The insurance industry spends about $6 billion a year trying – largely unsuccessfully - to get drivers to switch their car insurance policies. (This is a $160 billion market and the big carriers control half of it.) Never-ending expensive TV commercials - that’s what most people know about insurance companies – until, of course, their lives have been wrecked by something they thought was covered by policies, for which they’ve been paying for years. Let’s take a look at a few recent episodes.
Homeowners. Homeowners whose lives were shattered by Superstorm Sandy are still engaged in perpetual battles with insurers to get their flood insurance claims properly paid. The situation is no better for homeowners claiming under their non-flood policies, with insurers putting homeowners’ money into escrow accounts and then micromanaging repairs. Writes one policyholder, “No matter insurance company has documentation already and has approved repairs. No matter repairs have been made and homeowner just wants reimbursement.… TD Bank has this policy. So does Wells Fargo. Problem is you don't know this until u go to deposit insurance check.”
Business interruption insurance. All kinds of businesses where shut down after Superstorm Sandy, but insurers aren’t paying the claims, saying buildings were closed due to flooding (so not covered by their policies). But others say that’s ridiculous.
“It was not water related," says Andrea Katz, interim development director at [radio station] WBAI. “It was a restricted building that we were not allowed entry to and therefore could not do business as usual.”…
“It seems like they have lawyers that write these things out, and everything’s so opaque that they can just find a way to get out of it,” says Norman James, co-owner of Space Salon.…
The New York State Department of Financial services is now investigating these and other business claims from Hurricane Sandy.
Meanwhile, many businesses are seeking legal counsel, getting ready for a fair fight.
Victims who lost everything in [Colorado’s] Waldo Canyon fire last summer asked lawmakers at the Capitol on Tuesday to go even further in their reform of the insurance industry that they say left them in the lurch. …
It took Steve Price, who lost his roughly 5,000-square-foot home … two months to get a certified copy of his insurance policy after the fire. It took another two months to get copies of underwriting documents. “It’s a pattern among our insurance companies to delay, deny and ignore,” Price told a Senate committee considering House Bill 1225. “These contracts are unfair to begin with.”
The bill would require insurance companies doing business in Colorado to comply with a number of new mandates, including that a copy of a policy be provided within three days of the homeowner’s request. Policies would also have to be written on a 10th grade reading level and written notifications of changes in policy would be required. Price said he was very well prepared for a disaster, with photos documenting his home’s current state and contents, and he still was still about $10,000 underinsured.…
Ideally, he said Colorado should become one of 19 states that require insurance companies to pay out the maximum value of a policy in the event of a total loss — known as valued policy laws.
Incredible that this should even be an issue.
Health Insurance. Health insurers are “letting millions of Americans renew their current coverage for another year — and thereby avoid changes under the federal healthcare law” and “critics say this maneuver could undermine government efforts to remake the insurance market next year and keep premiums affordable overall.…”
“Insurers are onto this, and the big question is how many will try to game the system,” said Timothy Stoltzfus Jost, a law professor and health policy expert at Washington and Lee University.
Some of the nation's biggest health insurers are looking to take advantage of this delay, and Arkansas officials are encouraging companies to do this by resetting customers' renewal dates for the end of December. There's also concern that some insurers and agents could rush to sell more individual policies before year-end so they could be extended in 2014.
Some policy experts are expressing concern about this practice for fear that insurers will focus on renewing younger and healthier policyholders and hold them out of the broader insurance pool next year. Their absence could leave a sicker and older population in new government insurance exchanges, driving up medical costs and premiums there.
Meanwhile, California’ awesome insurance commissioner, Dave Jones, seems to be the only commissioner in the country actually looking out for policyholders by consulting with a respected consumer organization, Consumer Watchdog, on how to protect small businesses from unneeded rate hikes. The group already has a spectacular record of saving California policyholders billions of dollars. The industry is complaining about this. They seem to prefer that the commissioner consult only with insurance industry-connected actuaries (like every other commissioner does), ensuring that price-gouging of California’s businesses remain uninterrupted.
Reports the LA Times,
In its first report Tuesday, the Santa Monica group accused Anthem of padding its profits and overcharging small-business customers by about $17 million. … Jones criticized Anthem Blue Cross for raising rates on about 7,000 small businesses as much as 23% and said the company rejected his request for lower rates. Anthem said its average rate increase of nearly 11% for these 45,000 employees and their dependents was necessary to cover rising medical costs.
Jamie Court, president of Consumer Watchdog, said the group's proven track record in challenging insurance company practices made it an ideal choice for the state. Consumer Watchdog says it has saved Californians $2.3 billion since 2003 by successfully disputing rate hikes for property and casualty insurance under Proposition 103, the 1988 ballot measure the group championed.
"We are the foremost expert on health insurance rates," Court said. "This grant allows us to pull back the curtain and show how the wizards at Anthem and other companies are manipulating Oz. We want to prove that rates are too high."
Insurance-industry commissioners. Meanwhile, former and hoping-to-be-reappointed Texas insurance commissioner, Eleanor Kitzman, is decidedly not on the side of policyholders. She’s hoping to win reappointment from Governor Rick Perry, but not if consumer advocates have anything to do with it.
One of the loudest critics, Alex Winslow of the consumer advocacy group Texas Watch, said that home insurance rates had “skyrocketed” during Kitzman’s term and that she had rolled back rules created to inform doctors and patients about high out-of-network expenses before those charges were incurred. Winslow can and does go on about what he sees as her shortcomings, but the important thing is that few in the Capitol or the insurance industry — which was initially full of praise for her — are leaping to her defense.
And a final observation: If only policyholders could demand that their billions in premium dollars pay for legitimate claims instead of TV commercials.