Claims management bullying – Part 1

Twelve years ago, Financial Newswire’s life/risk columnist, Col Fullagar wrote a blunt assessment of how life insurance companies handle claims – a decade on, too much has not changed.

WARNING – The following content may be distressing to some

This two-part article is a reprise and updating of one written 12 years ago with the tragedy being that as blunt as it was then, it will be even more so now for the simple reason that the matters highlighted in 2013 have not only continued but appear to have worsened.

Some may feel the title of this article is harsh and provocative suggesting that what follows will take a cheap shot at those charged to work in life insurance claims departments. That is not the intention, and it is hoped it will not be the outcome.

Three things should be made clear:

• One – The focus of this article is on behaviour not people as it is absolutely acknowledged that the claims management environment is challenging for both insurers and assessors.
• Two – It is also absolutely acknowledged that what follows may not necessarily be representative of the claims management experience for many advisers and claimants.
• Three – There are some incredibly professional, knowledgeable, capable and ethical people working within the claims arena. Their abilities and actions are recognised and applauded with the one regret, if only all were like you.

Having said this, it is also not the intention to pussy foot around the topic. There are people out there who are or have been on claim who want, deserve and need to be heard and they must be given a voice and listened to.

This article is as accurate a reflection of the facts as can be made in the space available. The examples are real and the comments genuine.

Bullying

Bullying in society is rightly receiving increased attention. Many of us will relate to the horror of it and in saying “us”, the writer recalls how he experienced it as a 13 year old, standing on Pymble railway station with a friend, Ian Bieski, and being bullied by a mob of older youths.

Different definitions of bullying exist but today the following will be taken:

“Bullying in the context of claims management is where an imbalance of power exists and the use of psychological, verbal, written or physical means coerces, belittles or intimidates the claimant.”

Bullying, like sexual harassment, which is itself a form of bullying, can be intentional or it can result from a lack of thought or understanding. For the victim, the impact may differ little.

As per the above definition, for bullying to exist there must be an imbalance of power

Consider the average claimant:

• They may be competent in their own area of expertise but no doubt inexperienced in the ways of risk insurance and claim protocols,
• By definition, they will not be fully financially secure otherwise they would have no need for risk insurance,
• They may have a support base but it will unlikely be much more than a faithful few and, of course
• They will either be suffering the debilitating effects of a sickness or injury or be grieving the loss of a loved one or business associate.

Consider the average insurer:

• By definition, it should and will claim a high level of expertise in all aspects of risk insurance and claim protocols,
• It will no doubt boast a AAA financial rating which underpins its ability to administer and pay claims,
• It might have a support base of several thousand; they are called employees; and, of course
• Its staffing policy will enable those who are feeling poorly to go home and recover on full salary while their place is taken by equally competent others.

Indicatively this constitutes an insurer to claimant power imbalance of approximately a squillion to one.

Play with the numbers, but please do not raise the defence that internal dispute resolution (“IDR”), AFCA and the legal system even up the imbalance:

• Whilst no doubt it happens, the writer has never experienced or heard of an IDR dispute being found in favour of the claimant,
• In matters of claims, the role of AFCA is understood to be to decide the relative merit of the case made by the complainant v the insurer which arguably is another imbalance because the insurer has a wide range of experienced resources to draw upon when making its case, and
• If a claimant even mentions legal action, then the bullying can ratchet up a notch or two.

Let’s for now accept that a monumental imbalance of power exists which creates an environment where bullying can also exist.

Is Bullying Alive and Well?

Notwithstanding the environment for bullying exists, is bullying alive and well within that environment?

Maybe judgement might be reserved until the detailed examples are considered after which the questions can be asked:

• Has the reader encountered any of these examples,
• If examples have been encountered, do they represent the conduct of an individual within the claims department or are they encountered generally across the entire claims department,
• If examples have been encountered, are they confined to one insurer or are they encountered with multiple insurers such that they may even be considered normal practice, and
• When speaking to other claimants, advisers or friends and family of both, have they encountered examples?

