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In need of disability claim data.

I THINK DISABILITY INSURERS should swallow hard and get whatever antitrust approvals or other approvals they need in order to have some tough, independent organization post easy-to-understand, market-wide claim resolution statistics. Ideally, the statistics would give median claim approval rates and claim resolution times, along with statistics for the best performers and the worst performers. Give would-be buyers some idea of how likely they are to get paid, and in what kind of timeframe, if they should suffer from conditions such as strokes, heart attacks or paralysis.

Most of the people I know who've become obviously, seriously disabled had no disability insurance. The people I know who did have disability insurance "when they became disabled" did not look or act as if they were actually disabled. Two of the three looked to me as if they were about as employable as anyone else. One used the income he got from his disability benefits to set up a busy political advocacy organization, and another used hers to set up a food truck-based business.

So, my own personal experience is that fraud against disability insurers is extremely common. Even when claimants really have health problems, the main challenge many of those claimants face is employers' reluctance to employ people with health problems, not any serious difficulty with working. But I also run into many people who like the idea of disability insurance but are afraid of buying it because they are skeptical about the possibility that an insurance company would really pay a claim.

The topic came up a couple of weeks ago when I wrote a blog entry about figuring out how to get consumers to "come up with the idea of insuring their income all on their own," rather than flat out telling them about the concept. A reader e-mailed me to complain about the fact that I'd written anything positive about disability insurance. She said workers in group disability plans really can't collect benefits at all.

On the one hand, of course, even in the face of the Employee Retirement Income Security Act limits on suits against benefits plans, and even in the face of state regulations that allow many group disability plans to include broad discretionary clauses, group disability plans pay out a fortune in benefits to claimants.

But, on the other hand, I, as an ordinary individual without any special access to claim access databases, have no good way to tell how well the individual disability or group disability claim process really works.

Maybe a research firm has the numbers somewhere and doesn't do a great job of promoting them. Maybe carriers are reluctant to publish the statistics because, given how common malingering is, or they think it is, the statistics are not that great. But maybe honest, grim statistics would give everyone an incentive to get together to figure out how to make the private disability claim process work better.

The Social Security Administration already publishes similar statistics for the Social Security Disability Insurance program. The statistics do not paint a pretty picture - but at least they paint a picture. Consumers who are suspicious of insurance companies might feel more confident if they see figures that are too mediocre to make any marketing department happy than if they see figures that seem to be too good to be true. Those consumers might be surprised to see that the insurers do actually pay plenty of disability claims.

Another way to make consumers happier might to be to compare the private statistics with the Social Security Disability Insurance program determination statistics, to show how for-profit carriers stack up against a disability program that has no incentive to produce a profit.

On the third hand, maybe the disclosures would backfire, by leading would-be malingerers and their lawyers to try to use those nice, shiny, transparent, new windows to throw some bricks and grab for the carriers' wallets. But maybe there could be some middle ground between walls of windows that invite fraud and dwelling in what, to the casual observer, seems like an information bunker.

Allison Bell

Senior Editor

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Author:Bell, Allison
Publication:National Underwriter Life & Health
Date:May 1, 2014
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