Most of the people who are receiving private disability benefits have not thought about what the major intentions and priorities of insurers really are. Some are of the opinion that insurers are “all bad”, others believe the Almighty Net and believe claims are always in jeopardy, and finally some even believe they are entitled to benefits regardless.
Of course, none of that is true. Insurers DO pay benefits, in fact, they pay greater than 60% of claims, which is why they can’t make a profit doing the right thing. Premium for employers and individual IDI is costed using a 60% payout rate. Said another way, the cost of providing employee group STD/LTD is set by assuming that 60% of all claims submitted for payment will be paid. (LAR, or Liability Acceptance Rate)
Payout rates above 60% put insurers “in the red”, therefore, they develop strategies that “stack the deck” against insureds in order to pay fewer claims. But, I digress a bit.
Disability insurers DO NOT CARE ABOUT THE PAST. Insureds who persistently go over the same factual information from the beginning are wasting their time and emotional energy. Insurers only care about WHY YOU CAN’T GO BACK TO WORK TODAY AND IN THE NEAR FUTURE. When managing disability claims insureds can only deal with the here and now. Bringing up old news does not make a claim more credible, but gets you nowhere. Of course, there is always the claim where the insurance company made a mistake and “old news” must be forwarded, but for the most part, disability is determined for the future, not the past.
Why? Because insurers have already used “old news” to pay claims. The information you submitted in the past was deemed to be credible at the time and claims were paid on that basis. Therefore, it truly is old news and insurers don’t want to listen to it over and over again. In fact, a lot of that stuff winds up in the trash.
What IS important is that insureds always provide up to date information, including medical restrictions and limitations documenting no functional capacity for work IN THE FUTURE. The only reason benefits continue to be paid is that there is medical evidence that precludes working today, and disability status continues.
The objective of all insurance companies is to eliminate the assumed liability for future claims. Or, elimination of the financial reserve liability for claims payable in the future. It would be really stupid of insurers to pay claims today based on past information; it’s like comparing bananas to grapes. The only way to show profit is to eliminate financial reserve amounts moving forward.
Are insurance companies out to get you? Well, yes and no. Insurers are well aware that when the LARs exceed 60%, too many claims are paid, and something needs to be done to stop it. Hence, we see many new strategies and agenda in the claims processes that are likely to result in less claims paid. This is why one insured will say, “I had no problems with my claim”, versus another who says, “I had nothing but trouble.” Sometimes, a claim is just at the right place, at the right time, with the right claims handler and manager, depending on how you look at it.
Therefore, it is very important for insureds to refrain from submitting “old news” information and concentrate on the here and now. Medical restrictions and limitations should be for the present and near future. Refrain from bringing up the past, or what I call the “who done its.” “Unum did this and that”, or “The Hartford did something wrong.”
No claims decision is ever based on the “who done its”, or patient notes from the past, but on clear, specific, medical restrictions and limitations precluding work in the future.
