Leading Insurance Lawyer Pulls Back The Curtain on the Insurance Industry
The December 4 murder of United Healthcare CEO Brian Thompson has brought the insurance industry’s business practices to the forefront of public discourse once more. Three words etched on the killer’s ammunition—“delay”, “deny”, and “depose”—are reminiscent of delay, deny and defend: three words long associated with the private insurance companies’ mercenary mission to save money by denying legitimate insurance claims. We certainly don't condone violence. But, as public outrage against the insurance industry has demonstrated, denying claims and then refusing to accept responsibility in litigation can result in violence. This is particularly true when the legal system is so clearly biased in favor of insurers.
The insurance industry is often criticized for employing a strategy known as "delay, deny, and defend." This approach has been highlighted in various investigations and discussions as a method by which insurance companies aim to maximize their profits at the expense of claimants.
But what is “delay, deny, defend”, and how does this affect the average policyholder? Leading Oregon insurance lawyer Aaron DeShaw takes a closer look at each component of this strategy.
1. Delay
Insurance companies are known to delay the processing of claims to frustrate policyholders into abandoning their claims. This tactic involves creating bureaucratic obstacles, such as requiring additional forms, or claiming that forms were incorrectly filled out. By prolonging the claims process, insurers hope that claimants will either give up or accept lower settlements.
“Delay” is particularly effective in cases involving long-term care insurance, where the claimant's health issues may further complicate their ability to pursue claims. It’s not uncommon for larger claims, and claims involving traumatic brain injury, amputation or other catastrophic injuries, to be delayed indefinitely.
The "delay” strategy has significant implications for policyholders, as it results in prolonged financial hardship and emotional stress for injured people seeking valid compensation for their claims. Critics of the insurance industry argue that this approach prioritizes profits over fair treatment of customers, leading to widespread dissatisfaction and mistrust in the insurance industry.
2. Deny
Denying claims is another strategy used by insurers to avoid payouts. This can involve outright rejection of claims or offering settlements that are significantly lower than what might be considered fair. The denial tactic relies on the assumption that many claimants will not contest the decision due to frustration or lack of resources, thereby saving the insurer money that would otherwise be paid out in claims.
Claim denial is common—even on claims where liability is clear and insurance coverage is more than sufficient. Dr. Aaron DeShaw, insurance bad faith attorney, has been researching and writing on the topic of insurance bad faith for more than 20 years. His work has dispositively shown how the insurance industry uses software programs to systematically deny and undervalue claims.
In the 1990s, many insurance companies began using claims-adjustment software that replaced human claims adjusters with an algorithm that could be easily adjusted to maximize profits. By slowly adjusting premiums upward and systematically paying out less and less, the insurance industry began to see massive profits. This is covered extensively in the public and legal version of the book From Good Hands to Boxing Gloves edited by Aaron DeShaw.
Jay Feinman, law school professor and author of Delay Deny Defend: Why Insurance Companies Don't Pay Claims And What You Can Do About It, offers this insight:
“My vast experience in evaluating claims was replaced by values generated by a computer. More often than not, these values were not representative of what I had experienced as fair and reasonable. Many adjusters adapted to the new system and kept their jobs, or were replaced by claims representatives—the customer-friendly term now preferred by the industry—who were trained in the new normal.”
Professor Feinman's book on "Delay, Deny and Defend" tactics cites insurance lawyer Aaron DeShaw's research.
3. Defend
When delay and denial do not deter a claimant, insurance companies resort to defending against claims in court. This involves extensive legal battles that can last for years, making it financially and emotionally taxing for claimants to continue pursuing their cases. Insurers often employ expert witnesses and complex scientific arguments to support their defense, even when these arguments may not hold up under rigorous scientific scrutiny.
Why do insurance companies take on the risk and hassle of litigating valid insurance claims? Their goal is simply to exhaust their claimants’ resources and force a low-ball settlement in their favor.
Fortunately, there is a silver lining: claims that are represented by legal counsel frequently settle faster, and for higher dollar amounts, than unrepresented claims. A publication by the Insurance Research Council reports that settlements are nearly 3.5 times higher for claims with attorney involvement than on calms without. A full 85 percent of all insurance payouts for bodily injury claims went to plaintiffs working through their attorneys.
Understanding insurance defense tactics like “delay, deny, defend” is crucial for policyholders who may face challenges when filing claims. It underscores the importance of being well-informed about one's rights and considering legal advice when dealing with insurance companies. As these practices continue to be scrutinized, there is hope for more transparent and fair handling of claims in the future.
If your insurance company is delaying payout or denying your coverage, hiring an experienced insurance claim attorney can help you recover compensation.
Our law office has an extensive history and experience handling insurance class action cases and insurance bad faith claims. If your auto insurance or health insurance claims have been improperly denied, don't take the law into your own hands. Contact our office, or call for a free consultation at (503) 227-1233 and we can discuss your insurance claim.