Michigan Long Term Disability Insurance Lawyer Blog

Insurer-AIG has sunk to a whole new level.

Iraqi war veteran Andrew White returned from Iraq after spending two years protecting American Soldiers by removing IED's. His brother was not so fortunate-He was killed in combat.

So Andrew decided to take out a life insurance policy naming his parents as the beneficiaries when he saw the financial hardship related to his brother's death. AIG was happy to issue him a life insurance policy and accept his premiums (which it increased because he was a smoker).

However, when Andrew died in his sleep 14 months after obtaining the insurance AIG refused to pay the death benefit to his parents when it discovered that Andrew had been in a car accident when he was 16 years old. Even though the car accident had nothing to do with his death, AIG has refused to pay these benefits. Mr. White's representative scoffed at AIG's excuse that it would not have issued the policy if it had known about the accident years before.

If it were not so sad, it would be funny. AIG will insure this honorably discharged Iraqi war veteran who smokes (which everyone knows causes cancer-which kills people) as long as it can increase the amount it charges for premiums, but it is going to argue with a straight face that it would not have insured him if it had known of some fender-bender years before. Good luck with that one. Just another example of the Profits before People attitude common with many insurers today.

Posted by Serafini, Michalowski, Derkacz | Permalink | Email This Post

Posted In: Insurance Bad Faith

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I hate to pick on Allstate again, but they have really had some big problems lately.

The much maligned insurer, Allstate, recently agreed to a 28.5% rate reduction for all of its California residents. Apparently, in order to avoid the potential of having to pay a huge amount in refunds to its customers, Allstate agreed to the rate reduction.

According to the LA times article, a number of Allstate's customers were still angry despite the rate reduction because they have been paying too much for too long. Apparently, the rate cut is worth about $250,000,000 million dollars for the consumers.

If we do the math, it looks like Allstate is going to keep all of the excessive premiums it received-at least $250,000,000, maybe more?

Now, I think maybe we have an answer to the previous questions posed-how can Allstate afford to repeatedly pay millions of dollars in bad faith claims.

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Posted In: Insurance Bad Faith

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Allstate recently settled a bad faith lawsuit where it had been held in contempt of court for refusing to produce documents pursuant to a court order. Allstate began racking up $25,000 in fines per day when it refused to follow the Judge's order to produce the documents.

Apparently, Plaintiff sought internal Allstate documents supposedly showing how the company set up a claims payment system in the 1990s that low-balled clients and allowed Allstate to make huge profits.

Because a confidential settlement was reached it is not clear how much of the $7,000,000 fines were actually paid. Allstate claims that it was appalled when it learned last year that it was being threatened with contempt. Once again, one wonders how Allstate is able to operate in this manner and remain profitable.

Posted by Serafini, Michalowski, Derkacz | Permalink | Email This Post

Posted In: Insurance Bad Faith

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A Louisiana court recently rejected a long term disability insurer's attempts to hide behind the protections afforded insurance companies by ERISA. In Gulf Coast Plastic Surgery v Standard Insurance Co. the Court determined that a claim that the insurance agent failed to increase the policy limits despite the doctors request and the agent's promise was not preempted by ERISA. Rather, it was a simple negligence claim, even though it involved an ERISA policy.

The Court found that the claims against Hillyer(the insurance agent) were not subject to preemption under ERISA, because they did not implicate a relationship governed by ERISA and because the resolution of the claims does not require interpreting an ERISA plan. THe insurance agent was not an ERISA fiduciary, and the resolution of such allegations did not require the interpretation of an ERISA plan.

Posted by Serafini, Michalowski, Derkacz | Permalink | Email This Post

Posted In: ERISA

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