Why is the Insurance Denial Rate High in the US?

By Kenneth Guyer posted 08-05-2021 02:00 AM


Many Americans endure the frustration of insurance claim denial, whether for health, life, car, or homeowners’ policies. It seems that insurance companies will fight tooth and nail not to pay out a cent on claims. This leads policyholders to wonder why they pay insurance premiums when they wind up having to bear costs themselves.

Medical insurance claims denials have seen an alarming rise during Covid-19, leaving many people saddled with astronomical hospital bills for treatment. Why do American insurers deny so many claims?

Claimants lack legal representation

Few people go to insurance lawyers unless it is for a substantial claim or they have had a claim denied. A claim is a legal process, and involving a lawyer is essential. A visit to USAttorneys.com can help you find one in your area.

Regardless of how you choose to view it, insurance claims are a David vs. Goliath battle. Insurers have full-time attorneys who can tie claimants up in legal paperwork and other processes that few can handle alone as they lack the knowledge and experience.

An insurance attorney can get you on the right track, fill out paperwork, ensure your claim contains everything required, and stand up on your behalf when an insurer does not want to pay.

Most insurance attorneys work on a retainer basis, meaning they only collect their fee if a claim is successful. They also offer a free consultation to discuss your case’s merits and its relative chances of success.

Claimants do not appeal

Insurers exist to turn a profit, like any other business. They invest your premiums to earn interest and dividends on them. To maximize their profits, these companies want to pay out as little as possible. Their default response to a claim might be to deny it without valid grounds or on a minor technicality, such as failure to submit all relevant documents.

Due to the lack of legal representation and knowledge mentioned above, many insured parties accept the claim denial and do not take it further. Indeed, processes exist whereby claimants can appeal an insurer’s decision and have it overturned. However, this takes time and is likelier to be successful with an insurance lawyer at your side.

Claimants perpetrate insurance fraud

Insurance companies deal with fraudulent claims valued at millions of dollars annually. Too many people trying to make a quick buck will attempt to get a payout for a claim that does not hold water.

This has made insurance companies reluctant to fulfill claims without significant investigations beforehand, especially when substantial sums of money are involved. An insurer might insist on additional documentation to verify a claim’s authenticity to ensure that money is paid out to those who deserve it.

Companies have placed additional systems and processes into their claims procedures to avoid fraud. However, that affects all clients who must now go through rigorous scrutiny before getting their payout. It can be enormously frustrating as these policies make getting a claim settled a long and bureaucratic affair.

Claimants do not submit complete claims

As mentioned before, fraud plays a substantial role in how cautious insurers are to pay out vast sums of money. They have beefed up the claims process to prevent it from happening. To do this, insurers require supporting documentary evidence as this enhances a claim’s validity.

Many claimants do not read the insurance claim forms carefully enough to have everything in order upon submission. They may have to submit multiple times to get a claim processed. For this reason, insurers advise clients to keep proof of every expense, report, or bill related to their claim as they have a better chance of a successful payout.