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Insuring America: Who's Looking Out for You?

The opinions expressed by columnists are their own and do not necessarily represent the views of

Think you're in good hands with your insurance company? Think again.

A recent research study by the American Association for Justice, "The Ten Worst Insurance Companies in America," makes it clear that one of the main reasons the top insurance companies are doing so well is that they have consciously embarked on aggressive policies to avoid paying out claims, whether the claims are justified or not. In other words, they will take your money, but when it's time for them to pay you, watch out.

Bottom line: insurance companies are more interested in collecting premiums than in paying claims.

The AAJ report notes that U.S. insurance companies annually collect over $1 trillion in premiums, and today the industry is sitting atop $3.8 trillion in assets (more than the GDP of every country in the world, except the United States and Japan). Their executives are handsomely compensated with C.E.O.'s receiving multi-million dollar annual pay and benefits packages. Without a doubt, the industry is doing well.

There is nothing wrong with insurance companies making a profit, but businesses that operate on the basis of contracts with their customers ought to live up to those contracts.

The number one offender on the AAJ list is Allstate, which employs a "3 D" strategy in dealing with its customers: deny, delay, and defend. Allstate's policy appears to be to litigate every claim—including meritorious ones filed by their policyholders—in the hope that it can wear out its opponents and get them to accept a minimal payment or drop their claim altogether. The result is the policyholder who paid the company a premium in good faith is left to twist in the wind. Former Allstate adjusters say they were rewarded for keeping claims payments low, even if they had to deceive their policy holders. So much for being in "good hands"!

Second on the "Ten Worst" list is Unum, one of the nation's leading disability insurance carriers. The multi-billion dollar company is headquartered in Chattanooga, Tennessee, not a place from which you would expect "sharp" practices to emanate. Debra Potter learned otherwise. She filed a disability claim because of her multiple sclerosis. Her claim was repeatedly denied even though her doctor backed up its legitimacy and the Social Security Administration concluded she was totally disabled. Unum denied her claim for three years, and only paid after she retained a lawyer.

Ironically, Potter spent years selling Unum disability policies as part of a financial services package. Potter said, "People need safety and that's what I thought I was selling them. But here I am with all my knowledge of insurance, and I couldn't make it work for me." Former employees are on record saying that Unum ordered them to deny claims to meet cost savings goals.

AIG, the nation's largest insurance carrier with assets valued at over a trillion dollars, ranks third on the AAJ's Ten Worst List. The company has a reputation for being extremely stingy in paying out claims. According to AAJ, "Former AIG claims supervisors have alleged in litigation that the company used all manner of tricks to deny or delay claims, including locking checks in a safe until claimants complained, delaying payment of attorneys' fees until they were a year old, disposing of important correspondence during routine 'pizza parties,' and routinely fighting claimants for years in court over mundane claims." Numerous other tactics are described in the report, including price-gouging strategies developed to cash in on the tragedies brought about by Hurricane Katrina and the September 11 terrorist attacks.

The report is replete with documentation about the very disturbing practices of some of America's best known insurance companies. These companies built their businesses by cultivating the public's trust. Now, however, that trust is being betrayed as the companies put profits over their obligations to policy holders.

People in quest of a just society should decry business practices that are rooted in fraud or trickery or deceit. The doctrine of caveat emptor ("let the buyer beware") does not justify lying, cheating, or dissembling. And certainly those who call themselves Christians cannot justify such practices. The writer of Proverbs warns against unscrupulous conduct: "A worthless person, a wicked man, goes about with crooked speech, winks with his eyes, signals with his feet, points with his finger, with perverted heart devises evil…." (Proverbs 6:12-15 ESV) His fate, the writer warns, will be sudden "calamity" (Proverbs 6:15 ESV), for the Lord hates and finds abominable "a lying tongue," "a heart that devises wicked plans," and "a false witness who breathes out lies." (Proverbs 6:16-19 ESV)

Five hundred years ago, Martin Luther admonished his parishioners, "Everyone should conduct his trade, craft and business in such a way that he overcharges no one, cheats no one with false wares, is satisfied with a fair profit, and gives people something worthwhile for their penny." How different America's insurance industry would look today if its CEO's heeded the venerable preacher's advice.

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