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Col 7 of 7

‘Delay, deny, defend’

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa

South African financial services companies need to take a great deal of care if they do not want to develop the reputation of ‘Delay, deny, defend’ in challenging claims made by policyholders, medical members and clients.

‘Delay, deny, defend’ is the title of a book written by Rutgers law professor and insurance expert, Jay M Feinman, about insurance companies in the United States which don’t pay legitimate claims.

The book became famous world-wide as it was referred to in engravings on bullet casings used in the absolutely unacceptable murder in Manhattan, New York of the CEO of the American healthcare company, UnitedHealthCare, Brian Thompson.

Pennsylvania resident, Luigi Mangione, is now facing multiple charges for the assassination. As appalling as the assassination is that Mangione has and is receiving enormous support from a section of the American public. It seems Mangione’s supporters have been seriously upset by their own delayed or rejected insurance claims.

The big problem is that ‘Delay, deny, defend’ problem is that its contents not limited to the United States – the unfair delays and denials also seems to exist in South Africa. It does not take long to see this from various websites about claims made against many financial institutions.

This book is something that should be read by the broad financial services industry, including medical aids and banks; by the all the regulators; the various ombudsmen; and, more particularly by the general public.

The general public should use the book to take complaints to the Ombuds and other adjudicators.

Feinman makes the absolutely true statement that insurance, be it long- or short-term insurance or membership of a medical aid, is a ‘promise’ to policyholders and members. It is a ‘promise’ to pay out a fixed amount when disaster strikes.

He says: ‘Insurance does not work when the insurance company fails to honour its promises of security or even the formal promise of indemnity in the policy, through the strategy that has become known as ‘delay, deny, defend’.

In the 1990’s many insurance companies changed their payment policies on claims.

‘The insight was simply: An insurance company’s greatest expense is what it pays in claims. If it pays out less in claims, it keeps more profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise.’

The first step from moving away from the ‘promise’ to ‘delay, deny, defend’ was the hiring by Allstate (America’s biggest insurer) and other companies of the mega-consulting firm McKinsey & Company to develop a new claims strategy,

McKinsey saw claims as a ‘zero-sum game’ with ‘the policyholder and the company competing for the same dollars. No longer would each claim be treated on its merits. Instead a computer system would be put in place to set the amounts policyholders would be offered, claimants would be deterred from hiring lawyers, and settlements would be offered on a take-it-or-litigate basis.

‘If Allstate moved from “Good Hands” to “Boxing Gloves”, as McKinsey described it, policyholders would either take a lowball offer from the good hands people or face the boxing gloves of extended litigation,’ Feinman says.

Today insurance in the United States is a trillion dollar industry, with 2 700 property/casualty insurance companies collecting $440 billions in premiums and paying $250 million in claims each year.

The South African connection

Although South Africa is under-insured in every field, there are still Rands trillions invested with South African financial services companies. McKinsey has been very active in South Africa and a number of financial services companies have used their services. Whether McKinsey gave similar advice given to United States financial services companies to South African financial services companies is not known.

Apart from this McKinsey does not have a good record in South Africa. The company recently paid $122 million fine to the United States Department of Justice to settle a bribery claim in South Africa in which the company played a part in bribing both Transnet and Eskom.

Most of the ‘promised” claims in South Africa is invested in premium and contribution payments to:

Long-term insurance: This includes money invested in life and disability insurance; investments, which with life assurance are also a promise; and funeral insurance. All have seen various ‘delay, deny, defend’ issues.
Short-term insurance: This includes insurance against property and possession loss and car insurance. The way the short-term industry had to settle, though the courts, with many companies facing significant losses in the Covid-19 lockdown and many much smaller claims shows the effects of ‘delay, deny, defend’ used by the industry.
Medical aids: There are many court cases where medical aids have been successfully taken to court. Social media also has seen far too many such ‘delay, deny, defend’ issues. Medical aids do everything to complicate claims rejecting the initial claim, defending, then denying it and offering settlements.
Banks: Banks, which although very modern and world class, have always had a problem dealing with clients and this is becoming worse in many ways. Just the issues of fraud of been one of the cases where banks have tried to deny responsibility, by trying to place the ownership of the fraud on clients.

One ‘delay, deny, defend’ tactics in South Africa

A major problem is that most financial services companies, including banks, asset managers, long and short-term-insurance and medical aids attempt to make complaints a difficult process, not helped by the total inefficiency of some of the Ombuds offices.

One of the first things they try is to force customers to use telephones. They remove email addresses and even street addresses. And it is just as bad if you want to complain, particularly for people suffering from disabilities that affect speech and hearing and are unable to use telephones.

