Shop At An Online Policy Market?

An insurance law professor recently pointed out that “Insurance is the one product where you can’t find out what you’re buying until you’ve bought it.”

He came up with the suggestion that all state insurance regulators follow an initiative of the Nevada Department of Insurance, according to a recent article in the Newark Star Ledger.

Rutgers University professor Jay Feinman pointed out that you can choose coverages and deductibles, but you can’t read the fine print in your insurance policy until after you have bought it.

Those who have been exposed to insurance law (and readers of this blog) know full well that, with insurance policies, the “the devil is in the details”.

Why not put policy forms online so that people can read them and understand what they are going to get before they buy a policy?

The professor suggests that a Nevada initiative should be adopted by all states to give people better understanding of their coverage.

According to him, the state of Nevada began publishing online the policy forms of 10 of the state’s largest home and auto insurance carriers.  These carriers do about 80% of the  home and auto business in Nevada.

We agree with Professor Feinman that making this material available to the public online is not likely to help too much in educating the public because policyholders are notorious for not reading their policies even after a triggering event occurs.

But, there are many consumer advocacy groups can and will provide consumers with easy-to-understand guides to compare rates and the coverages offered.

Although this present situation covers only auto and home policies, there is no reason why it can’t be expanded to cover ERISA disability, life, health and other types of insurance which are based upon standard types of insurance policy forms. 

As well as helping employees to understand what insurance protection they have, the employer could also benefit by having an easy-to-understand comparative guide covering both benefits and cost.

These guides can be formulated by large employer associations as a service to their members.

Greater transparency – What a concept!



Plain English Or Not - It's Still A War

One little-known benefit for the public in Obamacare has nothing to do with treatment or medication. In plain English, it’s plain English.

Thanks to the policyholder’s friend, Wendell Potter, who used to work for an insurance company, we now know that it’s the law that insurance policies will have to be written in words that the average person can understand.

Whoa! You mean somebody buying a policy doesn’t have to rely on the insurance company’s statements anymore? An ordinary person can read for him or herself and understand what he or she is buying? What a breakthrough!

Not only will you understand what the insurance company is required to do for you, you will also have a very good idea what monies you will be required to pay for various medical and hospital services. Just as importantly, insurance companies will have to deliver these plain English summaries in a standard format. This will make it easier for those needing insurance to compare the benefits of competing companies.

During earlier hearings before the U.S. Senate on the Affordable Care Act, Professor Karen Pollitz of Georgetown University testified that the average American reads at an 8th grade level but that insurance policies are generally written at a first year college level. It’s no wonder we find in our disability income insurance practice that very few policyholders even try to read their policy until they become disabled. Unfortunately, by then, it may be too late for them.

The standard format summary to be provided by the insurer requires an estimate of the respective costs to the policyholder and insurance company of delivering a baby or treating a disease such as diabetes. This feature also makes it simpler for those seeking policies to evaluate the offerings of various companies so as to choose the best deal.

This year (2013) the estimate of cost will be based on a “best estimate” formula provided by the government since there is no history. After this year, the estimates in the summary will have to be based on the actual experience of the individual insurance company based upon its actual claim experience.

And, if any of our readers are feeling sorry for insurance attorneys because Obamacare will make it easier for claimants to understand their rights – DON’T!

Insurance companies, based on their history, will enhance their old ways and find new ways to try to duck their benefit obligations. With the complexity of disability insurance law and insurers’ ability to frustrate claimants who are fighting not only an illness or injury, but also complete lack of income, there should be plenty of work for claimant’s attorneys.

The policy language may become friendlier under Obamacare, but collecting benefits from an insurance company will be as tough or tougher than ever.