Insurance Transparency Project

I-Pods,

You will have to bear with ITP as he settles into his new position at a major Ivy League institution that shall not be named but which lies somewhere between 110th and 125th Street in the Morningside Heights section of Manhattan, between Broadway and Morningside Avenue, across from
Barnard and down the street from the Jewish Theological Seminary. More on that later. For those of you wondering, War Eagle has a desk and water dish in the next cubicle.

I can’t add much value to the above NYTimes piece about Conseco and other longterm disability insurers. If you live on the Gulf, some of this may seem familiar.

I will pull a few quotes and then go find where they put the gym.

The lede paragraph starts with a lady from Montana who set aside grocery money to avoid burdening her family when she got old, then got old.
“But when she filed a claim with her insurer, Conseco, it said she had waited too long. Then it said Beehive Homes (her nursing home) was not an approved facility, despite its state license. Eventually, Conseco argued that Mrs. Derks was not sufficiently infirm, despite her early-stage dementia and the 37 pills she takes each day.”

The Times pulls a dirty trick and actually reads the lady’s policy:

“Yet a copy of Mrs. Derks’s policy, sent to the Wheelers (her daughter and husband) by Conseco in 2004 and reviewed by The Times, mentions no requirement for proof of illness. The policy requires only that the confinement be ordered by a physician, and it allows for a notice of claim to be sent “as soon as reasonably possible.”

What did her doctor say?

“This is medically necessary!!!” reads a form signed by Mrs. Derks’s physician in 2004. “This has been filled out three times! This person needs assistance!”

Check your calendars: it’s now 2007.

And remember what ITP said about Yale’s Jacob Hacker and “The Great Risk Shift.”

“Eventually, the Wheelers sold part of their John Deere dealership to raise money to pay for her mother’s care.”

It’s a familiar story. In the early 1990s, apparently insurers underpriced these policies. Conseco filed and re-emerged from bankruptcy.

“As insurers began realizing their miscalculations, they persuaded insurance commissioners in California, Pennsylvania, Florida and other states to approve price increases of as much as 40 percent a year. “

Isolated case? Uh, no.

“Yet thousands of policyholders say they have received only excuses about why insurers will not pay. Interviews by The New York Times and confidential depositions indicate that some long-term-care insurers have developed procedures that make it difficult — if not impossible — for policyholders to get paid. A review of more than 400 of the thousands of grievances and lawsuits filed in recent years shows elderly policyholders confronting unnecessary delays and overwhelming bureaucracies. In California alone, nearly one in every four long-term-care claims was denied in 2005, according to the state. “

Insurer pals, the reporter, Charles Duhigg, went through 400 cases. This story must have taken months.

Then there’s the reporting from inside Conseco:

“Some employees describe vast mailrooms where documents appear and disappear. One call-center representative said he was afforded an average of only four minutes to handle each policyholder’s call, no matter how complicated the questions. Employees said they were instructed not to say when the company was behind in processing paperwork, even when the backlog extended to 45 days.”

And I like this one:

“Workers were prohibited from contacting each other by phone, although such calls might have quickly resolved obstacles, according to depositions.”

War Eagle says: “Oy.”

And now a word from state regulators:

“Ron Gallagher, a deputy commissioner with the Pennsylvania Insurance Department (Conseco’s and other’s prime regulator), said, “I don’t know that we have a real problem with improper claim denials.”

And yet…

“Yet data from the National Association of Insurance Commissioners show that from 2003 to 2005, Pennsylvania received more complaints regarding Conseco, Bankers Life and Penn Treaty than any other state. Mr. Gallagher said he might begin a new review of those companies.”

And note, these are complaints filed with his own office. State regulators do not take into account — and this drives ITP crazy — lawsuits (a form of complaint, right?) or even published opinions regarding insurers under their jurisdiction. Sometimes these cases play out in courthouses just steps away from DOI offices. This was most outrageous during the UnumProvident scandal. Do not get ITP started about Unum.

Oh, and stay tuned for ITP’s next installment of “Berardinelli and the McKinsey Slides” about Allstate, homeowners and auto claims.
Unrelated? ITP isn’t so sure.