of these companies is profit enhancement as well.
Because the primary loyalty of insurance companies is to shareholders or investors, those associated with these enterprises take a variety of steps to maximize revenue and profit at the expense of insureds and people making claims for damages or injuries.
A primary strategy utilized by insurance companies is to deny claims liberally, including claims that by all accounts are valid. The reality is that many individuals who file claims do not understand the process and are left to the whims and practices of insurance companies.
Engaging the services of a skilled, experienced attorney lessens the chances that a claim will be denied by an insurance company inappropriately. Nonetheless, because of the large number of consumers who do not consult legal counsel when dealing with an insurance claim, this practice remains widespread in the industry.
Another common practice of insurance companies is delaying the settlement or payment of claims for an extended period of time. The theory behind this strategy is that a consumer eventually will give up — or even die.
In other cases, a insurance company drags out the claims settlement practice hoping that a consumer will fail to file a lawsuit in a timely manner. Each state has what is known as a statute of limitations. The law dictates the time frame in which a lawsuit must be filed. If the deadline is missed, the insurance company nearly always is off the hook.
Yet another tactic employed throughout the insurance industry is customer confusions. Insurance contracts are extremely complicated agreements that are difficult to comprehend. Indeed, in many cases it is a challenge to ascertain the time frame in which a claim must be filed in the first instance.
In addition to confusion insurance contracts or policies, insurance companies craft confusing claims settlement processes that lack transparency. This includes setting a variety of proverbial hoops a consumer must jump through in the course of attempting to settle a claim for damages or injuries.
Credit Score Discrimination
Although there are now legislative efforts designed to combat this issue, another tactic employed by insurance companies is discriminating against people based on their credit scores. This has the most significant impact on the elderly and people who are economically less well off.
Credit score discrimination comes into play primarily in two specific circumstances. First, consumers are denied coverage in some instances because of their credit score. Second, individuals are not renewed as policyholders because of their credit score.
Cancelling Because Of A Phone Inquiry
Time and time again people hear of friends, family members, colleagues and members of the public more generally having their insurance policies cancelled because they made a claim. This is an area in which the law is in a state of flux as it pertains to certain types of insurance. For example, a health insurance policy is somewhat better protected against this type of action. On the other hand, this tactic is employed widely in the automobile insurance industry.
Another trend among some insurance carriers is dropping an insured when that individual called in to inquire about making a claim. In this situation, the individual has not even filed a claim, but merely requested some basic information from an insurance carrier. If you have been harmed by some of these practices then we may be able to help you. Reach out and contact us today.