Insurance companies devious new ways to rip you off

[11522914]

https://finance.yahoo.com/news/insurance-companies-discovered-devious-ways-094501832.html

It now makes a lot more sense what's going on with insurance costs/claims. It's disgusting what the insurance companies are doing.



"As Duncan Minty, an ethics consultant for insurers, recently wrote, "It's difficult to think of data that they haven't been collecting about policyholders."

That data is fed into proprietary models for analysis to determine how much to charge a particular consumer. The personalized prices that the algorithm spits out are not just based on how risky a person is compared to other similar people but also on metrics like Customer Lifetime Value — or the predicted net profit that a customer will deliver over their lifetime.

To determine that magic price tag, insurance companies drill down into the nitty-gritty details of your life. They might look at your home's roof using drones and automated image analysis, or where you're driving based on data from a smart device in your car, or what kinds of foods you're eating by looking at nutrition trackers. They might also look at your credit score, ZIP code, social-media posts, and battery-charging habits. This data can then be used as proxies for social categories like class and race or to make moral judgments about your personal responsibility, which factor into decisions for prices and policies.

One possible way insurers limit how much they pay on claims is by simply paying less on a batch of claims and seeing how many customers complain. If the number of complaints doesn't reach a certain threshold — say, 5% of claim decisions result in a formal complaint — then the amount paid is lowered even further with another batch of claims. The process of lowering payouts, which can be automated by AI tools, is continued until that threshold of complaints is reached.

In addition to dragging out claims until customers just give up, recent reporting by ProPublica found that the health insurer Cigna uses a system that helps doctors instantly reject a claim on medical grounds without opening the patient file, forcing customers to go through a tortuous appeals process."

If you want more in depth information on what Cigna is doing, read this article.

https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims

 

[wdwwildbill]

Grrrrrrrrr !!!!!

 

[OldShooter]

The problem is that insurance is fundamentally a socialistic concept and most of our insurance system is capitalistic. The result is that the companies try in every way they can to select a pool of clients that generates minimal underwriting losses.

 

[Teacher Terry]

I am extremely persistent when a company is trying to rip me off. This includes when my kids were little, when I was working full time and now that I am retired. I threatened to show up daily at a car dealership with my 3 little kids telling other customers that they ripped me off for 500. This was after trying to reason with them for months. That finally worked and I got my money.

6 years ago I had approval for my husband to get cancer treatment out of network because they didn’t have a qualified doctor in network. They denied the claim for a year after monthly phone calls until I showed up in person and demanded to see a supervisor. She took care of the problem. I will never give up and if more people were persistent maybe they would stop trying to cheat people.

 

[athena53]

This is a vicious article. OK, I'm a little prejudiced because I worked in the property-casualty business my entire career. I have no doubt that these practices go on and that they have in the past, especially among the lowest-cost providers. I knew a claims handler who worked for one of those companies and they loved it when he was able to settle a claim that would have brought far more if the claimant had known better.

Insurance is heavily regulated in the US. State regulators monitor complaint levels and there's a lawyer around every corner willing to take on bad-faith claims handling suits (alleging that the company dragged their heels or lowballed the claim). Awards can include punitive damages.

Yes, they use whatever data they can to assess your risk of a claim. To my knowledge, I have never had a company check my credit score or install a device to monitor my driving habits without getting my express permission first. Yes, they rate by Zip Code. Doesn't that make sense? If you're in a tornado-prone area or a flood zone or a neighborhood where car thefts are common, shouldn't you pay more? (Actually, regulators "flatten" these rate differences in many cases.)

Insurers need to prove correlation before they can use a rating factor to charge someone a different rate. This is how insurance works- higher-risk insureds get charged more premium. Either that or lower-risk insureds end up subsidizing them.

The problem is that insurance is fundamentally a socialistic concept and most of our insurance system is capitalistic. The result is that the companies try in every way they can to select a pool of clients that generates minimal underwriting losses.

So... they try to price them correctly. And your point is.....?

