The headlines are staggering, “Insurance Company Profits up 41 percent,” “Record Profits Don’t Stop Health Insurer’s Record Rate Hike,” and “Insurance Company Promises to Refund Excessive Profits to Customers.” All of these headlines are real and all of them are available via a simple Google search AND all of them well illuminate a very key concept of the insurance company, the customer is a cash cow that the insurance company is milking dry.
The health insurance industry, for example, sees fully insured and contractually obligated payments as a “medical-loss” and has determined the best way to reduce such losses is by not insuring unhealthy people. As ludicrous as this statement is, this statement, as well as their bad faith reduction strategies, can also be found and corroborated via a simple Google search.
One strategy these unscrupulous health insurance companies employ is called policy rescission. In policy rescission the insurance company reviews all the paperwork the sick policy holder filed with the insurance company for any error or omission they can use to cancel the policy. Policy rescission, obviously, works quite well. So well, in fact, that three insurance company executives each declined to rescind this unfair practice when requested to by the US House Subcommittee on Oversight and Investigation. The Subcommittee was fair, however, and understood that policy recession has merit in cases of intentional fraud yet all of the insurance executives refused to end this extremely profitable, but unfair, practice.
Another well used tactic is purging. Purging is simply hitting “unprofitable” accounts with excessive fees and rate increases so that they purge themselves from the balance sheet – inversely similar, in design and effect, to the unlawful process known as predatory pricing. Predatory pricing occurs when a well capitalized business reduces it’s prices to a point that it’s competitors cannot compete and go out of business. It is reasonable for one to wonder why predatory pricing is an unlawful (antitrust) practice but insurance company purging is not.
Unfortunately, home owner are not excluded from this madness. The homeowner’s insurance providers use the aforementioned and similar tactics to reduce their payouts to their customers. The best commonly known tactic is the industry’s reliance upon Insurance Adjuster’s. What is the best weapon of an Adjuster? Strategic Omissions.
Despite the Adjuster’s well groomed image and polished, corporate, “buddy-buddy” personality, the Adjuster is at the home owner’s home as an agent of the insurance company and is working for the interest of the insurance company – not the insured – and is well trained in estimation. The in-duress and trusting home owner may notice the Adjuster records everything the home owner states – with a reduction or denial via policy rescission in quietly in mind – but may not notice what the Adjuster omits.
As the Adjuster is doing everything possible to come across as “one of the guys,” the Adjuster is silently scanning the affected area for reduction potential. The Adjuster knows, for example, that in the eyes of the law (should a case ever make it to trail), if something is not recorded, it did not happen. In this light the Adjuster could omit “Piaget” from the gold watch listing which immediately, and unfairly, reduces the potential payout for this item. Unless the home owner has proof that the “gold watch” in question is a Piaget and not a $10 Wal-Mart special, this strategic omission just reduced the insurance company’s liability by a significant margin… and this is just a watch.
Most home owners do not truly understand the replacement value of the items in their home but the Adjuster does – that is what they are trained to do and from which their bonus check is calculated. The Adjuster’s bonus is, in many cases, directly proportional to the amount of money they can snake out of the home owner. The home owner’s only defense is to make sure the Adjuster fairly and accurately records the damages in their home during the Adjuster’s walk through – a practice the Adjuster is certain to dislike and attempt to discourage.
Home owners BEWARE! Watch what the Adjuster records and purposely omits. Your restoration depends upon it!
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