A Texas law firm that practices insurance defense work admits that claims delay is a strategy employed by some of its clients. In an article that was sent to me by numerous people, the law firm posted on its website blog:
In February of 2022, it was reported that more than 10% of all insurance claims related to the infamous Texas freeze were still unresolved. This led to widespread accusations that insurance companies were intentionally delaying claims. But why would insurance companies even want to do this? Why is delaying this process as much as possible advantageous for insurance providers? If you’re dealing with an insurance claim, should you delay for as long as possible?
If you’re searching for effective insurance defense strategies, your best bet is to book a consultation with a team of qualified insurance defense attorneys. These legal professionals can assess your unique situation and determine the best path forward. The truth is that there are many potential strategies for defending an insurance claim, and delaying for as long as possible might not be the most effective choice for you. When you speak with a qualified insurance defense attorney, you can receive legal advice that is tailored towards your specific situation.
The Advantages of Delaying a Claim
Companies that delay claims may experience a number of benefits. First of all, delaying a claim puts pressure on policyholders. These individuals may be dealing with mounting bills for property damage, legal fees, and medical expenses. Most people cannot afford to continue fighting insurance companies for a prolonged period of time. This means that most plaintiffs will be forced to settle for a favorable amount instead of continuing to negotiate with insurance companies for an extended period. In other words, delaying claims forces policyholders to accept lower settlement offers.
Delaying claims can lower costs in other ways. For example, when an insurance company faces a deluge of property damage claims, they can delay some of them in order to avoid mass payouts all at once. This limits the financial stress on these organizations, and it allows them to invest funds from paid premiums in order to earn interest revenue and offset some of the costs. This is likely one of the main reasons for continuing delays related to the Texas freeze.
Avoid Bad Faith Lawsuits
With all that said, you need to be very careful about how you delay claims. If you delay continuously in an unreasonable manner, you could face a bad faith lawsuit. This is why it’s so important to work with a qualified attorney and delay claims in a legal, proper manner rather than opening yourself up to further economic losses.
Enlist the Help of a Qualified Attorney Today
For help from our skilled Brownsville insurance defense attorneys, reach out to Colvin, Saenz, Rodriguez & Kennamer, L.L.P. Over the years, we have helped numerous organizations defend against insurance claims in effective ways. While it’s true that delaying your claim for as long as possible may provide positive results, you need to approach this situation carefully in order to avoid legal consequences. In addition, there are other strategies that you might wish to consider. Book a consultation today, and we can discuss all of your legal options in greater depth.
Insurance claim delay is against the law. Insurers can be fined, and licensed adjusters could face disciplinary charges for intentional claim delay. Claim delay is not a legal strategy. That is what all lawyers – who ethically must uphold the law – should tell their clients. We have written extensively about claim delay being the number one enemy of policyholders.
In Claim Delay 101, we noted:
There are several reasons why insurance companies delay claim resolution, but they all seem to relate back to one thing – augmentation of corporate profit. First, most unrepresented policyholders will give up on a claim or settle a claim for pennies on the dollar if the insurance company drags things out long enough. Of course, repeatedly winning this war of attrition against unrepresented policyholders is highly profitable for insurance companies. Second, insurance companies reap the benefit of accrued interest and investment gains on withheld benefits. This is also highly profitable for insurance companies.
Delay in the claim adjustment / investigation process is fairly common. It is also fairly common for the carrier’s delay to continue into litigation. Indeed, the comment to my November 15 post spoke of such – ‘the company sues the insured to delay and then drops their suit and still doesn’t pay.’ Although it is common for insurance companies to continue delay into litigation, it seems that, in bad faith litigation, an insurer’s litigation conduct too often plays second fiddle to an insurer’s claim adjustment / investigation conduct. Let’s not forget, an insurance company’s litigation conduct is fair game in bad faith, and potentially as important as claim handling conduct.
Twelve years ago, I noted that insurers are subject to market conduct examinations where delay is the central focus in, How Profitable and Common is Not Finding Damage and Claim Delay by Insurers?:
Departments of Insurance throughout the United States regularly conduct examinations of insurance company claim files. These are known as Market Conduct Examinations. The Claims Spot recently noted in 5 Claims Issues Cited for Non-compliance on Market Conduct Exams & 3 Tools to Avoid Them, recurrent wrongful claims practices by insurance companies since 2006 that are not being corrected by the insurance industry. Those highlighted wrongful practices were listed and then explained to be correctable with ‘basic’ action:
1. Failure to acknowledge, pay or deny claims within specified time frames
2. Failure to pay claims properly (sales, tax, loss of use)
3. Improper documentation of claim files
4. Failure to communicate a delay in the settlement of claims in writing
5. Use of unlicensed claims adjusters or appraisers
All of these findings could have been avoided with enforcement of best practices and an internal review process. With some basic actions, a company can minimize or eliminate their risk of being out of compliance.
Claim delay is illegal. It should never be a strategy used against an insurer’s customers before or after litigation. Insurance defense counsel should not engage in this unethical conduct nor promote it as a strategy.
Thought For The Day
You may delay, but time will not.