Delay Deny Defend: Why insurance companies don’t pay claims and what you can do about it.

We were honored to be contacted by the good folks at the Penguin Group’s Portfolio Publishing a week or so back. They inquired if we’d be interested in reviewing a new book by Jay M Feinman on the insurance claims process titled Delay Deny Defend. Professor Feinman is a Distinguished Professor of Law at Rutgers University School of Law who shares an interest in how insurers handle their claims with your (mostly) humble moderators here at Slabbed. According to the book’s website, “Feinman is a well-known expert on contract law, tort law, insurance law, and legal education. His scholarly work, including more than fifty scholarly articles, has been widely cited in the academic literature and by courts, including the United States Supreme Court.”

Lets begin with the accompanying press release:

Over the last two decades, insurance has become less of a safety net and more of a spider’s web: sticky and complicated, designed to ensnare as much as to aid.

Author and insurance expert Jay Feinman explores how these trends developed, how the government ought to fix the system and what the rest of us can do to protect ourselves.

In the book Dr Feinman chronicles many of the systemic abuses of policyholders many of which we have covered through time here. A few of the more interesting points Dr Feinman makes:

  • Auto insurance company spies who infiltrate church support groups to prove accident victims faked injuries.
  • Claims Adjusters who receive cash incentives to reduce the amount paid out on each claim.
  • Katrina claims adjusters receiving their 2 day training at a Burger King before being given a ladder and notebook computer.

Of course it was his chapter on Hurricane Katrina that immediately drew my interest. Before I share the contents of the chapter I’d like to take a second to highlight what is not is in it.  First off there are no fanciful Grand Unified Theories that attempt to tie the policyholder cases to Dick Scrugg’s subsequent criminal behavior. Lecky King is correctly identified as a female (vagina dentata)….well not really the last part and the insurance industry’s bad behavior is front and center where it belonges As I read the chapter I was briefly overcome with emotion as I saw tangible proof people are listening and do get it:

Slab cases were the most hotly disputed, even giving their name to the blog called slabbed, which expresses the frustration of Gulf residents by defining “slabbed” as “blown down, knocked down, or just down”.

Two of the journalists that we admire the most on Slabbed for their work reporting the events here, The Sun Herald’s Anita Lee and The Times Picayune’s Rebecca Mowbray are also credited by the author. Professor Feinman breaks down the 5th circuit’s mishandling of anti concurrent causation in Leonard and cites examples of the inconsistent legal stances taken by insurers most notably State Farm. Again we see the post Katrina hatchet jobs such as Mike Chaney’s deeply flawed, unsupported conclusions contained in his State Farm Market Conduct Exam and the Department of Homeland Security’s OIG report on claims dumping laid bare for the world to see. The chapter concludes with a quote from an Anita Lee’s story on Chaney’s whitewash market conduct exam from local attorney Joe Sam Owens:

‘If I didn’t know he was the Commissioner of Insurance, I would have thought he worked for State Farm.” And Owens may only have been premature in his remarks. Lee Harrell, the deputy commissioner of insurance who oversaw the examiniation of State Farm, left shortly after and joined Baker, Donelson, Bearman, Caldwell & Berkowitz, a law firm that represented State Farm in Katrina issues.

Finally Professor Feinman presents an appendix which lists resources for policyholders. It lists the usual all-star cast including  David Berardinelli, author of From Good Hands to Boxing Gloves: The Dark Side of Insurance, Law Professor Jeffrey Stempel’s Litigation Road: the Story of Campbell v State Farm, The National Association of Insurance Commissioner’s website, our friend Amy Bach over at United Policyholders, and Robert Hunter over at the Consumer Federation among others.  In the section keeping up to date we find Professor Feinman shares our affinity for Chip Merlin’s blog and Sam Friedman’s blog. He also lists a blog called Slabbed:

Detailed, often entertaining commentary on disaster insurance issues, particularly on the aftermath of Hurricane Katrina.

