Disability insurers generally have their internal claims review processes down to a science. Not only does management have daily access to statistics, financial reserves, and unit operational numbers, CEOs and VPs can tell you minute details round the clock. You might even say executive management knows its profitability by the minute.
To say that insurers were not prepared for a pandemic is an understatement. Disruptions within the routinely occurring risk management review process, in combination with work-at-home employees that can’t be micromanaged, insurers are taking a huge hit in the stock market, and understandably so.
For example, there’s no point in requesting surveillance or field visits when everyone is on lock-down. Insurance surveillance and IMEs, which are primary tools to claim denials and profitability, are no longer taking place. Focus groups and management targeting based on high reserve values isn’t possible either, leaving management helpless without carefully planned alternatives.
Additionally, COVID-19 came out of nowhere just prior to 1st Qtr. financial results. First quarter profitability reporting is a big thing with all U.S. insurers. To not be able to deny claims for lack of “proof of claim”, or any other reason, must have cost insurers a good chunk of their expected annual bonuses payable company wide in March.
Even claims that should be denied aren’t being denied right now. In short, insurers have their hands full just managing costs of keeping claims handlers working at home without profits on the other end to cover costs. You can be sure that whatever cost saving measures can be taken by management are being taken while other companies are seeking bailouts.
In addition, insurance companies traditionally are so dependent on protocols that when something out of the ordinary happens the whole company gets confused. It’s really uncanny. I can’t imagine the confusion within the confines of each company trying to supervise employees when executive thumbs aren’t pushing the buttons.
Unum managers, for example, must be in a fright. How can you give someone an “Exceeds” performance rating when you don’t have control to push your direct reports into denying more claims and producing profitability. It has got to be a really bad situation internally for insurers.
I realize in times like these not too many insureds are thinking about how insurers are managing claims from inside the company. Still, the amount of confusion within the industry has got to be overwhelming.