Bad-faith practices in insurance include denying claims without reasonable justification, requiring duplicative information, refusing to provide coverage, unjustified policy cancellations and retaliatory rate increases. Several bad-faith practices involve the claims department -- misrepresentations about claims handling, failing to handle claims promptly, and systematically delaying settlement.
On insurance bad faith, there are two areas of consensus among industry critics, defenders and observers:
1) First, it is impossible to gauge the full extent of bad-faith insurance practices because hard data on the national level are lacking;
2) Second, whatever the extent, the problem could be ameliorated by good administrative processes in the companies--i.e. good claims handling. This broad consensus emerges among policyholder attorneys, insurance company spokespersons, and industry observers, not only about health coverage but also about other insurance with an impact on health, including disability, long-term care, and medical benefits under automobile insurance.
When every man on the street or female head of household knows that choosing to file a claim may mean getting a premium increase, the continuing lack of exact information on insurance bad practices comes to seem rather expedient. This is not rocket science; if claims processing is the locus of widespread problems, then claims handling needs some attention, some enforced standard of good practice.
Note: The extent to which corporate media outlets have gone along with the industry, the GOP, and a succession of compliant administrations on this issue can hardly be overstated. Firsthand experience: In fall 2007 I spent a month to six weeks working on an article about health insurance abuses and lacks for a glossy health magazine, working closely with the editor--interviewing numerous individuals in person or by phone, checking out applicable law, researching articles in refereed journals, etc. At the last possible pre-publication minute and after a couple of rewrites, the article was deep-sixed by a hands-off publisher I had not previously seen in the picture. The editor later left, and the magazine has ceased printing.
(This article expands on earlier writing including posts at http://www.margieburns.com.)
1 | 2
