Is your insurer playing fair?
By Jennifer Openshaw,
CBS.Marketwatch.com
Last Update: 7:52 PM ET Dec. 14, 2004
Is your insurer playing fair?
Scandals should spur consumers to investigate more thoroughly
LOS ANGELES (CBS.MW) -- Are you in good hands with your insurance company?
Wouldn't it be nice to know before you need them?
Against the backdrop of lawsuits and allegations of illegal kickbacks made
against insurance brokers by New York Attorney General Eliot Spitzer and the
announcement of a lawsuit against five large insurance companies by
California Insurance Commissioner John Garamendi, it makes us all wonder if
we can trust our insurance company.
If insurance companies are accused of cheating their business clients out of
millions of dollars, how are they treating the rest of us?
We rely on insurance policies to protect our most significant assets: our
homes, our automobiles, the lives of our family and our livelihood. But do
insurance companies deserve our trust?
Unfortunately, there are plenty of stories about people who are in dire
financial straits because their insurance company did not help them. Michele,
a Cincinnati-based flight attendant with Comair Airlines posted her story on
www.consumeraffairs.com, a
consumer information site, which publishes consumer complaints.
Michele filed a short-term disability claim with Hartford Insurance Co. that
has been denied "on the on the grounds that they are challenging what my
occupation is at Comair Airlines," she says.
But, she says "Comair has clearly stated that my occupation is and always has
been that of a flight attendant." Michele also points out that she has
provided supporting medical documentation proving disability and inability to
return to work until she could perform the duties of a flight attendant.
UnumProvident: A just say no approach to claims processing.
Michele isn't the only one that has had a difficult time collecting on
disability insurance. Many others have had the same experience. UnumProvident
handles about 30 percent of the U.S. disability policies and is the nation's
largest disability carrier.
State insurance regulators and the U.S. Department of Labor have been
investigating UnumProvident for inappropriately denying claims for disability
benefits. But on Nov. 18, UnumProvident's disabled customers got some good
news: UnumProvident agreed to reassess 200,000 denied claims and to pay $15
million in fines.
Spitzer says "these claim denials involved vulnerable workers -- those whose
illnesses and injuries prevented them from continuing their employment."
Perhaps other insurance firms will take note and revise their practices.
Aggressive claim practices are not isolated to the world of insurance
disability. Customers with homeowners, auto and even life insurance policies
need to be wary as well. Unfortunately, www.consumeraffairs.com, is rife with
stories like Michele's.
Even life insurance claims, despite the seemingly clear-cut nature of a
claim, are not immune to claim payment resistance. Wade, a U.S. Army soldier
based in El Paso, Texas, lost his wife in a car accident and filed an
accidental death claim with Hartford Life. He only received the claim forms
after he requested help from the Texas Department of Insurance.
So go ahead, look closely. You need to learn whether your insurance coverage
is a mirage. And how do you know if your insurance firm is trustworthy? Ask
these three questions and you'll be on your way to discovering the truth. 1. Complaints: How does your insurance firm measure up?
If your insurance firm gets more than the average number of complaints about
its claim processing, that's a red flag. The most comprehensive
consumer-complaint information on the Web is the National Association of
Insurance Commissioners (NAIC) database (www.naic.org/consumer). Your state's
insurance site may also provide this data.
See the
Web site.
2. Premium hikes: Will your insurance firm raise your premium after a claim?
While no national statistics or databases exist to answer this question,
there are general customer-satisfaction ratings. The J.D. Power & Associates
consumer site (www.jdpower.com) provides customer-satisfaction data for
pricing and claims handling for auto and homeowners insurance.
Visit J.D.
Power's Web site.
You should also ask your agent what types of claims are likely to increase
your premium. Keep in mind that insurance firms watch your claims carefully
and share the information in a national database. If you file a higher than
average number of claims, all the insurance firms will have the data and it
may affect your premiums in the future. Consider raising your deductible and
forgo filing that claim.
Get yearly competitive insurance quotes to make sure that you are getting the
best premium available to you. Insurance marketplaces like www.insure.com or
www.insweb.com make it easy to get several quotes at once.
3. Financial health: Will your insurance firm be able to
pay a claim you file?
Check the financial stability of your insurance company by looking at their
rating by Standard & Poor's on http://info.insure.com/ratings/sandp.cfm.
Select an insurer with strong financial stability; for Standard & Poor's that
means an AA rating or better.
Check the Standard & Poor's site.
The selection of an insurance company is an important, if
not critical, decision. Take steps now to protect your family.
By Jennifer Openshaw,
CBS.Marketwatch.com
Last Update: 7:52 PM ET Dec. 14, 2004
