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History of Disability Insurance Denial

Professionals, such as lawyers and physicians often have difficulty finding affordable insurance. The reason is that the industry has had trouble insuring professionals in the past twenty years. In recent years insurers have faced soaring claims and declining premiums.

As a result when a professional becomes injured and disabled, policy benefits may be delayed or denied. In some cases they will only get benefits after hiring a lawyer and engaging in litigation against their insurer.

Professionals should take a look at their disability insurance policies and educate themselves about the tactics many insurance companies use to deny claims.

History of Industry Problems

Starting in the late the 1970s until the early 1990s, disability insurance companies aggressively marketed to professions with favorable risks, such as doctors, lawyers, professors and white collar professionals. Insurers aggressively competed for these clients with good policy payouts and premiums. Many of the policies could not be canceled and had guaranteed fixed rate premiums.

Unfortunately, in the mid-1990s, when many of these professionals had aged, the insurance companies realized that they had underestimated the number of claims. Baby boomers were all reaching the 45 to 55-year-old age range and began becoming disabled in large numbers. The large increase in claims included medical conditions that the insurance industry had not considered when the policies were written. Diseases and conditions ranging from carpal tunnel syndrome, fibromyalgia, chronic fatigue syndrome, Epstein-Barr virus related conditions, and various mental disorders made their appearance in a vigorous way in the past twenty years.

Occupations previously thought to be low risk for disabling injury suddenly became insurance mine-fields. To aggravate the problem many of the medical conditions had few available treatments and were viewed by the industry as marginal medicine with little scientific data.

As claims mounted several large insurance companies stopped writing disability policies. The remainder of the industry consolidated. Unum Provident, formerly three companies now handles 40 percent of disability insurance policies in the US.

The new policies are not as generous. Often featuring many limitations and exclusions to limit risk exposure, the policies are no-cancel, premiums may be raised in certain situations, benefits are capped at age 65 and they may require rehabilitation programs before benefits are paid. For claims involving certain mental disorders or other conditions the benefits may be limited to two years.

Denying Claims

In addition to re-writing the policies, disability insurance companies actively look for ways to avoid paying a claim. It can be difficult for disabled people to get claims paid and to prevent payments from being stopped.

Often disability insurers go too far and engage in bad faith tactics to avoid honoring a contract. Between 1992 and 2002 there have been an estimated 10,000 lawsuits for denial of claims against the largest insurer, Unum Provident. See Sample Cases Page

Making a business decision not to pay can mean a better return. Since the payout on disabled professional will often run hundreds of thousands to millions of dollars, especially for doctors and lawyers, it makes economic sense to deny the claims and litigate the merits later. Additionally, these tactics will probably often save the company up to 40 percent even if the case settles.

Insurance Company Tactics

Insurance companies use a number of techniques to avoid paying disabled professionals:

- As discussed above denying a claim to simply to wear the claimant down to a lower settlement using protracted and costly lawsuits.

- Using harassing tactics such as repeated requests for independent medical examinations. Often procuring opinions from people inexperienced with the medical condition at issue and using these unqualified opinions to deny the claimed disability.

- Or they may take the opposite approach and simply deny claims without any independent medical examination.

- Use of detectives and surveillance in an effort to discredit the disability and deny the claim. This can involve interviewing co-workers, friends, and neighbors.

-The company may use pressure tactics to get the claimant to surrender their professional license.

- Outright denial of claims involving certain diseases including mental disorders, fibromyalgia, and chronic fatigue syndrome.

- Partial payment on a claim for total disability.

-· Claiming a late premium and lapsing the policy.

- Arguing the disability is the result of a pre-existing condition.

- Alleging a misstatement invalidates the policy.

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