To understand the practice of insurance denial, it is important to know how the insurance industry works. During the 1980s, insurers were eager to maximize their revenues by boosting their sales and capitalizing on high interest rates and favorable market conditions. They focused their marketing efforts on "white-collar" professionals thought to be low risk, such as lawyers, doctors, and professors. To compete for these desirable clients, insurers promised to provide such perks as cancellation-proof disability insurance policies with fixed premiums, lifetime benefits, and annual cost-of-living adjustments.
Like most well-laid plans, however, this marketing strategy eventually derailed and problems arose. Optimistic profit projections by insurance analysts proved to be unrealistic. At the same time, interest rates began to plummet and the number of claims steadily increased as baby boomers aged. Unable to affect interest rates, insurance companies knew that the only way to maintain profits was to save money. They sought to accomplish this by finding various ways to deny, delay or underpay claims even those that were perfectly legitimate.
Unfortunately, protection for policyholders whose insurance claims have been denied is virtually non-existent. There are no federal statutes regulating the insurance industry. Although all U.S. states have insurance departments and most have created legislation banning "unfair practices," they offer little in the way of enforcement and no compensation for the denied claimant. In cases of insurance denial, it is often necessary to seek legal assistance from a qualified attorney.
Has Your Disability Claim Been Denied?
Insurance companies have an obligation to their policyholders to conduct business in a manner that is fair and ethical. Those that exercise bad faith practices can be held accountable for their actions. If you or a family member has been denied long-term disability benefits or have had benefits terminated, you may want to speak to an attorney who specializes in these types of claims.
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