Insurance companies operate under a business model that involves underwriting risk (placing a dollar value on your risk of becoming disabled and filing a claim), taking in premium dollars from its policyholders (you or your employer), investing those dollars, and, when necessary, paying out on claims made on its policies. For the insurance company to prosper, or even stay in business, it must maximize premium dollars and return on investments while minimizing the cost of claims.
Insurance companies operate in highly competitive markets, and it is not uncommon for insurance companies to pull out of an unsustainable or unprofitable market. In essence, insurance companies cannot make a loss for any considerable length of time. Thus, insurance companies vigorously manage their claims process and pay out on as few claims as possible. Insurance fraud is a relatively common crime and, understandably, insurance companies wish to protect themselves as much as possible against it.
To control claims and combat fraud, insurance companies operate defensively, with a strategy far from the best interests of you, the claimant. Policies are written with clauses, sub clauses, limitations, and exceptions. When the terms of a policy are ambiguous, they will inevitably err on the side of the insurance company. Claims adjusters are responsible for verifying the validity and acceptability of claims. These professionals are trained to control claims. A claims adjuster who is paying out on too many claims is simply not performing and could jeopardize his or her job. Many insurance companies do not have training manuals for their claims adjusters, preferring instead that they learn on the job. It has been suggested that this is because it would be risky to put down on paper what is supposedly the shady side of their business, namely, that adjusters are encouraged to deny claims.
To combat fraud, insurance companies routinely hire investigators to monitor disability claimants, which can include physically following them during their daily activities. The result of this surveillance can be used to make cursory decisions on whether the claimant could perform their job if they were back at work. They also hire their own independent medical examiners (IMEs) to improve their chances of obtaining a medical evaluation in their favor, one that ultimately means your claim may be denied.
The result of this vigorous defense of claims is that processing of disability claims can be unduly lengthy, complicated, and overly burdensome on individuals who may be already overwhelmed by daily activities in the face of an injury or major illness. Efforts to control claims and combat fraud have created overwhelming amounts of paperwork, requests for information, delays, and unfair denials.
The defensive tactics of the insurance company have created an uneven playing field, in which the average claimant, inexperienced in the process of filing a disability claim, is pitted against a powerhouse opponent. These tactics have the potential to create an adversarial relationship and can lead to frustration and aggravation, exacerbating an already difficult time for an injured or ill worker.