Six Tricks of the Trade (often used by insurance carriers against their own policyholders)
- May 20, 2011
- By Gerard Devita
The insurance industry is among the largest, most profitable sectors of the U.S. economy. Unfortunately, much of the money they make comes from the strategies of deny, delay, confuse, and refuse. While their profits soar, these companies do everything they can to keep from paying out claims. From an American Association for Justice report, below are six tricks of the trade that the insurance industry doesn’t want you to know about:
Deny claims. Some of the largest insurers with the best reputations routinely deny claims in an effort to pad the bottom line. They go so far as to reward employees who successfully deny claims, while penalizing (even terminating) employees who do not.
Delay until death. Many insurance companies know that if they delay a claim long enough, there’s a good chance the policyholder will just give up. If that doesn’t work, they may even delay until the policyholder passes away.
Confuse consumers. Our entire free-market system is based on the idea that two parties can fairly come to terms on a contract. What happens when one party writes the contact in a way that the other cannot hope to understand? Consumers buy insurance policies and only later, when they need it, do they find that the contact contained a “catch” that gets the insurance company off the hook for paying the claim.
Discriminate by credit score. Instead of basing premiums on risk assessment alone, some insurers charge more for those with poor credit scores. This penalizes the poor, those on fixed incomes, and those who had financial troubles at some point in the past. Also suffering are those who choose to stay out of debt and pay their bills in cash, as lack of credit activity negatively affects a credit score.
Abandon the sick. One way for insurers to cut costs is to cancel, sometimes retroactively, the policies of the sick. Some companies even pay bonuses to employees who meet their “cancellation goals.”
Cancel for a call. Ever had a small claim that you decided to pay out of pocket so your insurance rates wouldn’t go up? If you called to even discuss making the claim, that plan probably won’t work. Oftentimes, insurance companies will deny renewal of a policy just because their customer called to inquire about the possibility of making a claim. When it comes to protecting profits,, they can’t be safe enough.
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