While certain upstate cliques thought they had ignored us to oblivion something else was happening. The people that have literally defined the issues on the national level were tuning in. We’re both very proud and humbled to be mentioned in the same breath as Robert Hunter, David Berardinelli, Chip, Amy and even my main man Sam. Nowdy for the issues we cover I think I’m safe saying we are the preeminent policyholder blog in this country bar none. Nowdy, Bam Bam,  Belle and many others too numerous to mention deserve this recognition for making slabbed possible. We’ll have more from Professor Feinman in another post. Meantime for the Slabbed Nation and Crooks in Gucci Suits everywhere rest assured…….

[youtube=http://www.youtube.com/watch?v=1y-qYhu51GM]

sop

13 thoughts on “Delay Deny Defend: Why insurance companies don’t pay claims and what you can do about it.”

  1. This is a very unfortunate situation for the writer. However, most personal umbrella policies do not provide uninsured or underinsured coverage. The reason is simple, the umbrella policy is an extension of the insure’d underlying libility limits. The is what is called a “third party” coverage to protect the insured against large liability claims. UM/UIM coverage is “first party” coverage which provides coverage for the insured.

    There obviously was disagreement about what the insured was or was not advised. The court obviously did not find for the insured. Those who were not in the courtroom for every bit of testimony cannot logically pass a judgement on the findings of the court.

  2. We are going to post somemore on perils and policyholders being underinsured Sup. The under insured driver has personal exposure for the excess loss but somehow I doubt he had any assets for the Fanuccis to attach.

    Most people do not realize it until it is too late but uninsured motorists coverage is one of the most important coverages to carry. Ms Fanucci had it and the dispute goes to the coverage limits rather than the coverage itself. Regardless of the outcome of the case this is a heart wrenching story.

    sop

  3. Sop, agreed that UM/UIM is a very important coverage and unfortunately too many prople either reject the coverage entirely or decline to increase their limts.

    When I was working in MS it was common for most people not to raise the their Underinsured limits. Why, the cost had gotten very high in MS. The reason for this is there were so many uninsured and underinsured drivers in the state. The cost was also inflated due to the “stacking” of those limits. That means if an insured had two cars the coverage was doubled which was not the intent. I do not know what the current system is.

    Where I currently work it is common for insureds to carry the same limits as their liability limits. The cost is relatively low as the state does an outstanding job of enforcing the financial responsibility laws for carrying liability insureance.

  4. Sup my Mom was one such person who thought she could save a nickle by eliminating that coverage. In today’s post McKinsey world that was the opening Nationwide used to attempt to screw her after one of their insureds ran a stop sign. They would have made it stick too had she not had a son who essentially provided the benefit of that coverage while she waiting almost 3 years for her day in court. Had Nationwide been fair up front they would have been out of pocket for around $15K. After the jury got done it was more like $50K net of fees.

    For every person like my Mom I suspect there are 95 that take pennies on the dollar because they have no choice.

    You don’t buy that coverage anymore because there are lots of uninsured drivers running around. You buy it because (unless you are wealthy) it is the only way to insure a level playing field if an insured driver causes an accident like happened to momma Sop.

    sop

  5. Sop,

    Thanks for the mention and the kind words. Everyone at Slabbed deserves all the accolades you can get.

    Just to let your readers know that Katrina is part of the story but only the tip of the iceberg, if I can mix meteorological metaphors. Delay, Deny, Defend tells the story of how the claims process has been transformed into a profit center for insurance companies, contrary to their promise and obligation to pay claims promptly and fairly. Players range from mega-consulting firm McKinsey & Co., which consulted with Allstate and other companies, to the GEICO gecko, symbol of the emphasis on price over service. The Katrina story is reflected in the problems with homeowners insurance for ordinary claims, and the book also discusses devices for stonewalling or lowballing auto claims and the exaggeration of the problem of insurance fraud. It also offers suggestions for consumers on how to pursue claims successfully and for regulators, lawmakers, and judges on reforms that are needed.

    Be clear that the book is pro-insurance, not anti-insurance. Insurance is a great social and financial device, but it needs to really give policyholders the security they expect and deserve.

    Jay Feinman

  6. Thank you Jay and will have more on it in the days to come. My favorite adjuster story involves a stripper turned adjuster. Will be be touring in support of the book? We’d love to have you on the coast as our guest.

    sop

  7. 2 days of training at Burger King? Based on my experience deposing well over 20 Katrina adjusters I would say that is an insult to Burger King.

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