LONG TERM CARE INSURANCE - A CRISIS ON THE HORIZON
Long term care insurance refers to the insurance for care taking and services beyond medical care and is used by people who have a disability or chronic illness or plainly just in their “golden years”. People are living longer these days and, unfortunately, normal health insurance policies and Medicare do not pay for long term care expenses. Long term care insurance typically covers the cost of health in your home with daily activities like bathing, dressing, eating, cleaning, adult daycare, visiting nurses, care in a nursing home or assisted living programs and services that are provided in a special residential setting other than in your home which services may include meals, health monitoring and help with daily activities.
Approximately ten years ago, a persuasive insurance agent convinced me that it was necessary to purchase long term care insurance for myself, as well as my aging parents. As any individual who has reviewed a newspaper within the past month can determine, many of the insurance companies in America are in deep financial crisis. It appears that there is much more trouble on the horizon for the beleaguered insurance industry. Recently, benefits for some 164,000 long term care policyholders at Conseco Senior Health Insurance Company may be in danger as they are moved to an independent trust. For more information on this, please see my blog article dated October 13, 2008.
Since 1979, I have exclusively devoted my legal practice to handling catastrophic injury and insurance claims cases. In the process, I have developed a fairly intimate knowledge of the insurance industry as I have worked with many experts including but not limited to actuaries, economists, lobbyists, product developers and insurance industry executives. As a financial investor, I have carefully studied trends and balance sheets of insurance companies. I have even been asked to participate in the start up of a few insurance companies. The field of long term care insurance is a fairly young industry and has been largely in the premium collection mode (to date) from the baby boomers who are now aging or have parents who are entering the “golden years” period of life. The financial weakness of the markets is starting to reveal its effect on even the major insurance industry players as they face declining sales and an aging population. Claims are being denied or delayed and premiums being increased in a more than harsh fashion in what this writer perceives as an attempt to negate or cancel policies for non-payment.
It seems readily apparent to this writer that many of today’s once stalwart companies are managing their claims departments as profit centers. Quite simply, it is my best guestimate that we will see more and more carriers denying claims and abusively raising their rates going forward. When one purchases one of these insurance policies, your salesman will tell you that it is one of the safest, most prudent financial choices that you can make. However, I am sure that most insurance claims will rarely get paid with a simple phone call and what should be a fairly straight forward process often necessitates the need for bringing in an attorney, turning the process into a confrontational and adversarial matter. Obviously, the mission of any company if you ask its Chief Financial Officer/CEO is to earn a return for the shareholders. Unfortunately, the dedication to shareholders comes at a great expense to policyholders.
Over the last ten years, the insurance industry has enjoyed average profits over $60 billion dollars. The CEO’s of the top ten insurance firms earned an average of $8.9 million dollars in 2007, plus golden parachutes.
As noted in my prior blog, Conseco has been in the business of selling long term care policies typically to the elderly. The elderly are the most vulnerable members of the population when it comes time to litigating claims against insurers and the insurance companies know it. I distinctly remember an upsetting conversation I had a few years ago with a key executive of a “decrepit” 3rd or 4th rate insurance carrier (perhaps I am being too kind) who told me that selling was the most important aspect of the insurance game. He said that the name of the game was collecting premiums and that there would typically be a ratio of 2/3 collection to 1/3 payout. Incredibly, sales people received commissions of at least 90% with a 10% trail. Sometimes the upfront commission actually exceeded the first year’s premium. That’s correct, with “kickers” the commission could sometimes reach 120% of the annual premium for the first year of the policy. His policies targeted an elderly market and he bragged that the company rarely paid claims unless they were forced to. The policy of this company, like many others, was to defend or deny claims and to force the elderly policyholders to “cave” for a lesser settlement. Unfortunately, it seems that this business model is all too prevalent today.
It is time to recognize that despite historical and projected growth, the long term insurance market in total and many of its leaders are destroying values.
If you are one of the unfortunate customers of an insurance company and purchased long term coverage and your claim has been denied, it is important that you hire an attorney with extensive experience in fighting insurance companies to put you on equal ground. To quote Winston Churchill, “Never, ever, ever give up!” Many insurance companies such as Conseco, Bankers Life and Casualty, and Penn Treaty have been cited for handling claims poorly and they are being closely watched by government authorities.
At the Pennsylvania insurance claims firm of Reiff & Bily, we have been representing catastrophically injured individuals and insureds since 1979 and have extensive experience dealing with insurance companies who refuse to pay claims. We are all too familiar with the insurance company practices of deny, delay and defend. We welcome the opportunity to put our clients on level playing ground with the big insurance companies.
If you were involved in a catastrophic accident or have a claim with an insurance company and they are refusing to pay you, it is important that you know your rights and that you collect the benefits that you paid for. Please feel free to contact us for a free consultation at 1-800-421-9595 or online at www.reiffandbily.com.
