Disability Insurance – The Business Of Skulduggery

deceptionYesterday, one of my callers said, “I don’t know if you know this or not but most of the attorneys in Illinois read your blog!” Well, I sincerely hope so. I’ve been writing blog posts since 2001, as I said back then, “to provide information at least equal to that of the insurance companies making decisions to pay/deny claims.”

In the last 17 years or so I’ve posted many articles attempting to convince and persuade private disability insureds that private disability products should NOT be trusted or relied upon for long-term financial security. And yet, everyday I have a new caller say to me, “If my insurer denies my claim I don’t know what I’m going to do.” Unfortunately, these are mostly ERISA folks relying on employer-provided benefits that provide the least protection of any insurance product out there.

I think the word “skulduggery” perfectly describes the business of private disability and here’s why.

  • Employer Plans and policies are contracts of adhesion meaning the insured or claimant has no say in what the policy says or means.
  • There are provisions limiting maximum duration payouts and benefits for mental health and “self-reported illnesses.”
  • Disability insurers target and devise strategies to “stack the deck” against insureds to limit their overall liability for claims. (In other words, they deliberately reduce their risk and liability acceptance rates.)
  • The overall profitability focus is to identify legitimately payable claims and deny them in order to increase profitability. This is done via internal strategies that focus on various elements of the claims process.
  • Insurers spend very little for training of claims management staff.
  • Claims handlers are forced to sign template letters they do not write and/or do not agree with.
  • Employer Plans “offset” other income to help finance their overall liability for claims, therefore, there is always a threat to estimate SSDI if claimants do not immediately apply.
  • Claims handlers do not have the autonomy to make claims decisions. They are the lowest rung of administrative review and act as a buffer to protect managers who DO make claims decisions, but do not present to the general public.
  • Insurers manage claims to deny rather than to pay. This is a direct indication of a “conflict of interest” as both payers and reviewers of claims.
  • Insurer strategies include deception, trickery and invasions of privacy to document work capacity when no work capacity exists.
  • Insurers deliberately encourage fear and anxiety to convince insureds they should do whatever the insurance company requests even when it is an out of contract demand.
  • Insurers place frequent unexpected phone calls in an effort to require insureds to respond spontaneously rather than providing questions in writing and allowing them time to actually think about their responses.
  • Insurance physicians contact treating physicians by phone to convince and persuade treating docs that patients can return to work.  There is always a deceptive element in documenting doc-to-doc calls.
  • Insurers always offer low lump sum settlements representing only a percentage of net present value. At least a 20% profit is realized on settlement claims.
  • Insurers “target” various impairments for denial, such as CFS, FMS, chronic pain, HIV, depression, Lupus and MS.
  • Insurers “target” various occupations for denial such as RNs, Attorneys, Physicians,  Anesthesiologists, and others where the occupation is defined in the national economy.
  • Insurers often recalculate claims and arrive at outrageous overpayments in order to curb cash flow problems.
  • Insures use “reservation of rights status” to engage in “off-Balance Sheet financing” to reduce liabilities and maximize profits.
  • Insurers do not know much about actual “disability”, but center only on removing the financial reserve for profit at the expense of insured or claimant.

While I could go on and on about how the internal review process really works, I think you get the idea. None of the disability insurance products sold today are reviewed fairly and objectively which is why those who have these policies should never put all of their eggs in the private disability basket that’s likely to remain empty.

The private disability industry operates as a fear instilled means of selling disability policies insurers have no intention of paying, if they can help it. Nearly all group employers today hire third-party medical providers who are paid to discredit claims. These organizations consist of highly qualified medical doctors who are able to act as expert witnesses in matters of litigation. This is just another layer of “stacking the deck” against insureds and claimants.

I realize when I write articles such as this one, I generally scare the heck out of people. However, the reality of private disability insurance is that it should be realistically viewed as short-term compensation supplemented by your own Plan B, or other sources of future income. To rely on, or trust the “skulduggery” of the disability insurance industry guarantees a very complex and frustration-filled claims process that never ends.

Those who rely on the long-term income from private disability will be disappointed when the insurance company gets around to targeting them. Although I am well-known for my frank and accurate reporting of private disability, DCS, Inc. dedicates itself to a more positive perspective of managing claims successfully rather than continuously focusing on the “skulduggery” of insurers. It is far more important to know how to identify the deceptions and how to manage them.

In my view, it is always better to have a realistic picture of your financial future rather than a sudden fire bell in the night you can’t manage or put out. Furthermore, the future of private disability in the age of merger and consolidation appears to be disadvantageous to those who invest and trust in the products sold to them. Insurance in general can no longer be trusted to provide what it is that was promised and paid for.

And, by the way, Lindanee’s Blog is open to everyone with an interest in private disability, in particular attorneys searching for accurate information to the hard questions about private disability claims. You’ve certainly come to the right place!