Are you in good hands with your insurance
By Jennifer Openshaw
Dec. 14, 2004
Against the backdrop of lawsuits and allegations of illegal kickbacks made against insurance brokers by New York Attorney General Eliot Spitzer and the announcement of a lawsuit against five large insurance companies by California Insurance Commissioner John Garamendi, it makes us all wonder if we can trust our insurance company.
If insurance companies are accused of cheating their business clients out of millions of dollars, how are they treating the rest of us?
We rely on insurance policies to protect our most significant assets: our homes, our automobiles, the lives of our family and our livelihood. But do insurance companies deserve our trust?
Unfortunately, there are plenty of stories about people who are in dire financial straits because their insurance company did not help them. Michele, a Cincinnati-based flight attendant with Comair Airlines posted her story on www.consumeraffairs.com, a consumer information site, which publishes consumer complaints.
Michele filed a short-term disability claim with Hartford Insurance Co. that has been denied "on the on the grounds that they are challenging what my occupation is at Comair Airlines," she says.
But, she says "Comair has clearly stated that my occupation is and always has been that of a flight attendant." Michele also points out that she has provided supporting medical documentation proving disability and inability to return to work until she could perform the duties of a flight attendant.
UnumProvident: A just say no approach to claims processing
Michele isn't the only one that has had a difficult time collecting on disability insurance. Many others have had the same experience. UnumProvident handles about 30 percent of the U.S. disability policies and is the nation's largest disability carrier.
State insurance regulators and the U.S. Department of Labor have been investigating UnumProvident for inappropriately denying claims for disability benefits. But on Nov. 18, UnumProvident's disabled customers got some good news: UnumProvident agreed to reassess 200,000 denied claims and to pay $15 million in fines.
Spitzer says "these claim denials involved vulnerable workers -- those whose illnesses and injuries prevented them from continuing their employment."
Perhaps other insurance firms will take note and revise their practices. Aggressive claim practices are not isolated to the world of insurance disability. Customers with homeowners, auto and even life insurance policies need to be wary as well. Unfortunately, www.consumeraffairs.com, is rife with stories like Michele's.
Even life insurance claims, despite the seemingly clear-cut nature of a claim, are not immune to claim payment resistance. Wade, a U.S. Army soldier based in El Paso, Texas, lost his wife in a car accident and filed an accidental death claim with Hartford Life. He only received the claim forms after he requested help from the Texas Department of Insurance.
So go ahead, look closely. You need to learn whether your insurance coverage is a mirage. And how do you know if your insurance firm is trustworthy? Ask these three questions and you'll be on your way to discovering the truth.
1. Complaints: How does your insurance firm measure up?
If your insurance firm gets more than the average number of complaints about its claim processing, that's a red flag. The most comprehensive consumer-complaint information on the Web is the National Association of Insurance Commissioners (NAIC) database (www.naic.org/consumer). Your state's insurance site may also provide this data.
2. Premium hikes: Will your insurance firm raise your premium after a claim?
While no national statistics or databases exist to answer this question, there are general customer-satisfaction ratings. The J.D. Power & Associates consumer site (www.jdpower.com) provides customer-satisfaction data for pricing and claims handling for auto and homeowners insurance.
You should also ask your agent what types of claims are likely to increase your premium. Keep in mind that insurance firms watch your claims carefully and share the information in a national database. If you file a higher than average number of claims, all the insurance firms will have the data and it may affect your premiums in the future. Consider raising your deductible and forgo filing that claim.
Get yearly competitive insurance quotes to make sure that you are getting the best premium available to you. Insurance marketplaces like www.insure.com or www.insweb.com make it easy to get several quotes at once.
3. Financial health: Will your insurance firm be able to pay a claim you file?
Check the financial stability of your insurance company by looking at their rating by Standard & Poor's. Select an insurer with strong financial stability; for Standard & Poor's that means an AA rating or better. Check the Standard & Poor's site.
The selection of an insurance company is an important, if not critical, decision. Take steps now to protect your family.
Copyright © 2004 CBS MarketWatch, Inc.