Litigation

The synopsis for "Vulture Culture: Dirty Deals, Unpaid claims and the coming collapse of the Insurance Industry" by Eric D. Gerst (Amacom publishing 4/1/2008) reads like an alterrnative book jacket description for the John Grisham novel "The Rainmaker", or a review for the 1995 film of the same name:

"We all dutifully write out checks for insurance coverage each month, assuming that if the worst should occur, we'll be protected financially. But what we don't know about the insurance business could - and most probably will - hurt us. "Vulture Culture" is a hard-hitting expose of the sorry state of the industry, from tales of rampant, widespread corruption to inconsistent state regulations and the inability - and often unwillingness - of the federal government to protect the rights of denied claimants.The book takes readers into a world of bid-rigging, fraudulent commissions, and secret payoffs, revealing shocking abuses and ominous new trends. Readers will hear about a rogue's gallery of shady executives, including a CEO whose massive claim denial schemes eventually got him fired ...at great cost to consumers. From the Hurricane Katrina fiasco of unpaid claims, to a revolving door in which former insurance executives regulate their own industry before returning to it themselves, this is a shocking account of an industry on the brink of collapse, and what must be done to fix it before it's too late".

Perhaps these two stanzas of an "Invisible Bankers" era song sum up one side of the story:

"Nowhere to turn around and catch your breath
It's all relatively trouble free
No need to bother with the bottom line
Or a money back guarantee

You sign a deal that's been etched in stone
It's absolutely cut and dry
That's when they got you in the danger zone
And the only way out is to die"

from "Vulture Culture"-The Alan Parsons Project (1985)

From reading the work of this latter day incarnation of Andrew Tobias, it's conceivable that one could develop the perception that EVERY insurance company is entirely corrupt and we should all be suspect. While not downplaying the serious subject matter of Gerst's book, consumers must be properly educated and be able to differentiate between what is a corrupt business practice and legitimate business practices that include the legitimate investigation of claims.

According to estimates of the tri-partisan watchdog Coalition Against Insurance Fraud, a national alliance of consumer groups, public interest organizations, government agencies and insurers, fraudulent insurance claims represent an $80 billion a year business! Fraud generally occurs when there is intentional deception about an insurance matter to receive money or other benefits not rightfully due the perpetrator of the deception. The Coalition states that the following are usually not frauds (1)good-faith disagreement between an insurance company and consumer about a claim (2) decision by the insurance company to decline your insurance application, or not renew your coverage.

Further reading that may be helpful on the topic of insurance fraud

• Coalition Against Insurance Fraud website
• Coalition Against Insurance Fraud blog
• C Edward Sentell  The Misprepresentation Defense  in Life and Disabilty Cases: The Issue of Causation
• Earlier this year it was reported that Whirlpool Corporation suspended 39 workers for lying on insurance paperwork about their smoking habits (ostensibly to save $500 on their employee health insurance.)

Gerst's solution  "Call in the Feds!"

Further reading on the Debate Concerning Federal Regulation of Insurance

• The Case For Federal Regulation of Insurance   Tom Baker, University of Connectcut School of Law  May 2007
• Federal Regulation of Insurance Would be Harmful  Jim Hodges Politico.Com August 12, 2008
• NAMIC Position on Federal Regulation
• The Forgotton Financial Sector Ed Royce (R-CA) member of House Financial Services Commitee an co-author of the National Insurance Act   from Wall Street Journal, April 16, 2008
• Sen.John E. Sununu press release on Reintroduction of "National Insurance Act of 2007" May 24, 2007