The U.S. insurance industry has trillions of dollars in assets, enjoys average profits of over $30 billion a year, and pays its CEO's more than any other industry. But insurance companies still engage in dirty tricks and unethical behavior to boost their bottom lines even further.
The current economic turmoil affecting the insurance industry on Wall Street has only made the outlook bleaker for consumers living on Main Street in every U.S. city. Insurance companies are likely to demand huge rate hikes and refuse more claims than ever. Some of the most recognized insurance companies, the same ones that spend billions on advertising just like oil giant BP does in its industry, trying to earn your trust, have worked out methods to deny claims, delay payments, confuse consumers with incomprehensible language, and retroactively refuse anyone who may cost them money.
Some of the nation's largest insurance companies, like AIG that earned such a bad reputation when details of its inept business practices and government bailout became known, have denied valid claims in an attempt to boost their bottom lines. These companies have rewarded their employees who successfully denied claims, replaced employees who would not, and when all else failed, engaged in outright fraud to avoid paying claims.
Many insurance companies routinely delay claims, knowing full well that many policy holders will simply give up trying to get payment that they deserve under the policies they paid for. Some have gone so far as to lock paperwork away in safes. The most shameful use of delay tactics has been by long-term care insurers who often take advantage of their policyholders' age and ill health. One regulator, who spoke plainly, said, "the bottom line is that insurance companies make money when they don't pay claims...they'll do anything to avoid paying, because if they wait long enough, they know the policyholders will die."
Insurance contracts are some of the most dense and incomprehensible contracts a consumer is ever likely to see. More than half of our states have enacted "plain English" laws for consumer contracts, but many Americans still don't fully understand the risks they are subject to. For example, after Hurricane Katrina, insurance companies used obscure "anti-concurrent" clauses to get out of paying claims. Consumers who bought hurricane insurance and thought they were covered suddenly found the coverage eliminated by an obscure clause they could not hope to understand. In the next weeks, I will give you some examples of these bad practices and tell you how these companies abandon the sick in their greatest time of need and how they cancel insurance contracts if one simply inquires about the possibility of making a claim.
Wes Pittman, attorney in Panama City, Florida, appears weekly on the WJHG-TV noon news.
