Insurance Claim Delays Deliver Massive Profits
The Huffington Post published this article in 2011 titled "Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers". At this time many people in Christchurch did not fully appreciate how things would unfold with their own insurance claims. This article frames the motivation of insurance companies in a different light to what we might have expected prior to the earthquakes. It illustrates cautionary tales that sound all too familiar now.
"Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers"
By Mollie Reilly, Max J. Rosenthal, Huffington Post
13 December 2011
WASHINGTON — Unlike many other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurers have long operated as semi-public trusts. But since the mid-1990s, a new profit-hungry model, combined with weak regulation, has upended that ancient social contract.
“Claims has been converted into a money-making process,” said Russ Roberts, a New Mexico-based management consultant and former business professor at Northwestern University who has studied the insurance industry’s evolution from a service business to a profit-driven machine.
Those who took the low-ball offers received prompt service, while those who didn’t had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits. As former Allstate agent Shannon Kmatz told the American Association for Justice, the trial lawyers’ lobby, the strategy was to make claims “so expensive and so time-consuming that lawyers would start refusing to help clients.” The strategy was dubbed “Good Hands or Boxing Gloves” by the consultants, riffing on Allstate’s advertising slogan.
Read the full article - click here for the Huffington Post