Claims Management Bullying – Part 1
Twelve years ago, Financial Newswire’s life/risk columnist, Col Fullagar, wrote a blunt assessment of how life insurance companies handle claims. A decade later, unfortunately, much of the problem remains. This article serves as a reprise and update, with the unfortunate reality being that the issues highlighted in 2013 have not only persisted but appear to have worsened.
Some may consider the title of this article harsh, even provocative, and may feel the following content takes a cheap shot at those working in life insurance claims departments. This is not the intent. It is hoped that the outcome will not be perceived that way.
Three key points: First, the focus is on behavior, not individuals, acknowledging that the claims management environment is challenging for both insurers and assessors. Second, the examples may not represent every claim management experience for every adviser or claimant. Third, the industry employs many professional, knowledgeable, capable, and ethical professionals. Their skills and actions are recognized and applauded.
That said, it’s not the intention to soften the topic. People affected by claims need to be heard, and this article aims to provide a voice. This is as accurate a reflection of the facts as space permits, with genuine comments and real-life examples.
Bullying
Bullying in society receives increased attention. The author, in this context, recalls experiencing bullying as a thirteen-year-old.
Different definitions for bullying exist; however, for this article, the following definition applies:
“Bullying in the context of claims management is where an imbalance of power exists and the use of psychological, verbal, written or physical means coerces, belittles or intimidates the claimant.”
Bullying, like sexual harassment, can be unintentional or stem from a lack of understanding. The impact on the victim may be similar.
For bullying to occur, an imbalance of power must exist.
Consider:
- The Average Claimant: They may be experts in their area but are often inexperienced in risk insurance and claim protocols. By definition, they are not financially secure. They may have a support system, most likely limited to a few. They may be dealing with the effects of illness or injury or are grieving.
- The Average Insurer: The insurer is expected to have a high level of expertise in risk insurance and claims protocols. They likely boast a AAA financial rating to support their ability to administer and pay claims. They have a base of thousands of employees. Their staffing policy allows employees to recover on full salary.
This constitutes an insurer-to-claimant power imbalance that is substantial.
While dispute resolution and the legal system may help, rarely is a claim found in favor of the claimant. AFCA often decides the merits of the case made by the complainant versus the insurer, which poses an imbalance because the insurer has significant resources. If a claimant mentions legal action, the bullying can escalate.
Let’s accept that a monumental imbalance of power exists, creating an environment where bullying can also exist.
Is Bullying Alive and Well?
Despite the environment for bullying, is it present? Judgment might be reserved until the detailed examples are considered.
- Has the reader encountered these examples?
- Do they represent the actions of one individual or throughout the claims department?
- Are they limited to one insurer or common across multiple insurers such that they are considered normal practice?
- Have other claimants, advisers, or their families encountered these examples?
Could bullying be the reason the industry, which pays out billions annually, isn’t universally loved?
This article will consider a few examples, either bullying or conduct perceived as such.
Different Types of Bullying
The following is a real experience of a claimant and the steps taken concerning their claim.
Psychological Bullying
One of the most fundamental human needs is to be heard and responded to. One of the most common forms of claims management bullying denies this to claimants.
Claimant Shut Out
“When they want something, I am expected to provide it. When I ask something, I am ignored.” An example concerns a specific claim; when pointed out, the insurer replied, “Please provide examples of when you feel your questions have not been addressed.” The response: “Previously unanswered questions include those listed under ‘outstanding questions’ in my 28 January email.” The insurer responded, “I would request that all matters in respect of this claim are now directed to our customer relations team.”
Then there is the silent treatment.
The claimant asks, “Could you please advise when you would expect to come back regarding this matter?” The response was Crickets !!
In 2019, an insurer told a claimant there was a $20,000 overpayment of benefits in 2016. The claimant emailed back their disagreement. The insurer didn’t respond until 2024, demanding repayment within ten days. More than a year later, the claimant continues to wait for copies of the source documents so the allegations can be checked.
“Our Position Remains Unchanged” is another form of shutting out the claimant. An extreme example involved sending an insurer a 16-page analysis of a claim, requesting a review of its denial. In response came a sixteen-word response: “We do not accept the matters raised in your letter and thus our position remains unchanged.”.
Attack as Defense
Attack as a form of defense has been a strategy in wars and arguments. However, when it’s used in claims management, it can constitute bullying.