Some of the problems include:

No proof: Customers have no proof of contacting the company. This applies to all customers, including those with challenges. With an email copy you have the evidence of discussions and can easily refer to it in future discussions.
Different people: You never deal with the same person at the contact center. The is you are often given useless information, never telephoned back, never receive a surname and then, too often, do not get your complaint resolved.
Revolving complaints circle: You keep going around in circles with some companies not even properly identifying their internal ombudsmen, which need to be contacted first before taking the complaint to an external ombud.
No Reply emails: When most financial services providers email you, even when they are asking a question, they send out ‘No reply’ emails. Instead of an email address for a reply the companies normally have a telephone number. (Again no proof for the customer; and, people hard of hearing or with a speech problem are excluded)
Using a Bot: Most financial services companies use ‘bots’. A ‘bot’ is a software application that is programmed to do certain tasks. Bots are automated, which means they run according to pre-set programmes without a human interference.Most of the industrial services Bots are just plain useless. They do not answer anything but the most vanilla of questions. Ask a complicated question, and you may be referred to a ‘living bot’ person (who only has a first name). Ask the ‘living bot’ a question, and, again if the questions are not vanilla, you are often given intimidated or given untrue or misleading information. If the ‘living bots” are not doing this deliberately on the instructions of their employees, then they are very badly trained.

Meaningless apologies

Most apology, particularly those through the ombuds system, seems to be nothing but meaningless words. Nothing seems to change after the apology, which only comes when the complaint is taken to the one of the ombuds. Many of the ombuds simply seems more on the side of the product provider than the complainant, using the apology instead of an actual change in the companies claims and other policies to force a change by the offending company.

One of the problems is that people simply do not know how to complain and to whom they can complain. Many people simply just accept the bullying attitude from the industry knowing they do not have the money to fight it.

‘Delay, deny, defend’ by Jay M Feinman. It does not seem to be available on South African bookstores but is available on Kindle for $9,99 (R180 plus)

There is a lot more detail about complaints in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on our website www.retirementplanning.co.za

Share this post

Col 7 of 7

‘Delay, deny, defend’

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa

South African financial services companies need to take a great deal of care if they do not want to develop the reputation of ‘Delay, deny, defend’ in challenging claims made by policyholders, medical members and clients.

‘Delay, deny, defend’ is the title of a book written by Rutgers law professor and insurance expert, Jay M Feinman, about insurance companies in the United States which don’t pay legitimate claims.

The book became famous world-wide as it was referred to in engravings on bullet casings used in the absolutely unacceptable murder in Manhattan, New York of the CEO of the American healthcare company, UnitedHealthCare, Brian Thompson.

The big problem is that ‘Delay, deny, defend’ problem is that its contents not limited to the United States – the unfair delays and denials also seems to exist in South Africa. It does not take long to see this from various websites about claims made against many financial institutions.

This book is something that should be read by the broad financial services industry, including medical aids and banks; by the all the regulators; the various ombudsmen; and, more particularly by the general public.

The general public should use the book to take complaints to the Ombuds and other adjudicators.

Feinman makes the absolutely true statement that insurance, be it long- or short-term insurance or membership of a medical aid, is a ‘promise’ to policyholders and members. It is a ‘promise’ to pay out a fixed amount when disaster strikes.

He says: ‘Insurance does not work when the insurance company fails to honour its promises of security or even the formal promise of indemnity in the policy, through the strategy that has become known as ‘delay, deny, defend’.

In the 1990’s many insurance companies changed their payment policies on claims.

‘The insight was simply: An insurance company’s greatest expense is what it pays in claims. If it pays out less in claims, it keeps more profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise.’

The first step from moving away from the ‘promise’ to ‘delay, deny, defend’ was the hiring by Allstate (America’s biggest insurer) and other companies of the mega-consulting firm McKinsey & Company to develop a new claims strategy,

‘If Allstate moved from “Good Hands” to “Boxing Gloves”, as McKinsey described it, policyholders would either take a lowball offer from the good hands people or face the boxing gloves of extended litigation,’ Feinman says.

Today insurance in the United States is a trillion dollar industry, with 2 700 property/casualty insurance companies collecting $440 billions in premiums and paying $250 million in claims each year.

The South African connection

Apart from this McKinsey does not have a good record in South Africa. The company recently paid $122 million fine to the United States Department of Justice to settle a bribery claim in South Africa in which the company played a part in bribing both Transnet and Eskom.

Most of the ‘promised” claims in South Africa is invested in premium and contribution payments to:

Long-term insurance: This includes money invested in life and disability insurance; investments, which with life assurance are also a promise; and funeral insurance. All have seen various ‘delay, deny, defend’ issues.

Banks: Banks, which although very modern and world class, have always had a problem dealing with clients and this is becoming worse in many ways. Just the issues of fraud of been one of the cases where banks have tried to deny responsibility, by trying to place the ownership of the fraud on clients.

One ‘delay, deny, defend’ tactics in South Africa

A major problem is that most financial services companies, including banks, asset managers, long and short-term-insurance and medical aids attempt to make complaints a difficult process, not helped by the total inefficiency of some of the Ombuds offices.

One of the first things they try is to force customers to use telephones. They remove email addresses and even street addresses. And it is just as bad if you want to complain, particularly for people suffering from disabilities that affect speech and hearing and are unable to use telephones.