Could the presence of bullying ultimately be the reason an industry that gives away billions of dollars every year by way of claim payments, is not universally loved?

This article will only consider a few examples, with these being either actual bullying or conduct that might reasonably be perceived as bullying. As before, there may be little difference.

The choosing of examples was not done on severity but rather those that lent themselves to be easily described bearing in mind the limitations of space.

Claimants were invited to comment; they were not only willing to do so but even grateful for the opportunity. There has been no censorship of their comments which were made in respect of claims that were paid or are being paid; so these are people with every reason to be industry advocates

To begin …..

What different types of bullying might be experienced?

Psychological Bullying

• Claimant Shut Out

One of the most fundamental human cravings is the desire to be listened and responded to. One of the most common forms of claims management bullying denies this to claimants.

“When they want something, I am expected to provide it. When I ask something, I am ignored.”

This was pointed out to an insurer in respect of a particular claim. The insurer indignantly replied … “Please provide examples of when you feel your questions have not been addressed.”

The response … “Previously unanswered questions include those listed under ‘outstanding questions’ in my 28 January email.”

Ever accountable the insurer came back with … “I would request that all matters in respect of this claim are now directed to our customer relations team.” To this day, those questions remain unanswered.

Then there is the silent treatment. The claimant asks “Could you please advise when you would expect to come back regarding this matter?” The response .. Crickets !!

In 2019 an insurer advised a claimant there had been a $20,000 overpayment of benefits in 2016. The claimant emailed back and expressed disagreement. The insurer did not respond, well not until 2024 when it wrote to the claimant and demanded repayment of the overpaid amount within 10 days. A year later, the claimant is waiting for the insurer to provide copies of source documents so the allegations can be checked.

Yet another form of claimant shut out is the old Our Position Remains Unchanged. An extreme example involved sending an insurer a comprehensive 16 page analysis of a claim requesting a review of its decision to deny.

Two months and six follow-ups later the insurer provided a comprehensive 16 word response: “We do not accept the matters raised in your letter and thus our position remains unchanged.” That probably could have been shortened to two words!!

• Attack as Defence

Attack as a form of defence has long been a strategy in wars and arguments but when it is used in claims management, it can constitute bullying.

Hildy had been on an income protection claim for 14 months and had received payments of around $80,000. Likely the insurer was feeling pretty pleased with itself about the positive difference being made on Hildy’s life.

The adviser however was not sure all was right, so a private audit was commissioned. This found eight separate errors in how benefits were calculated identifying a potential underpayment of many thousands of dollars

A report was prepared and submitted to the insurer. On behalf of Hildy, the adviser asked this not be treated as a complaint. Fully respecting Hildy’s wishes, the matter was immediately referred to IDR.

Down came the Cone of Silence – another form of Shut Out bullying. Eventually out popped a response – against every query the same words “We do not agree”, “We do not agree” – again and again. And while they were at it, IDR took the opportunity to call for additional requirements.

Hildy’s initial reaction was to walk away. She was literally in fear the insurer would take out its apparent anger on her and make her life more difficult as the claim was clearly going to be long-term.

After some assurances and support from Team Hildy, she agreed to soldier on. A couple of weeks later the insurer conceded and sent Hildy a cheque for in excess of $100,000 with, of course, no acknowledgement of the errors and certainly no apology.

In case it was missed, the above included another form of psychological bullying, ie ignoring the clear instruction of the claimant. Notwithstanding the direction that the matter not be referred to IDR, it was. The cynics theory on why this occurs, and it occurs frequently, can be found in the article Insurers Continue to Behave Badly, Money Management 2 April 2021, (iv) Speaking of Arguments.

