My book “Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It” was thrust into the spotlight recently, after UnitedHealthcare Inc. CEO Brian Thompson was shot and killed in what authorities say was a targeted attack. Investigators found bullet casings inscribed with the words “delay,” “deny” and “depose.”
The unsettling echo of the book’s title struck me and others.
That killing – and the torrent of online outrage that followed – put Americans’ unhappiness with health insurers at the front of the national conversation. Many people blame UnitedHealthcare and other insurers for failing to pay for essential medical treatments. Gleeful online trolls even celebrated the alleged killer as a heroic vigilante.
I think few should be surprised by this ghoulish reaction. The killing revealed many Americans’ resentment and even rage about insurance companies. And while the focus has been on health insurance, these frustrations extend across the broader insurance landscape. Homeowners insurance is becoming harder to get in many states even as coverage is shrinking, and auto insurance rates are skyrocketing.
Policyholders are most outraged when insurers fail to keep their promises to pay claims promptly and fairly.
And as I read people’s stories about their own experiences, I kept hearing echoes from my book. Too often, people say, insurance companies delay paying some claims, deny other valid claims altogether, and force policyholders to defend themselves in court.
But problems often begin long before anyone files a claim. Insurance consumers generally don’t know much about what they are buying. For homeowners, auto and many other types of insurance, companies seldom provide copies of policy language or accessible summaries of policy terms.
And many consumers don’t read or can’t understand the long, complex legal documents. Similarly, they can’t anticipate the many ways a loss could occur or the problems that could result if it does.
Then when consumers need coverage, they discover that there are significant protection gaps. Health insurance can involve a tangle of limitations due to provider networks, medical necessity rules and preauthorization requirements. Homeowners reasonably expect that they will be fully covered for all major losses, but insurers have cut back coverage to account for rising costs due to inflation and climate change.
When disaster strikes, too many Americans feel like they haven’t gotten the security they paid for.
Rebuilding trust won’t be easy, but it’s essential. Insurance is the great protector of financial security for the American middle class, but only when it works. As the recent reaction demonstrates, it needs to work better. The insurance industry won’t change by itself; the financial pressures on insurers from increasing losses and fierce market competition are too great.
In order for insurance to serve its goals, lawmakers and regulators need to take action. I see three big areas for improvement.
First, the government can help make the market for insurance work better. Markets need information, and better information produces better results. Regulators should require that key information about coverage be available in an accessible format for all types of insurance.
Consumers also need information on the quality of companies. Whether a company pays claims promptly and fairly is a key measure of quality. Consumers don’t have access to much reliable information on that now, so disclosure should be mandated.
Second, states would be wise to consider minimum coverage standards, especially for homeowners insurance, as insurers have been cutting back on coverage recently to reduce costs.
Third, policyholders need effective remedies when insurance companies are found to have acted unreasonably. Many claims result in good-faith disputes about how much the insurance company should pay. But other times, insurance companies deny claims after inadequate investigations or for spurious reasons.
When people find themselves in this sort of situation, they have to spend lots of time and effort fighting to get what they were owed in the first place. Even when an insurance company eventually relents, it still hasn’t fulfilled its original promise to the policyholder to settle claims promptly and fairly. Requiring additional compensation to policyholders and insurer disincentives for unreasonable conduct would level the playing field.
Jay Feinman is a distinguished professor emeritus at Rutgers Law School. Distributed by The Conversation and The Associated Press.
