The class was usually relatively sedate until we started discussing how an insurance company handles claims. Many of the agents already had fairly well-formed opinions on that topic, i.e., they were convinced the claims process took unnecessarily long, that it was needlessly complex and inconvenient, and that claims payments were delayed and unfairly minimized by claims adjusters who they believed were rewarded by insurance companies for underpaying claims. Some of the agents had been involved in or had heard about at least one nightmare claims situation, the details of which they always enjoyed sharing with the group. So while I was often surprised by the students' general lack of knowledge and understanding of the claims handling process, I was never surprised by their fascination with the "dirty tricks" they were convinced claims handlers commonly used to minimize claims payments.
I thought it was important for the agents to understand all of the forces that exerted influence on the claims handling process, so I gave them a quick overview of the elements of fair claims practices regulations that had been implemented in many states, including this list of some of the prohibited behaviors in California:
- Misrepresenting coverage
- Failing to acknowledge and act reasonably promptly upon communications
- Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims
- Failing to affirm or deny coverage of claims within a reasonable time after proof of loss
- Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims
- Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds.
- Failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.
- Directly advising a claimant not to obtain the services of an attorney.
- Misleading a claimant as to the applicable statute of limitations.
With the exception of "Operation 3%," these probably were not really dirty tricks--they weren't illegal or unethical-- they were simply best practices at that time. The agents would usually agree, although a few would remain unshaken in their belief that adjusters are rewarded for underpaying claims. And they wouldn't budge, even when I described how most insurance companies routinely reviewed closed files to assess claim handling quality, and when they found an underpayment they immediately corrected it.
If those insurance agents were any indication, there is a receptive audience out there for publications such as Tricks of the Trade. Google "dirty tricks used by adjusters" and you will get a quarter of a million results, many of which are links to law firm websites shrilly warning consumers about ploys, tactics and dirty tricks used by adjusters. Unspeakable, heinous and despicable tricks such as attempting to talk with a claimant, or to get a claimant's statement, or to secure a medical authorization form.
"Some matters are simply contentious" wrote Sara Sheridan recently in a Huffington Post blog totally unrelated to claims. Indeed.