Another Black Eye
The headline of the lead story in yesterday’s edition of “The New York Times” was devastating to the insurance industry’s already tattered reputation–”Aged, Frail and Denied Care By Their Insurers.” (The word “Evil” before “Insurers” is implied.) Included was a page-one picture of a sweet, little old lady, being comforted by her daughter while battling long-term care insurers who are giving mom the runaround. Even though this does not involve property-casualty coverage, collateral damage will affect all types of carriers, as the general public doesn’t distinguish among the various types of insurers. It’s all one big, bad industry.
You may access the Times story by clicking here. Read it and weep.
The bulk of the story primarily dealt with claims problems plaguing policyholders of Conseco and its affiliate. But even though the article conceded that “tens of thousands of elderly Americans have received life-prolonging care as a result of their long-term-care policies,” the focus of the piece was that “thousands of policyholders say they have received only excuses about why insurers will not pay.”
The article also exposed some serious shortcomings in state regulatory oversight of LTC claims mishandling, making it sound as if insurance departments are absolutely clueless about the problems plaguing policyholders.
I have to admit the article scared the life out of me. Approaching 49, I’m at the age where the purchase of LTC coverage–if only for asset protection–will soon become a necessity. But I have always been nagged by doubts about the product. Will LTC carriers be there years from now, after I have committed tens of thousands of dollars to them, when I actually need care? Or will all I purchase be the right to sue?
If someone in my position is nervous, imagine the average Joe who only hears horror stories like this from the media–or perhaps from a friend, family member or neighbor battling some insurer over a disputed claim.
The phones were probably ringing off the hook yesterday at the offices of life insurance agents and financial planners nationwide from LTC buyers looking for reassurance that their carrier can be relied upon to cough up the dough when required–without undue fuss, let alone a legal challenge.
Every time someone in the industry screws up, the public’s worst fears about insurers are realized. The stereotype of fat cats who make profits by denying valid claims is confirmed, and agents face that much harder of a sales job to convince prospects their carriers are different–that such extreme cases of claimant abuse are in the minority. I don’t envy them the task.
With LTC costs soaring and the population aging rapidly, can the LTC insurance market fill the gap and provide a soft landing for all but an unlucky handful? Or should LTC be built into the Medicare system, so otherwise honest people don’t have to resort to asset-transfer scams to become eligible for Medicaid, and thus avoid spending their life savings on the last few, painful years of life?
These are not easy questions, but fundamental issues such as these–about the need for universal health care, affordable drug coverage, Social Security and long-term care–should dominate the next presidential election. As the Baby Boomers continue to age, we have that much less time to craft a solution–one that hopefully includes a major role for an insurance industry that has yet to prove itself worthy of the public’s trust.
(For the LTC industry’s reaction, click here.)
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Isn’t a lot of the bad ink being used up on stories about the insurance industry not somewhat the fault of the media?
It’s easy to sensationalize these stories playing upon fears of the big bad wolf insurance companies.
Doesn’t all this fall in line with the “why should I take responsibility” attitude of today’s consumer? Read the fine print of the insurance contract and buy the product from a reputable provider. Sometimes the consumer is to blame.
No, you aren’t covered for everything. No, exclusions do apply. No, the deductible does apply.
If folks spent as much time learning their insurance coverage as they do a new video game, maybe there would not be as much to write about.
Sam Responds: You make a very good point about consumers needing to read their policies carefully (or have their agents properly explain it to them). But a problem could be that the policies are not written clearly in the first place, or–as the Times reported in its LTC story–it’s the insurer who ignores the policy language, not the buyer, with the insurer asking for documentation not called for in the contract, for example.
As for your first point about all this being the “fault” of the media, I always fall back on the tagline for the Society of Professional Journalists, of which I am a proud member: “If the media didn’t tell you, who would?”
The media didn’t make up any of this stuff they are reporting about the insurance industry. It all goes back to an earlier blog entry, in which I said the problem is not the industry’s image, it’s the industry’s behavior that’s to blame.
The only criticism I would have about the media is an old one–bad news rules. No one reports that 95 percent or more of Katrina claims have been paid in a timely fashion. The news focuses on the 5 percent that didn’t. But that’s the nature of the beast, and that shortcoming doesn’t change the fact that bad stuff being reported about the industry isn’t happening.
Wouldn’t it be so simple to ask that both parties adhere to the “contract.” Plain language policies should certainly be more prevalant.
People still buy products with usage instructions that are a farce and this doesn’t seem to bother them. If you seek to fully understand what you are buying, the resources are available.
I was not intimating that the media was to blame for this issue. It’s beneficial to point out injustices perpetuated by any industry, but it would be nice to see equal time given to the positive elements.
I was one of those who criticized the poor handling of Katrina claims by the insurance industry and FEMA’s lack of direction. This does not negate the work of those in the insurance industry who strive daily to deliver a quality product.
Unlike the women in the New York Times story, last year my father had a policy with Genworth (an LTC carrier) with the least complaints.
However, if I or my aunt did not help my mother sort through, fill out, get copies of, mail, respond, follow-up on the huge amount of correspondence generated by his claim, my mother, age 78, wouldn’t have received a dime.
An LTC policy, compared to a medical health policy, is night versus day. You better have help if you want to see any monetary reimbursement.
What BS!
Reasonasble expectations on an insurance contract is the recognized rule for the consumer per the courts. Read the fine print! Give me a break!
Even the folks who draft these coverages have problems with interpretation. And to say most Katrina claims were paid–95 percent–WOW! What world is this guy living in? Not the real one, I think.
Two points:
One is that the insurance departments of most states are undermanned and let many complaints get too far. Tthe media only prints the frustrations caused by misunderstandings and over-promised coverages of LTC policies over sold by agents just trying to make a living!
The other is the lack of concern that insurance companies have durring claims that are not going well. They seem to expect every claimant to just disappear whimpering!
Some policies have been amended to reduce coverage as the premiums went up and clients only remember what was originially sold, not the changes!