Bad news for long term disability insurance companies invariably means worse news for long term disability policyholders. We’ve seen it in the past, and this recent article from Insurance & Financial Advisor has a dire warning for policyholders – but you have to read between the lines. Long-term disability insurance companies experienced greater loss ratios in 2011 than in the two previous years – and you can believe that they didn’t do that well in 2012 either.
Loss ratios for individual long-term disability insurance companies, which are the companies that sell the policies owned by our clients (either privately purchased or part of their employee benefits plan), had a loss ratio of 85.71%, up from 80.36% in 2009. A quick primer: the loss ratio is the ratio of incurred losses and loss-adjustment expenses (read benefit payouts and legal costs) to net premiums earned. The ratio is used to measure the profitability of the product area.
In other words, the long term disability insurance companies are seeing low levels of profitability because they are paying out more than they are taking in. And we know from our years of experience in the disability arena that this means one thing: more claims will be denied, more claims will be delayed, and more claims that are being paid now will be terminated. The reasons will continue to be arbitrary and capricious; in some instances the decisions to terminate or deny claims will seem outrageous. But the long term insurance companies consider their first responsibility to their shareholders, not their policyholders.
If you are on claim but have seen some warning signs that the insurance company is looking for reasons to terminate your claim, or if you are about to file a claim and wish to protect yourself and your family, or if you have been denied, call our office to learn how we can help. This is one battle you don’t have to fight on your own.
Justin C. Frankel is committed to fighting for the rights of clients when their long term disability insurance claims have been denied, delayed or terminated.