The claims environment has become increasingly complex, and media analyses should reflect current realities and provide a whole picture of why claims close without payment, Triple-I says in response to a recent Wall Street Journal article on auto claims.
Recently, the WSJ followed up on its article about homeowners insurance claims, “The Home-Insurance Coin Flip: Nearly Half of Claims Result in Zero Payout,” with a new article concerning auto insurance, titled, “If You Get in a Car Crash, the Risk Is Growing Your Insurance Won’t Pay.”
The WSJ article proclaims, “Auto insurers didn’t pay out on 45% of auto liability and medical claims they resolved last year, according to a Wall Street Journal analysis of thousands of company regulatory filings. That rate might change slightly as more claims are resolved, but it is up from around one in three, or 35%, of such claims a decade ago.” It also suggest, "Americans are required to pay for car insurance as a condition of driving. Yet often, the insurance doesn’t provide the financial backstop that car owners were expecting."
The article quotes plaintiff attorneys, consumer advocates, and insurance industry representatives who debate the particulars of the modern claims environment.
In its previous article about homeowners claims, WSJ said the problem of claims being closed without payment to insureds is worsening, noting that, together, the five biggest home insurers resolved over 44% of claims without payment—up from 36% a decade earlier, according to its own analysis.
That article prompted a rebuttal from Triple-I CEO Sean Kevelighan, who told CLM, “A higher percentage of claims closed without payment does not necessarily indicate that insurers are becoming less willing to pay covered claims. In fact, insurers remain contractually obligated to pay covered losses and continue to pay millions of claims each year. The claims process and the reasons claims are closed are more nuanced than the article suggests, and it is important that consumers understand the distinction between claims closed without payment and improper claim denials.”
He added, “The biggest misconception that will likely come from the WSJ article is that claims closed without payment are synonymous with unfair claim denials. They are not.”
In the most recent WSJ article on auto insurance, Kevelighan points out that litigation has become “a first step instead of a last resort,” which has complicated the claims picture. Plaintiff attorneys disagree, with the WSJ article quoting Morgan & Morgan founder John Morgan as contending that litigation is increasing because more claims are being denied, “not the other way around.”
Loretta Worters, vice president, media relations at Triple-I, tells CLM, in response to the WSJ article, “The insurance industry’s fundamental role is to be there for policyholders when they experience a loss and to pay covered claims fairly and promptly. It is important to recognize that a claim closed without payment does not mean an insurer denied or refused to pay a valid claim.”
Worters reiterates Kevelighan’s point in response to WSJ’s previous article about the conclusions one should—and shouldn’t—draw about claims closed without payment. Worters states, “Claims can be closed without payment for many reasons, including when another insurer pays the claim, the customer withdraws it, damages fall below the deductible, or the circumstances do not result in payment under the policy.”
Worters concludes, “The claims environment has also become increasingly complex, with litigation and attorney involvement occurring earlier in the process rather than as a last resort, adding cost and time to claim resolution. These factors are important to consider when interpreting claims data and outcomes.”