The Expert Podcast

Introduction: Welcome to another episode of "Behind the Policy," where we uncover the hidden truths of the insurance industry. Today, we delve into the repercussions of delayed insurance claim payments and how they can spiral out of control for insurers.

Main Points:
  • Playing Games with Claims: As an insurance company, delaying or mishandling valid claims can lead to severe consequences.
  • A Costly Case Study: Consider a scenario where an insurance claim of $500,000 initially began at $250,000. Due to the insurer's failure to act promptly and appropriately, they ended up paying millions in damages to the claimant.
  • The Domino Effect: The insurance company neglected to pay the claim within a reasonable timeframe, stretching over 400 days. This delay resulted in an $8.5 million hit to their bottom line to settle a lawsuit.
  • Lessons Learned: Insurers must understand the importance of handling claims promptly and in good faith. Most states have stringent regulations in place to ensure fair claim processing.
  • The Price of Procrastination: While it's crucial to investigate claims thoroughly, dragging one's feet can lead to exponential costs. Paying the initial claim amount upfront could have saved the insurer nearly $10 million, including legal fees, penalties, and potential license repercussions.
Conclusion: It's evident that failing to handle insurance claims in a timely and proper manner can result in significant financial and reputational damage for insurers. This case serves as a stark reminder of the importance of adherence to regulations and the consequences of neglecting policyholder rights.

Join us next time as we continue to explore the intricate workings of the insurance industry on "Behind the Policy." Remember, transparency and accountability are key in building trust and ensuring fair treatment for all stakeholders.  If you have questions or want to delve deeper into today's topics, visit at RiskCoverage.com for additional resources. Until next time, stay insured and stay informed!

What is The Expert Podcast?

The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.

If you're an insurance company, this is why you don't play games in paying claims. If you have a valid claim against you and you don't pay it properly, it can snowball quickly. Here's a case where there was an insurance claim of five hundred thousand dollars, and actually, you started out at 250. Because the insurance company didn't act properly, they ended up paying millions of dollars to the victim.

How did all this work? Well, this insurance company had a claim against it for two hundred and fifty thousand dollars. After failing for 400 Days, more than a year, to give its policy limit basically, pay the claim, then the insurance company took an eight and a half million dollar hit to its bottom line to settle a lawsuit because they didn't pay the claim initially.

This is an extremely important lesson for insurers: to properly handle the claims process. Most states have in place a very specific set of regulations for how to handle claims in good faith. Certainly, you want to investigate a claim to make sure it's legitimate, to make sure you know all the facts. But if you drag your feet and if you have a claim that is obviously valid on its face and you've done proper due diligence in a reasonable amount of time and you don't pay that claim, it can snowball out of hand very quickly. Paying that 250 up front would eliminate almost 10 million dollars, eight and a half, nine depending on how you count it. Plus there's probably legal fees you have to pay, there's probably penalties you need to pay, and your insurance license might be at stake because now somebody can file a complaint against you for bad faith in claims processing.