The naïve view of the insurance industry sees it as a giant charity. Their ads promote this image. Slogans tell customers they’re in good hands, with a good neighbor. One who’s there for them in time of trouble. A helpmate who pays claims promptly and in full. Then, at the moment of truth, reality bites. When (eventually) the “good hands” pass back claims denied or underpaid.
CLAIMS DENIED OR UNDERPAID
The shocked policyholders then recall that insurance companies are, after all, businesses. Not charities, that is, or churches. They owe a duty to their stockholders to maximize profits. Money paid out to satisfy claims is expense. A dollar saved from expenses is a dollar added to profit. So, okay, they’re just trying to do their jobs. Good old American Work Ethic.
Well, it’s a little darker than that, from the policyholders’ point of view. Attorney Charles Miller recently published an expose of the insurance industry’s evolving practices in claims processing. He’s described what he calls a “revolution in insurance claims handling”. He first wrote about this in 2007. He found in 2016 that the revolution has only accelerated since then.
INSTITUTIONAL CLAIM HANDLING
The industry’s innocent-seeming term for this approach is institutional claim handling” (ICH) . Institutional, because the policies and practices have to be company-wide. Some of the key elements are:
- Employee incentives and bonuses rewarding low payouts of claims
- Back office procedures designed to lengthen the processing times for claims
- Aggressive litigation postures
An ordinary layman finds Miller’s disclosures disturbing, if not outrageous. Moreover, since the insurance indsutry is so closely regulated by the government – surely illegal. There oughta be a law, right?
However, lawyers say that “institutional claim handling”, per se, isn’t against the law. Nor can policyholders sue companies for practicing it. The companies’ position is, of course, that the goals of ICH are legitimate. To assure uniform treatment of claims and to control what they call leakage “Leakage” refers to overpayments of claims. On the face of it, these are legitimate business goals. Claims denied or underpaid is good for the bottom line.
However, human nature is what it is. The dynamics of ICH push claims handling ever closer to that fine line. And, perhaps, across it. Into the zone of illegality or civil action. For example, a company employee rewarded for low payouts is one eager to deny and underpay claims. A company purposely delaying payouts earns interest on the cash in the meantime. Employees love bonus checks. Executives and stockholders love earnings per share. Thus, ICH makes everybody happy, except the customer.
LEVELING THE FIELD
This is the main reason policyholders shouldn’t go it alone with property damage claims. Like Attorney Miller, the experienced industry pros at Florida Loss Public Adjusters know the inner workings of insurance companies. Every gear, every button, every switch. Hence, we’ll get you the full amount your policy entitles you to. See, we’re human beings, too. We, too, like getting paid more rather than less. Our fee is 20% of the payout we get for our client. So, we make sure that’s 20% of the full payout our client deserves. We can re-open closed claims, too. We work for you. In fact, we’re the good neighbor, with the good hands.