You are probably at InsuranceAid.com because you are having a problem with your insurance claim. Prior to your loss, you faithfully paid your premiums to the insurance company believing that you were receiving, in return, a valuable but intangible item, namely, a promise-a promise to be there for you and assist you in a time of crisis. Indeed, you bought your insurance hoping never to have to use it at all. You paid your premium (which was non-negotiable in amount) and, after doing so, you received a lengthy written contract in the mail which contains terms and conditions, none of which you actually agreed to or discussed. In short, you made a business deal with a company that no one in their right mind would actually make if you hadn't been promised that when disaster strikes you would be in good hands or treated just like a good neighbor.
How and why do problem claims develop? What is it that makes the claim process seem like a fight? There are no set answers, but there are often many answers.
Some of the reasons will be set forth below.
Let's start with the individual handling your claim, the claim adjuster. Be assured that these individuals did not wake up one morning and say to themselves, Since I'm a mean, rude and uncaring individual, I think I'll become a claim adjuster. Nothing of the type took place and, in fact, most claim adjusters begin their careers with the genuine desire and hope of being able to help people in their time of crisis. They assume that they will be able to reimburse insureds for their losses as the claim adjuster deems appropriate and that this is what company management wants from them. Unfortunately, the idealistic goals of a new claim adjuster are often drastically different from the realities of the job they are required to perform.
There are many reasons why problems develop:
1) Being overworked, insurance companies set standards for the number of claim files each adjuster is supposed to be handling at any given time, but it is rare that those goals are met. Claim adjusters often have far too many files to be able to work them in an efficient and timely manner. As a result, the claim process gets bogged down, phone calls don't get returned to insureds and, before long, the entire process changes the claim adjuster's attitude from one of being positive and helpful to just hoping to survive and get through the current day. Claim adjusters often find it impossible to get their work done in a 40-hour work week and, as a result, often have to work longer hours, often without additional pay.
2) The Big Brother Reality Claim adjusters have specific and defined authority with respect to the handling of their claims. Their authority is usually expressed in terms of a dollar amount such as having $10,000 in authority to settle a total loss claim, etc. As a result, the natural tendency for claim adjusters is to hope that any given claim falls within their dollar authority because, if it does not, the claim adjuster then has to go see the claim supervisor for additional authority to resolve the claim. Having to go to a claim supervisor means additional time and effort being spent. For example, it can mean additional forms needing to be filled out for the supervisor's review. Needless to say, the less often supervisory approval is required, the smoother things go for the claim adjuster.
Aside from the additional work aspect, however, there is also the subconscious, or even conscious, concern about not being able to get claims settled for amounts within the adjuster's authority and having it go to the supervisor, time and time again, for additional money.
3) Re-inspections, and overpayments. All claim adjusters are regularly subjected to what are called re-inspections of their files, or file audits. For example, every 60 days the claim adjuster might have 10 recently closed files selected at random by the claim supervisor for re-inspection.
The claim supervisor goes through these files and looks for instances in which the claim adjuster has overpaid or even appears to have overpaid on the loss in question. Ignoring how subjective and unrealistic it might be for the supervisor to second guess the claim handler on a file where the supervisor may have had no involvement while it was pending, claim adjusters don't want overpayments to be found in any of their files. Not only does that reflect badly upon the claim handler's job performance, but the claim supervisor's job performance may also be graded by the overpayment percentage that is found to exist when the files of the adjusters are being supervised are re-inspected. (As you might expect, while overpayment percentages are tracked as to each individual claim handler, insurance companies keep no statistics as to underpayments, namely, where a re-inspection reveals that the insured may not have been fairly or properly compensated.) 4) Lack of discretion and human input. While computers are certainly wonderful, their use by insurance companies has, in many instances, resulted in a number of claim problems for the policyholders.
At the same time, the claim adjuster's job has become much more robotic and less dependent upon the adjuster's objective judgment and experience. Some of the more prominent examples of this computer age phenomenon are as follows:
- Many insurance companies, including the largest ones, now determine the monetary value of an individual's personal injury claim, including the extremely variable component of pain and suffering, by computer programs marketed by outside third parties. The computer program most often used by insurance companies is called Colossus. As implied, Colossus was not created or programmed by neutral or objective sources as to how personal injury claims should be evaluated but, rather, by a corporation which marketed the software to insurance companies with promises of saving the insurance companies money on their personal injury claims. As a result, the settlement offer you receive for your personal injury claim has probably been generated by an arguably biased computer program rather than by fair and honest human judgment. To make matters worse, claim adjusters generally have restrictions placed upon them as to how much, if at all, they can deviate from the computerized valuation in settling the claim. The insurance company's philosophy is, We're paying for this service, so we're going to rely upon it and use it. As would be expected, this entire process makes negotiating or appealing the settlement offer much less viable. From the claim adjuster's standpoint, having to use and rely upon computer generated settlement offers as opposed to their own judgment and experience is often viewed as being personally degrading which, of course, leads to decreased job satisfaction.
- Along the same lines, insurance companies now rely upon outside vendors to provide computerized valuations for automobile damage claims, the most common use being to determine the value of an insured's totaled vehicle. There has been a substantial amount of both class action and individual bad faith litigation around the country concerning total loss valuations over the past decade. Substantial evidence has been developed which proves that not only have insurance companies used these outside vendors with the intent to pay less money to their policyholders, but that these ill-gotten gains or savings have amounted to hundreds of millions of dollars per year on a national basis. Remember, it's hard to cheat one individual out of $100,000, but it's very easy to cheat 100,000 individuals out of relatively small sums of money insofar as each individual claim is concerned. Considering that the larger insurance companies process several hundred thousand total loss claims per year, low-balling their policyholders an average of several hundred dollars per claim adds up to a staggering amount of savings on an annual basis.