 

[disneysteve]

Insurers are in business to collect as much as possible in premiums and pay out as little as possible in claims. They do this largely by making the process as difficult as possible. Nothing new here. It's buyer beware and very much up to the customer to do the leg work to fight for every penny they feel they are entitled to.


I will admit that I am not nearly as aggressive with this stuff as I used to be as I now value my time and sanity more than I value the monetary return.


Years ago after a car was totaled, I picked through the settlement offer line by line and contested anything that was inaccurate. For example, they hadn't included certain optional equipment that the vehicle had which made their offer lower than it should have been. They corrected it and paid us more.


On the other hand, we recently got a bill for a medical test that we only learned after the fact was done at a facility that wasn't fully in-network for our plan. Of course nobody bothered to tell us that in advance, including the facility itself that had to get prior authorization before they would even schedule the test. I paid the bill, though I did also send in an appeal but I don't expect anything to come from that. What I didn't do is waste an hour or two of my life on the phone arguing with anyone to try and get the bill reduced or eliminated.

 

[pb4uski]

I have no problem at all with insurers pricing poles based on all legally available information on the insured and the insured properties... IMO that is just smart business and each policyholder will pay premiums commensurate with their risk.

The second part about denying and dragging out claims is totally unacceptable. If a legitimate claim is filed with the required documentation then just pay the bloody claim.

 

[athena53]

The second part about denying and dragging out claims is totally unacceptable. If a legitimate claim is filed with the required documentation then just pay the bloody claim.

I once filed a claim for hearing aids for DH through my employer's plan. It was clear-cut; they paid up to $1,500 for hearing aids, we'd bought hearing aids that cost more than that and sent the receipt. They kept dragging their feet, asking for the same stuff.. we've all been though it. I searched all over the Internet to find a street address for their Claims office. Nada. I sent an e-mail asking for it because I wanted to send a registered letter expressing my dissatisfaction with the process. The response: "We can't give you a street address". My response: "Well, I do know the street address of the State Insurance Commissioner and if I don't have a check within 2 weeks I'll be filing a complaint."

They paid the claim.

 

[Sunset]

....
On the other hand, we recently got a bill for a medical test that we only learned after the fact was done at a facility that wasn't fully in-network for our plan. Of course nobody bothered to tell us that in advance, including the facility itself that had to get prior authorization before they would even schedule the test. I paid the bill, though I did also send in an appeal but I don't expect anything to come from that. What I didn't do is waste an hour or two of my life on the phone arguing with anyone to try and get the bill reduced or eliminated.

Years ago, I had something similar, went to in-network hospital with my in-network doctor, and got some out of network anesthesia doctor (something I had no control over).

So they billed me ~$1K for him.

It took over a year every couple of months to phone in and fight the same bill, repeatedly..

I would have given up, which is what they want, but DW knowing the system better encouraged me to continue to fight.

Finally they wiped away the bill.

But I shouldn't have had to do all that and spend all those hours on the phone each time.

 

[Koolau]

I am extremely persistent when a company is trying to rip me off. This includes when my kids were little, when I was working full time and now that I am retired. I threatened to show up daily at a car dealership with my 3 little kids telling other customers that they ripped me off for 500. This was after trying to reason with them for months. That finally worked and I got my money.

6 years ago I had approval for my husband to get cancer treatment out of network because they didn’t have a qualified doctor in network. They denied the claim for a year after monthly phone calls until I showed up in person and demanded to see a supervisor. She took care of the problem. I will never give up and if more people were persistent maybe they would stop trying to cheat people.

A rigid, spiteful, straight-razor tottin' woman. (From Polk Salad Annie -TJW.)


Good for you!

 

[donheff]

I am extremely persistent when a company is trying to rip me off. This includes when my kids were little, when I was working full time and now that I am retired. I threatened to show up daily at a car dealership with my 3 little kids telling other customers that they ripped me off for 500. This was after trying to reason with them for months. That finally worked and I got my money.

