. The industry pays their CEOs more than any other industry in America.
Question: Do insurance companies, even with all of this money, still strategize to hurt their policyholders’ legitimate claims, for the sake of increasing their profits year in and year out?
Answer: You better believe it.
Some of the biggest insurance companies use “questionable" tactics in order to make more money. Below are just a few of the kind they have been known to implement in the past:
1. Denying Claims Companies like Allstate, AIG, and State Farm (just to name a few) have been caught denying VALID claims to the point of it being considered fraud. Despite the fact that it is the EXACT business they are in, and notwithstanding the fact that they promise to take care of their insureds when their insureds need them, paying out claims to policy holders is the last thing insurance companies really want to do. They strategize and even re-write their policies regularly in order to deny what otherwise are very valid and payable claims. The reason: Profits
2. Delaying Until Death This is also another common tactic that is used by insurance companies in order to increase profits. They delay claims as long as possible, and hope that the claimants simply “give up". They have even gone as far as locking up paperwork in safes and taking advantage of some policy holders health in hopes the policy holder would die. In some circumstances when this happens, the claim goes away, or the claim value becomes greatly diminished.
3. Confusing Customers Okay, not difficult to understand this one. Who can really understand insurance contracts? Answer: Very few people.
Insurance contracts are by far some of the most dense and most incomprehensible contracts that the average consumer will ever see. It has gotten to the point where states have enacted “plain English" laws in order for consumers to better understand what exactly they sign up for. Still, many are taken advantage of with many clauses that weren’t easily understood initially or weren’t noticed due to the density of the contract itself. Indeed, more often than not you don’t even get your insurance contract until after you have submitted your application and paid your premiums. Do you go through it at that point? The answer is an overwhelming “no".
Unless there is a specific thing that you are concerned about, most people are content having the insurance in place. After that, any concerns become situational, meaning that you have no reason to look at your policy until something happens. However, if you think about it, by that time it is too late. The policy either covers or doesn’t cover the loss event, and there is no way to turn back the hands of time.
So you try to read your policy and understand it. Does any of this make any sense?
I have been a licensed personal injury attorney for 20 years, and often I have to read the policy language multiple times to really get it, crossing referencing other provisions, definitions, exclusions, etc…. This is tricky stuff, and it is designed to be that way. The reason? The insurance companies’ bottom line.
In the United States we have the best justice system in the world. Perhaps not perfect, but by far the best. In the United States, the “powerless" have the same standing in a court of law as the “powerful". In Congress, it often seems there is little than one person can really do to bring about change. In the courts however, it only takes one—with the right facts, with the right evidence and the right lawyer to bring even the biggest of companies to pay for their mistakes, and change their policies that were designed as profit-maximizers.
One person, with legal counsel, can make a difference.
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