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Delay, Deny, Defend: Why Insurance Companies Don't Pay Claims and What You Can Do About It

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Abstract

The essential promise of an insurance policy is that when a claim is filed, the company will pay what it owes, promptly and fairly. Increasingly that promise is being violated. Insurance companies often delay payment of valid claims, deny payment in part or altogether, and force claimants to litigation to receive the benefits to which they are entitled. This new book exposes and documents the problem and offers solutions for consumers and lawmakers.Today insurance companies often delay payment of justified claims, deny payment altogether, and force policyholders and claimants to litigation. Since the 1990s, as a result of the intense focus on price competition and maximizing shareholder value, insurance companies have transformed the claims process into a profit center, adopting elaborate systems to cut payments to policyholders and claimants. Many of these systems have been designed by McKinsey & Co. and other large consulting firms, and they involve sophisticated techniques to avoid the prompt and fair payment of claims and to reward company employees for underpaying valid claims. Delay, Deny, Defend describes the history and operation of these systems in automobile and homeowners insurance, including segmenting claims, litigation strategies, computer systems such as Colossus and Xactimate, and changes in the role of claims adjusters. It also includes chapters on insurance in natural disasters such as Hurricane Katrina and on insurance fraud. Among other sources, the book uses insurance company internal documents, statements of present and former company executives, trial testimony, and other material not widely available. The book concludes with advice for consumers and proposals for legal and regulatory reform.

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... Thus, they hey are unlikely to purchase any preventive techniques such as insurance, safeguard from risk, most especially high severe situation, and frequent low situation. However, constructive arguments have been raised in the past, as to those factors influencing insurance purchase to include absence of trust concerning insurance providers (Feinman, 2010); high level premiums (Kelly & Vu, 2010;Pullis, 2010); not acknowledging the exigency of insurance (Laury, Mcinnes, & Swarthout, 2009). ...
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... It has been argued that factors impacting insurance take up include the high price of premiums (Deposit Power/Real Estate Institute of Australia, 2007;IFSA, 2005;Pulis, 2010); lack of trust in the insurance sector (Feinman, 2010); not seeing the need for the insurance (IFSA, 2005;Pulis, 2010), and availability of life insurance within superannuation funds (Pulis, 2010). Factors related to literacy also appear to influence insurance take-up, including insurance policies being difficult to understand such as the difference between product types (IFSA, 2005;Pulis, 2010); and the lack of skills in evaluating risk (Capuano and Ramsay, 2011). ...
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