LOL. That made me think of an experience I had about 44 years ago in Chicago. I ordered a cheapo brand new Chevette from a Z-Frank satellite showroom just as the oil crisis was causing gas prices to skyrocket. When I placed the order, they gave me a price on my existing car ($600, IIRC) which I thought was good. The salesman smiled and promised to honor that trade in price unless I damaged the car or like issue.

My brothers and several guys at work laughed at my naivete and told me they would never honor their promise. I made a bet I would get the car at my price. I went to pick up my car with a check from the credit union for the exact amount due, minus the trade-in amount. Sure enough, "market conditions" had changed making my trade-in now worth only $200. I raised hell in the showroom which drove some other customers out. I got nowhere. So, I told them, "Call the main showroom over on Western Avenue and tell them I am on the way to talk to the big guys." When I arrived at the main showroom, they started out promising to find a resolution and ended up at the same place. It was obvious to me that they could sell my cheapo, great mileage, new car at a premium because of rising gas prices. I raised absolute hell to the point that a salesman got in my face in the showroom screaming, "are you calling me a liar"? Customers fled. At closing time, I told them I would be out on the sidewalk the next day (a Saturday), and I was. A senior manager quietly invited me in, took my check and the title to my trade-in and handed me the keys to my new car.

I go out of my way to find simple deals these days. No way I will ever go through that process again. But I always react the same way if I think someone is intentionally cheating me.

 

[Zathras]

I have no problem at all with insurers pricing poles based on all legally available information on the insured and the insured properties... IMO that is just smart business and each policyholder will pay premiums commensurate with their risk.

The second part about denying and dragging out claims is totally unacceptable. If a legitimate claim is filed with the required documentation then just pay the bloody claim.

+1!!!!!

The article is a hit piece, which happens to raise some excellent points.

 

[VanWinkle]

The problem is that insurance is fundamentally a socialistic concept and most of our insurance system is capitalistic. The result is that the companies try in every way they can to select a pool of clients that generates minimal underwriting losses.

Why wouldn't you look for the least likely to submit claims? Makes perfect sense to me.

VW

 

[youbet]

Why wouldn't you look for the least likely to submit claims? Makes perfect sense to me.

VW

+1

I want my insurance companies to know I’m a good risk (relative to others) and place me in a category where my premiums are less.

When shopping for insurance, a company’s reputation for customer service and ethics is more important to me than price.

 

[The Cosmic Avenger]

One possible way insurers limit how much they pay on claims is by simply paying less on a batch of claims and seeing how many customers complain. If the number of complaints doesn't reach a certain threshold — say, 5% of claim decisions result in a formal complaint — then the amount paid is lowered even further with another batch of claims. The process of lowering payouts, which can be automated by AI tools, is continued until that threshold of complaints is reached.

That is basically the whole plot of The Rainmaker (1997). I remember being surprised back then that it is intentional and systemic.... LOL.

 

[athena53]

When shopping for insurance, a company’s reputation for customer service and ethics is more important to me than price.

Yep. The lower-cost insurers also tend to whittle away at coverages included in standard forms that you don't notice until you have a claim in that category (e.g., you rent a car, loan it to a friend with low insurance limits, they loan it to someone else with low insurance limits and cause an accident with severe injuries). A friend got a cheaper policy that had no coverage for tree root incursion into sewer lines on her property. She found later that her previous policy had $5,000 coverage for that.

That is basically the whole plot of The Rainmaker (1997). I remember being surprised back then that it is intentional and systemic.... LOL.

The sleazier health insurance companies were doing something awful called "post-claims underwriting". I remember reading a sad case about a woman whose child was denied coverage for cancer treatments because in her initial application she omitted the fact that she'd been on anti-depressants at one time. If you filed an expensive claim they went through your medical history with a fine-toothed comb to find something you omitted in your application. I think the regulators finally cracked down on that.

 

[frayne]

I wonder how many times a medical insurer will hit somebody up with a bogus claim or rejection of payment and people just say screw it and pay it. Probably more than we would like to think.

 

[OldShooter]

Why wouldn't you look for the least likely to submit claims? Makes perfect sense to me.