Other examples of attack as defence include an insurer accusing a claimant of breaching their application Duty of Disclosure. In itself there is nothing wrong with this, but when it is done in a way that reflects the presumption of guilt, it is bullying. In one jarring example, the initial allegation was made and followed by the word “misrepresentation” being hurled at the claimant 11 times in the same email.

When the matter was subsequently registered as a complaint, IDR joined in by not only repeating the accusation but additionally accusing the claimant of withholding information relevant to the insurer’s investigation, breaching their duty to act in good faith and last, but not least, it questioned the claimant’s credibility.

The claimant succinctly summed up how he felt in one word “Hunted”

18 months later, this matter had a good outcome leading to another form of bullying which will be discussed later in this article.

• Onerous Requirements

The claims management equivalent of what was previously referred to as Chinese Water Torture, is the Daily Activity Diary.

“ … to assist with our understanding of (your) daily functioning and how (your) condition continues to affect (you) … we require (you) to complete ….. an activity diary ….. This must be completed in full as directed on the front cover.

Each hour of each day, the claimant was expected to write down details of any work performed, or activity undertaken, including – as directed by the front cover of the diary:

• gardening;
• watching TV;
• going shopping;
• cleaning;
• cooking;
• child caring; and so on.

Unfortunately, the claimant, who was suffering a mental and nervous disorder, went on holidays and simply noted this in the activity diary. The response was swift and withering:

“You are required to give a comprehensive account of all tasks undertaken.. We note the last page indicates that you were on annual leave. This is not acceptable and you have to complete the diary on a daily basis, taking into account the direction points noted on the front cover of the diary.

When the claimant audaciously asked why he needed to complete the form, he was advised: “Daily activity diaries are now an ongoing requirement for all mental illness claims.” On-going? Is that like forever or just to age 65?!

When the insurer was advised the claimant would not continue to complete it until signed off by the treating psychiatrist, strangely and co-incidentally the requirement was withdrawn. Timely as it turned out as the claimant was soon to be married and departing on his honeymoon !!

In another example, the insurer spontaneously insisted on the claimant completing in excess of twenty functional tolerance questions every month. How long can you stand? How far can you walk? How long can you drive? etc.

The insurer was asked to provide context, for example with driving, is that in city traffic, or on an expressway, in good weather or poor weather? The response “We are seeking a general understanding of functional tolerances we are not asking about specific driving scenarios.” Keh?

Lastly, a claimant was instructed to provide business tax returns and financial statements for a list of entities in which a directorship was held – all 17 of them. The only problem was the direction was insisted upon without first identifying which of the entities were in fact relevant to the claim.

P.S. The above was meant to be the last example of Onerous Requirements but just as this article was about to be signed off, an email was received. In it was a list of information the insurer required to financially assess a claim. The 6 page long list included in the order of 500, yes 500 separate items. Glory be –  We have a winner !!

• Change Mismanagement

For income protection claimants, a feeling of stability is often an important factor in their coping regime. A good example of the antithesis of this is the process by which insurers change assessors with unnerving irregularity and with an unnerving perceived lack of consideration.

It is not unusual to have a rotation of 3 or more assessors per annum with the issue often being not only the change of personnel but how it is announced ie an email that states happily “Hi, I am your new assessor.”

When the opportunity exists to provide forewarning, there would be merit in doing so, even if only to give the claimant an opportunity to say thank you and wish the previous assessor well.

Change Mismanagement can also manifest as a change in the rhythm of the claim with new and increased requirements, and previously supplied information being lost and/or requested again.

Sadly, sometimes the new assessor appears to be unaware of much that has gone before and seems more interested in making their mark on the claim. Any previous sense of trust, understanding and stability can disappear overnight.

For one claimant caught in this vortex, the insurer’s intent was clear: “I know what they are up to; they have paid my claim for long enough and have instructed this new assessor to get me off claim.”

So, let’s take a break here………

In Part 2, a few more examples of Psychological Bullying will be provided before moving onto examples of Verbal, Written and Physical Bullying.