Employee Turnover and Ethics in the Disability Insurance Industry

We’ve recently had several clients who have had utterly terrible experiences with their claims examiners.  From rudeness to laziness to incompetence, it seems like some insurance companies are not only trying to save money by denying claims but also by hiring less qualified staff.  Companies and claims departments (who know better!) are hiring, training, and even promoting claims examiners who don’t return phone calls, provide wrong information, or become defensive or non-responsive when asked claim questions that deserve an answer.  After complaining, some insureds are reassigned to another claims examiner who in turn answers their questions.  Although this may be seen as a win, all that’s been accomplished is a game of musical chairs.   Continue reading

Advances in HIV/AIDS Treatment and the Effect on Disability Claims

Our understanding and treatment of HIV/AIDS has changed dramatically since it appeared in the public consciousness in the 1980’s.  In its early stages, health providers and insurance companies often considered HIV/AIDS a terminal disease, but continuing advances in medications and treatments have changed the outlook to a chronic condition.  In fact, the life expectancy for many patients in treatment continues to increase and is returning to the level of the overall population.  But the disease as well as some treatments can still cause complications that make it impossible for people to continue working in their own occupations or otherwise.  While a thorough study of this topic could fill volumes of books and still not be complete, I want to briefly touch on how the advances in treatment and the changes in popular belief on HIV/AIDS affect those who are trying to obtain their disability benefits.

Both the Social Security Administration and many insurance companies considered HIV/AIDS to be a terminal disease through the early 2000’s.  This definition began to change as the HAART (highly active antiretroviral therapy) treatment, commonly known as the “AIDS cocktail,” became the prevalent course of action.  A combination of at least three antiretroviral medications, the HAART treatment causes far fewer long-term and short-term side effects than previous treatments.  This improvement has caused a change in the way disability claims resulting from an HIV/AIDS diagnosis were processed.  Previously, these claims were readily approved as the insureds had high mortality rates, and the duration and amount of benefits was not expected to be very high.  With more accurate classifications of disability claims from HIV as more of a chronic condition as opposed to those resulting from an AIDS diagnosis, claims resulting from HIV are beginning to receive much more scrutiny from insurance companies. Continue reading

The Aftermath of Continuing Industry Consolidation

Over the past 15 years, insurance companies have followed an increasing trend of consolidation and product restructuring that has changed the landscape of disability insurance.  Changes in philosophy can be traced to the 1990’s when Paul Revere was acquired by Provident, shortly followed two years later by Unum merging with Provident.  Another large merger in this same time period was the Swiss Re acquisition of Royal & SunAlliance in 1999.  Many companies decided to leave the disability market and sold their existing policies to larger insurers.  These acquisitions allowed these large corporations to leverage economies of scale and have more resources aimed at higher but more condensed policy counts in their claims departments.

Large corporate operations have been formed that administer claims on behalf of the many smaller companies that are now owned.  For example, an insured may still get correspondence on Provident letterhead but in actuality that letter is coming from a Unum claims department.  There are many other companies that use this same tactic.  This can enable companies to do business as firms with a better reputations and claims histories, all while pursuing aggressive claim denial tactics. Continue reading

The Profits Behind Denying Disability Claims

Happy New Year! I hope your holidays were enjoyable, and we wish you and yours a very happy and prosperous 2012.

Many people realize too late the voracity of which insurance companies attack insureds’ credibility and practice a policy of deny first, ask questions later.  What many people do not understand are the reasons why.  Practical business sense says that putting your customers first and practicing strong customer service will keep customer loyalty.  Insurance companies follow these rules when selling and updating their insureds’ policies.  But these rules are at best only given lip service in the claim departments after a claim is filed.  Our first post of the year is going to discuss the reasons behind the change in rules once you’ve filed your disability claim.

Since the late 1970’s, insurance companies actively marketed “own-occ” policies to white-collar professionals.  These people were specifically targeted because they were less likely to stop working due to the time they had invested in their education, high salaries, and enjoyment of their careers.  These policies, in addition to paying if a claimant could not work their specific occupation, were also non-cancellable, and the premiums were fixed.  These policies became very popular!  The market became more competitive with more insurance companies offering more attractive measures, such as reducing underwriting standards and lower prices.  Other features – coverage without a detailed medical history, no mental health exclusions, lifetime benefits, and 6% cost of living increases – were also added to policies, resulting in a “boom” of sales.

The economic expansion and investment returns during the ’80’s and ’90s enabled insurance companies to invest the premiums from these liberal policies and earn substantial returns.  These returns were predicted to continue but stopped after the late ’90s.  At the same time, the income for many professional careers grew stagnant and even declined in some specialties, which caused many professionals to reconsider whether they should continue working through their disabilities and instead file for benefits on their disability policies.  This sudden influx of claims coupled with the declining rates of return on the invested premiums turned the “own-occ” policies into a very unprofitable field, costing insurance companies millions of dollars.

This lack of profitability caused insurance companies to start focusing on the “management” of these claims in order to make the policies profitable again.  Insurance companies started reviewing claims and looking for every and any reason or interpretation of policy language they could use to deny otherwise legitimate claims.  Policy forms were revised, and new reasons were constructed to deny benefits.  Claim payments were slowed down or even stopped while investigations were ramped up.  The methods that came about during this period are well known today to insureds who have gone through the experience of filing a disability claim: lost documents, unannounced visits, field interviews, “independent” medical exams, financial audits, surveillance, and many other dubious tactics.

Insurance companies have realized the profitability of fighting claims, which has developed into its own billion dollar industry.  We know – that’s where we were taught all about disability claims and how to “defend” against them.  This is why insureds must stay vigilant and why advocates are often necessary to get a disability claim filed properly and benefits paid quickly.

A publicly traded insurance company reports to the stockholders, not its insureds.  Even mutual companies construe their attacks as simply defending the interests of their policyholders.  The most important numbers aren’t your rightful disability benefits —  it’s their bottom line.  Claim departments in insurance companies have the resources to come up with excuses to deny otherwise valid claims.  Don’t let yourself become one of their victims.  If you have questions, please visit our FAQ page.  For more information on obtaining help for your claim, check out our services.