VW

My point exactly. Insurance companies behave exactly like they are motivated to behave.

 

[MRG]

Yep. The lower-cost insurers also tend to whittle away at coverages included in standard forms that you don't notice until you have a claim in that category (e.g., you rent a car, loan it to a friend with low insurance limits, they loan it to someone else with low insurance limits and cause an accident with severe injuries). A friend got a cheaper policy that had no coverage for tree root incursion into sewer lines on her property. She found later that her previous policy had $5,000 coverage for that.



The sleazier health insurance companies were doing something awful called "post-claims underwriting". I remember reading a sad case about a woman whose child was denied coverage for cancer treatments because in her initial application she omitted the fact that she'd been on anti-depressants at one time. If you filed an expensive claim they went through your medical history with a fine-toothed comb to find something you omitted in your application. I think the regulators finally cracked down on that.

I have seen the workflow and some processes that enable this. I thought it was odd, me not having industry knowledge, but a business person explained what they were doing.

 

[Texas Proud]

Did not read the article but the OPs stmt is ho hum... nothing new here...


Of course a company is going to calculate how much you are 'worth' to them... I know that banks did that back in the 90s... probably still do...


I for one hardly ever pay a bill that I do not think I owe... within reason (the really small ones I do)... to me, keeping the money is the leverage... if they want to get paid then they will need to come to an agreement or not get paid...


As for claims, I have gone over a year off and on with and insurance company (someone hit my DW)... I finally got tired and said I was gong to file a small claims case the next week if they still denied the claim (it was a loss of value claim, not fixing the car)... I got a check...

 

[Montecfo]

None of this is new. If you use a Mac for online shopping, some retail sites may assume you can pay more and price accordingly.

 

[PatrickA5]

As others have said, nothing new here.

Life insurance companies are notorious for slow pays. It took several months to collect a $5,000 policy that my FIL paid premiums on for over 30 years. I was convinced that their fax machine was connected to a trash can.

 

[Mr. Tightwad]

https://finance.yahoo.com/news/insurance-companies-discovered-devious-ways-094501832.html

It now makes a lot more sense what's going on with insurance costs/claims. It's disgusting what the insurance companies are doing.



"As Duncan Minty, an ethics consultant for insurers, recently wrote, "It's difficult to think of data that they haven't been collecting about policyholders."

That data is fed into proprietary models for analysis to determine how much to charge a particular consumer. The personalized prices that the algorithm spits out are not just based on how risky a person is compared to other similar people but also on metrics like Customer Lifetime Value — or the predicted net profit that a customer will deliver over their lifetime.

To determine that magic price tag, insurance companies drill down into the nitty-gritty details of your life. They might look at your home's roof using drones and automated image analysis, or where you're driving based on data from a smart device in your car, or what kinds of foods you're eating by looking at nutrition trackers. They might also look at your credit score, ZIP code, social-media posts, and battery-charging habits. This data can then be used as proxies for social categories like class and race or to make moral judgments about your personal responsibility, which factor into decisions for prices and policies.

One possible way insurers limit how much they pay on claims is by simply paying less on a batch of claims and seeing how many customers complain. If the number of complaints doesn't reach a certain threshold — say, 5% of claim decisions result in a formal complaint — then the amount paid is lowered even further with another batch of claims. The process of lowering payouts, which can be automated by AI tools, is continued until that threshold of complaints is reached.

In addition to dragging out claims until customers just give up, recent reporting by ProPublica found that the health insurer Cigna uses a system that helps doctors instantly reject a claim on medical grounds without opening the patient file, forcing customers to go through a tortuous appeals process."

If you want more in depth information on what Cigna is doing, read this article.

https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims

What's a nutrition tracker?

 

[The Cosmic Avenger]

What's a nutrition tracker?

https://www.myfitnesspal.com/


They're used to track calories and nutritional intake.

 

[PatrickA5]

https://www.myfitnesspal.com/


They're used to track calories and nutritional intake.

I've been using this for years. It would probably disqualify me for life, health or LTC insurance if they saw all of the crap I've been eating lately.