Today’s blog post is about what the Impact Claim Services team has deemed “The Rule of 99”. After years of experience in handling Insurance claims, this is our interpretation of what the insurance industries business model has become in regards to the handling and paying claims.
Many years ago when you filed an insurance claim a trained adjuster from your insurance company came out, inspected the damaged, acknowledged the damage and said, “Mr. and Mrs. Insured, have your chosen contractor let us know what it’s going to take to repair this damage, and what the charges will be. Then they cut you a check. There was no arguing with professionals on damage and price, it was a customer-focused approach to paying claims.
The insurance industry many years ago converted from this business model to a numbers driven dollar figure game that forever changed the insurance claims landscape. The introduction of inexperienced, untrained and uneducated insurance company adjusters combined with estimating software that has suppressed and driven down market prices of construction costs, has allowed insurance companies to underpay and deny claims much easier.
With all that being said the rule of “99” is as follows. If on 100 claims an insurance company denies or under pays 100 of those claims, in our experience “99” those 100 insured’s will either walk away from escalating the claim, or find a low grade contractor to do the work for the underpaid amount of the claim.
The “1” person out of 100 will retain a public adjuster and will get their claim paid for in full under the terms of the policy. During the course of this endeavor this “1” person will likely expose the insurance industry’s willingness to unreasonably delay and deny claims and as a result this person will file suit against the insurer for bad-faith or unreasonable or denial and could be entitled to additional penalties as a result of these claims handling behaviors. Under Colorado Laws this can translate to 2 times the amount unreasonably delayed or denied, plus attorney’s fees! That’ll teach ’em, right! Wrong!
You see on those “99” of 100 claims, the insurer has preserved and retained so much money that paying the “1” of 100 triple the amount they would have, had they paid the claim fairly in the first place, is a business decision that makes complete sense. That’s right, I said it. It makes sense. Let’s do the math. Assuming a $10,000 average claim, and that the claims were underpaid by 50%, which is being generous in this adjuster opinion. That means that on the “99” claims the insurer retained $495,000 of money that were owed, at the expense of paying the “1” of 100, $30,000 plus attorney’s fees. Now do this over thousands and thousands of insurance claims annually, and absent the application of morals and ethics that math is tough to argue with.
The head of an insurance company is a business professional that is going to look at bottom-line numbers and strategies for his organization and as a result of underpaying all those claims they make a ton of money, and in “99” out of 100 situations the insured won’t even know they’ve been underpaid or dealt with unfairly.
People need insurance and most consumers do not know the value of being insured by a company with solid claims practice. Most insured’s are sold a premium by an agent, never fully understanding the coverage’s or potential consequences of their choice of insurer.
In this day and age consumers, business owners and policyholders have to come to terms with the overwhelming trend that insurance companies have their interests in mind, not the policyholders. They are here to make money and the name of that game has become “the rule of 99”. They don’t care if you sue them and get what your owed, plus double the amount unreasonably delayed or denied plus attorney fees, because the “99” people wont. This strategy will make the insurers more money than you can imagine, but it comes at the expense of the consumer.
Our clients are the “1” of 100, our clients hire us knowing that we are willing to do what ever is necessary to secure and obtain ALL MONEY rightfully owed under the policy. Don’t be one of the 99%. Don’t let the insurance industry have you contribute to their records profits at your expense. You paid your premiums you lived up to your end of your policy contract, make your insurer do the same.
No matter how nice you think your adjuster was, or fairly you think your claim was adjusted keep the “rule of 99” in mind and have a professional public insurance adjuster review your claim to make sure you’re not one of the “99”.
A great article was published by The Huffington Post on this concept, and also contains additional references to additional resources and publications on the change in the claims handling industry, you can access it here.