Denial Karaoke Or Phantom Chickens

Please consider this month’s edition to Long Term Care Insurance’s free speech as an open mic. Your stories of perceived intentional delay, bureaucratic malaise, rigid interpretation of terms, inadequately disclosed benefit restrictions, arbitrary interpretations of benefit qualification thresholds. At this point my growing concerns about LTC claim management are only anecdotal. I would greatly appreciate hearing from the troops on the front line. Many of us have given the bulk of our insurance careers in putting what coverage we can on the books. We believed we were establishing a claims reserve for those smart enough to plan ahead. The client inventory we set out to build 25 to 30 years ago was composed exclusively of our best and brightest consumers. We were able to successfully explain that the claims would come in the future and wanted those we loved and cared about to be prepared. The Boomers we spent a generation selling to are now the generation entering the world of LTCI claim management. The overwhelming majority of those we convinced are now languishing in closed blocks of premium. Those fragile and now calcified risk pools are subject by definition to the inevitable pressures of rate spiral setting on top of initial rate structures that have proven to be unsustainable. I am becoming very concerned about how those billions of claims dollars we worked so hard to establish and push ahead of the financial and emotional calamity will be handled. Please email or text me your most difficult claim battles. Perhaps together we can try to make sense of our claim management legacy.

I am not pointing fingers or suggesting negative intent. The carriers and reinsurers have a virtually sacred obligation to protect against fraud. Our industry pays its legitimate claims. It is our absolute faith in that truth that brought us all here in the first place. Do not misunderstand. It is also my understanding that even those official claim denials are ultimately frequently successfully approved. What I do believe is that we have unintentionally built a structure that is not withstanding the test of time and circumstance.

We have not only allowed the fox to have free psychological access to the hen house. We gave him an unquestionable badge of authority. Positioned him with layers of concertina wire at the entrance and then let him dare anyone questioning his hegemony to stand down or be permanently cut down.

The insidious truth that seems to intrude into every action of claim administration is that: Every day of delay is a day closer to the day the claim will end.

  • Human and corporate nature make it impossible that this truth does not infect performance.
  • Every claim denied reduces the mechanism for risk dollars that can inevitably end up on the companies and or reinsurers plate.
  • Words like “severe” reek of normative values like truth and justice and who ultimately decides the meaning.
  • Interpretations of benefit triggers like stand by assistance. When a claim actually begins, agreement of elimination days validity, although outlined by TQ status, are managed by corporate and policy perceptions of those parameters.

So dear friends here is the bottom line: “Bad Faith” is not that hard to recognize in this interpretative environment. Send me your stories. Unfortunately an amorphous blob makes a good target.

Other than that we should all have an opinion on this subject.

Ronald R. Hagelman, CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products.

A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing “friend” of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman and his partner Barry J. Fisher are principles of Ice Floe Consulting, providing consulting services for Chronic Illness/LTC product development and brokerage distribution strategies.

Hagelman can be reached at Ice Floe Consulting, 156 N. Solms Rd., New Braunfels, TX 78132 Telephone: 830-620-4066. Email: