Get Your Claim Paid: Politics, Policies and Why Getting Your Claim Paid Is so Tough Introduction
You buy insurance so that you get paid when you make a claim. Whether the reason for the claim is that someone put a dent in your car, a fire destroyed the kitchen in your house, your dog bit your neighbor or you need your appendix taken out, you want one thing from your policy -- the insurance company to cut a check quickly and without a lot of debate.
This is getting more difficult to accomplish with any kind of certainty. Insurance companies are more likely than ever to deny or delay paying claims. And, even when they finally do decide to pay, they will often only pay part of the money you need to resolve your problem.
Why has this happened?
Several different sets of issues during the late 1980s and 1990s have combined to put pressure on the claims process.
First, trends in the law have made it easier for people to sue insurance companies that don't pay claims in a timely manner. These laws -- intended to make it easier for you to get your claim paid -- have had unintended consequences. They have attracted a growing number of crooks and con artists to the insurance business; the bumbling insurance crook of movies and novels has become in real life a smooth criminal -- often with ties to organized crime. As a result, insurance companies spend more time examining claims for fraud. This has a negative impact on all people making claims -- most of whom are honest...and desperate.
Second, technology hasn't improved the claims process as much as it has other parts of the insurance industry. Computers and the Internet have made the process of applying for insurance easier and faster. They've made the process of paying for insurance faster. They've given the actuaries better tools for pricing coverage that's just right for you. What they haven't done yet is make the claims process easy.
As a result, claims processing -- the most critical part of the insurance business -- has lagged behind the other parts in terms of customer service and ease-of-use.
This last point is important, as more and more insurance is being sold on-line. A lot of insurance industry types talk about how these computer-based changes will reduce the role of the agent in the application and administrative parts of the insurance cycle.
But if you think buying car insurance over the Internet is impersonal, wait until you have to file a claim by Internet.
The fact is that claim processing may be the one part of the insurance industry that won't work in an on-line format.
And another fact is that even the most expensive PR gurus in Manhattan and L.A. can't seem to talk fast enough to turn the tide of perception that the insurance industry rips off customers by denying legitimate claims.
Insurance companies make good punching bags for trial lawyers, politicians and politically-motivated consumer advocates.
There always has been a somewhat touchy relationship between insurance companies and customers. It's rooted in the inherent tensions between business and society.
People pay insurance premiums year after year -- and believe that they are entitled to a fast, fair settlement when they make a claim. When an insurance company hesitates, delays or negotiates, the consumer is not happy.
But the insurance companies are often following the letter of their agreements. They write language into insurance policies limiting what is covered and how this will be paid. These terms help set the price of the policy, which the consumer usually wants to keep as low as possible.
But you get what you pay for. A cheap insurance policy is bound to be not-so-good when it comes time to pay a claim. And this is especially true if the claim involves complex issues like damages to third parties or loss of use of the insured item.
So, inherent tensions remain. Lawyers and advocates for policyholders argue that insurance companies have adopted aggressive strategies to deny valid claims; at the same time, the companies argue that they are victims of a legal system that often requires them to pay unjustified claims.