Hildy had an income protection claim for 14 months, receiving around $80,000. Likely, the insurer was pleased with the positive impact on Hildy’s life. The adviser, however, was not sure everything was right, and a private audit was commissioned. This revealed errors in how benefits were calculated, leading to an underpayment of tens of thousands of dollars. A report was submitted to the insurer, and the adviser asked that it not be treated as a complaint. Respecting Hidy’s wishes, the matter was referred to IDR causing the “Cone of Silence – another form of Shut Out bullying.” Eventually, out popped a response – against every query, the same words “We do not agree”, “We do not agree” – again and again. Moreover, IDR requested additional requirements. Initially, Hildy wanted to give up. She feared the insurer would make her life more difficult as the claim was long-term. After some assurances and support, she continued.
A couple of weeks later, the insurer conceded, sending Hildy a check for over $100,000, with no acknowledgement of the errors and certainly no apology. In case it was missed, the above included another form of psychological bullying, ignoring her clear instructions.
Other examples of attack as defense include an insurer accusing a claimant of breaching their application Duty of Disclosure. In itself there is nothing wrong with this, but when it is done in a way that reflects the presumption of guilt, it is bullying. In one jarring example, the initial allegation was made and followed by the word “misrepresentation” being hurled at the claimant 11 times in the same email. When the matter was subsequently registered as a complaint, IDR joined in by not only repeating the accusation but additionally accusing the claimant of withholding information relevant to the insurer’s investigation, breaching their duty to act in good faith and last, but not least, it questioned the claimant’s credibility. The claimant succinctly summed up how he felt in one word “Hunted” 18 months later, this matter had a good outcome leading to another form of bullying which will be discussed later in this article.
Onerous Requirements
One example of onerous requirements is the Daily Activity Diary.
“ … to assist with our understanding of (your) daily functioning and how (your) condition continues to affect (you) … we require (you) to complete ….. an activity diary ….. This must be completed in full as directed on the front cover.
Each hour of each day, the claimant was expected to write down details of any work performed, or activity undertaken, including – as directed by the front cover of the diary: gardening; watching TV; going shopping; cleaning; cooking; child caring; and so on. Unfortunately, the claimant, who was suffering a mental and nervous disorder, went on holidays and simply noted this in the activity diary. The response was swift and withering: “You are required to give a comprehensive account of all tasks undertaken.. We note the last page indicates that you were on annual leave. This is not acceptable and you have to complete the diary on a daily basis, taking into account the direction points noted on the front cover of the diary. When the claimant audaciously asked why he needed to complete the form, he was advised: “Daily activity diaries are now an ongoing requirement for all mental illness claims.” On-going? Is that like forever or just to age 65?! When the insurer was advised the claimant would not continue to complete it until signed off by the treating psychiatrist, strangely and co-incidentally the requirement was withdrawn. Timely as it turned out as the claimant was soon to be married and departing on his honeymoon !!
In another example, the insurer spontaneously insisted on the claimant completing in excess of twenty functional tolerance questions every month. How long can you stand? How far can you walk? How long can you drive? etc. The insurer was asked to provide context, for example with driving, is that in city traffic, or on an expressway, in good weather or poor weather? The response “We are seeking a general understanding of functional tolerances we are not asking about specific driving scenarios.” Keh? Lastly, a claimant was instructed to provide business tax returns and financial statements for a list of entities in which a directorship was held – all 17 of them. The only problem was the direction was insisted upon without first identifying which of the entities were in fact relevant to the claim.
P.S. The above was meant to be the last example of Onerous Requirements, but just as this article was about to be signed off, an email was received. In it was a list of information the insurer required to financially assess a claim. The 6-page-long list included in the order of 500, yes 500 separate items. Glory be – We have a winner !!
Change Mismanagement
For income protection claimants, stability is important in their coping regime. The antithesis of this is the process by which insurers change assessors with irregularity and an unnerving perceived lack of consideration.
It’s not unusual to have a rotation of three or more assessors per year. The issue is often the change of personnel and how it’s announced: for example, an email that states, “Hi, I am your new assessor.”
Change Mismanagement can also manifest as new and increased requirements, and previously supplied information being lost and/or requested again. Sometimes, the new assessor appears unaware of previous information and seems more focused on making their mark on the claim.
For one claimant, the intent was clear: “I know what they are up to; they have paid my claim for long enough and have instructed this new assessor to get me off claim.”.
