Relying on claimants to be “wimpy” about their rights is the keystone of insurance company claims defense.  Insurance company experience with policyholders is that any roadblocks thrown out by the insurer will discourage a meaningful percentage of claimants to give up the fight or to accept much less than they are entitled to under the terms of their policies. 

     With such financial rewards as the result of just saying “no”, it’s not a wonder insurance companies find the habit of rejecting claims very profitable.  Insurance companies are in the business of making money and claimant “wimpiness” makes them tons.

     For example, disability income insurance companies are notorious for pursuing a policy of turning down apparently valid claims out of hand.  They are relying on the “wimp” factor.  The companies have found through experience that a substantial number of disability claimants will accept an insurance company turndown, even if clearly wrong, and do nothing further about it.

     From the nature of the insurance business, one would expect an insurance company to have a strong tendency to say “no” when asked to pay a claim.  After all, claim payments come right out of their pocket and right off their bottom line.

     So, “no” from a disability insurance carrier is not surprising.  What is surprising is that the insurer says “no” in cases where it knows it is likely to have to pay.  Because when they say “no”, there are a slew of additional costs to them in defending a claim which they know they are likely to have to pay anyway.

     Why insurers do this may seem a mystery until one realizes that the likely solution – insurers do it because it saves them a lot of money. 

     The one thing you can bet on with certainty is that insurance companies can mathematically calculate the probability of any financial result they face.  They know how much, to the penny, are the legal, medical, court, and internal costs of defending a claim.  And, they know these defense costs are substantial.  So, in the matter of a valid claim, why do they do it and add the costs of defense to the costs of paying the claim?

     They do it because they have also calculated the “wimp” factor – the chance that a claimant will not pursue a valid claim to its legal conclusion for a variety of reasons.  Nobody but the insurance companies know the percentage of valid claims that are never pushed to a conclusion, but even if the number is between 10% and 20% the savings turn out to be a big windfall for the insurance companies.

     Some of the reasons people may not fight for their rights are innate “wimpiness” - they just naturally hate conflict and controversy.  Some other reasons (some might call them excuses) are:

• They think, “You can’t beat “City Hall”, i.e. the big insurance company.

• They have an aversion to getting involved with a lawyer (I wonder if insurance companies have been fostering all of those “shark” jokes about lawyers). The vast majority of lawyers don’t bite, no matter what the jokes lead you to believe.  If they are retained by you, they work for you and only for you and your claim.

• They find it difficult to cope with stress. 

• They believe the insurance company, which has every reason not to, acted fairly and made an unprejudiced decision.

• They won’t take the risk of spending money on legal advice without a guarantee they will win.

     There is a whole host of reasons (excuses?) why a goodly number of people will not take on an insurance company.  And, in that goodly number of people lies a treasure trove for insurance companies. 

     The result of this “wimp” syndrome is particularly profitable to insurers in disability income and long term care insurance claims.  The payments for these types of claims can go on for decades and cost millions of dollars.  Evading payment on 10% or 20% of these types of claims comes to a hefty amount of money saved for the insurance companies. 

     Since insurers do this consistently, one has to believe that they know that the “wimpiness” savings more than offset what they spend to defend claims they know they will have to pay – if the claimants were to undertake and follow through on properly pursuing the claim.

     Advice to the hesitant claimant:  Before you become one of the “wimpy” herd, have a competent insurance attorney evaluate your claim and advise you on if and how to proceed. 

     Only then is it fair to yourself, (wimpy or not), to decide whether or not to pursue your claim.