All disability insurance companies recognize profitability by reductions in financial reserve. That said, year-end targeting of vulnerable claims is perhaps one of the most important priorities of an insurance company from October through December.
The process of reducing financial reserves is found directly within the claims review process from the time a new claim is first uploaded to the time it is eventually denied, if it ever is. Claims management incentives, validation, Reservation of Rights, the use of LARs (Liability Acceptance Rates), and Settlements are all dedicated to maximize profitability when it’s needed.
What insureds often misunderstand is what they don’t see. Up until the time of the Unum Multi-State Settlement Agreement, insureds and claimants had absolutely no idea how their claims were reviewed, or how much “bad faith” was actually going on. When Unum’s abuses were disclosed in public, all hell broke loose and the rest is history.
While Unum’s abuses are now viewed as “old news”, many of the company’s egregious practices are still going on, and in some cases, worse than ever. With the exception of CIGNA and Prudential, most other insurance companies seem to operate at a neutral level, neither providing good claims practices, nor chasing after bad ones. However, while Unum’s problems have always been poor leadership, other insurers manage to stay under the wire of negative public opinion and regulatory scrutiny.
At this time of year, inside most disability insurance companies, there is an hysteria to locate claims that potentially can be denied. Unum’s practice and popular saying was to “deny the biggest bang for the buck” meaning locate the highest financial reserve claims first and deny those for increased profitability.
Once located, the claims are reviewed by both claim specialists and their managers, looking for red flags that can be used as back-up to deny claims. Again, insureds generally are unaware their claims are receiving special attention until it is too late to do anything about before year-end. This is not by accident, mind you since company actions are deliberate and often malicious.
Just yesterday, an attorney told me, “Something is going on with Unum, they just don’t want to pay.” I agreed, but from what I’m seeing, Unum is completely chaotic and disorganized, no doubt from the decentralization of its claims process, working remotely without adequate resources. Still, this time of year all disability insurers are hysterically looking for more and more claims that can be denied to roll in profits that were not made in prior periods.
So, I’m guessing at least some of my readers are thinking, “tell me what I can do about this. How can I protect my claim?” As I indicated earlier, insureds and claimants cannot preemptively act on what they don’t see or know until it’s too late. This is why many December denials come as a surprise to those who need the money over the holidays.
The best thing to do is to not delay any requested responses and put any obvious abuses in the record. One of the aspects of targeting claims is choosing those the company believes it can win on appeal. Putting things in the record makes it harder for an insurer to win.
Stay aware this next month and do everything you can to make sure your claims survive until next January. If you need help please feel free to give me a call or email me at: lindanee.dcs@gmail.com