Some of the problems include:

No proof: Customers have no proof of contacting the company. This applies to all customers, including those with challenges. With an email copy you have the evidence of discussions and can easily refer to it in future discussions.

Different people: You never deal with the same person at the contact center. The is you are often given useless information, never telephoned back, never receive a surname and then, too often, do not get your complaint resolved.

Revolving complaints circle: You keep going around in circles with some companies not even properly identifying their internal ombudsmen, which need to be contacted first before taking the complaint to an external ombud.

Meaningless apologies

One of the problems is that people simply do not know how to complain and to whom they can complain. Many people simply just accept the bullying attitude from the industry knowing they do not have the money to fight it.

‘Delay, deny, defend’ by Jay M Feinman. It does not seem to be available on South African bookstores but is available on Kindle for $9,99 (R180 plus)

There is a lot more detail about complaints in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on our website www.retirementplanning.co.za

Col 7 of 7

‘Delay, deny, defend’

By Bruce Cameron Co-author to The Ultimate Guide to Retirement in South Africa

South African financial services companies need to take a great deal of care if they do not want to develop the reputation of ‘Delay, deny, defend’ in challenging claims made by policyholders, medical members and clients.

‘Delay, deny, defend’ is the title of a book written by Rutgers law professor and insurance expert, Jay M Feinman, about insurance companies in the United States which don’t pay legitimate claims.

The book became famous world-wide as it was referred to in engravings on bullet casings used in the absolutely unacceptable murder in Manhattan, New York of the CEO of the American healthcare company, UnitedHealthCare, Brian Thompson.

The big problem is that ‘Delay, deny, defend’ problem is that its contents not limited to the United States – the unfair delays and denials also seems to exist in South Africa. It does not take long to see this from various websites about claims made against many financial institutions.

This book is something that should be read by the broad financial services industry, including medical aids and banks; by the all the regulators; the various ombudsmen; and, more particularly by the general public.

The general public should use the book to take complaints to the Ombuds and other adjudicators.

Feinman makes the absolutely true statement that insurance, be it long- or short-term insurance or membership of a medical aid, is a ‘promise’ to policyholders and members. It is a ‘promise’ to pay out a fixed amount when disaster strikes.

He says: ‘Insurance does not work when the insurance company fails to honour its promises of security or even the formal promise of indemnity in the policy, through the strategy that has become known as ‘delay, deny, defend’.

In the 1990’s many insurance companies changed their payment policies on claims.

‘The insight was simply: An insurance company’s greatest expense is what it pays in claims. If it pays out less in claims, it keeps more profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise.’

The first step from moving away from the ‘promise’ to ‘delay, deny, defend’ was the hiring by Allstate (America’s biggest insurer) and other companies of the mega-consulting firm McKinsey & Company to develop a new claims strategy,

‘If Allstate moved from “Good Hands” to “Boxing Gloves”, as McKinsey described it, policyholders would either take a lowball offer from the good hands people or face the boxing gloves of extended litigation,’ Feinman says.

Today insurance in the United States is a trillion dollar industry, with 2 700 property/casualty insurance companies collecting $440 billions in premiums and paying $250 million in claims each year.

The South African connection

Apart from this McKinsey does not have a good record in South Africa. The company recently paid $122 million fine to the United States Department of Justice to settle a bribery claim in South Africa in which the company played a part in bribing both Transnet and Eskom.

Most of the ‘promised” claims in South Africa is invested in premium and contribution payments to:

Long-term insurance: This includes money invested in life and disability insurance; investments, which with life assurance are also a promise; and funeral insurance. All have seen various ‘delay, deny, defend’ issues.

One ‘delay, deny, defend’ tactics in South Africa

A major problem is that most financial services companies, including banks, asset managers, long and short-term-insurance and medical aids attempt to make complaints a difficult process, not helped by the total inefficiency of some of the Ombuds offices.

One of the first things they try is to force customers to use telephones. They remove email addresses and even street addresses. And it is just as bad if you want to complain, particularly for people suffering from disabilities that affect speech and hearing and are unable to use telephones.

Some of the problems include:

No proof: Customers have no proof of contacting the company. This applies to all customers, including those with challenges. With an email copy you have the evidence of discussions and can easily refer to it in future discussions.

Different people: You never deal with the same person at the contact center. The is you are often given useless information, never telephoned back, never receive a surname and then, too often, do not get your complaint resolved.

Revolving complaints circle: You keep going around in circles with some companies not even properly identifying their internal ombudsmen, which need to be contacted first before taking the complaint to an external ombud.

Meaningless apologies

One of the problems is that people simply do not know how to complain and to whom they can complain. Many people simply just accept the bullying attitude from the industry knowing they do not have the money to fight it.

‘Delay, deny, defend’ by Jay M Feinman. It does not seem to be available on South African bookstores but is available on Kindle for $9,99 (R180 plus)

There is a lot more detail about complaints in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on our website www.retirementplanning.co.za

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa