Rule number 1 in being a product low-price leader is to restrict overhead cost. Restricting coverage and denying claims is the most potent overhead control of the low-cost leaders. This suit comes as no surprise.
I have been with USAA since 1998. They are awesome. I have had a couple of wrecks, and never had any problems with them. The last accident I had (someone else’s fault), and I got sued one year later for the accident. USAA provided me a local lawyer to help with the suit and the service from both the lawyer and USAA were tops. Other companies claim to have lower rates, but you can’t beat the service. I bet the denied claims were from non-USAA members that were trying to cash in.
Actually, to the other commentor (Tim Martin), it appears that this action is being taken on behalf of USAA insureds, not third party claimants. I am assuming, from what I read in the press releases, that it stems from the practice of “utilization reviews” which is where an insurance company contracts with a firm that prepares reports alleging that treatment received was unneccessary. State Farm and other companies have been sued doing the same thing to their policyholders.
When using these reports to deny or limit first party claims, a company runs the risk of bad faith suits. However, from a cold-hearted business standpoint, the savings they realize from the practice will likely dwarf any judgements they pay out for bad faith.
USAA also has the added risk that their doing so will be characterized an assault on our troops, since that’s who they insure. Potential PR nightmare.
The fact is, from what I have seen, is that those reports almost always say the same thing, sometimes verbatim from one report to the next… “The injuries are non-existant or overstated therefore the medical bills are not reasonable and necessary.”
These suits are the inevitable consequence of the practice and surely the companies calculate that into their decision to adopt such a practice.
Or it could be much more simple: that the insured submitted unrelated, unnecessary, not customary, and unreasonable medical treatment on a PIP, Med Pay, UM or UIM claim. The practice of INVESTIGATING AND EVALUATING may very well be alive and well at USAA. Claim denied? Sometimes it should be.
Absolutely some claims should be denied. From what I have seen, utilization reviews are most often used in claims where there is questionable injuries due to low impact. To use them in medium to hard impacts would likely get one laughed out of court. I am not opining on the merits of the case, just trying to fill in a few blanks with some insight I have regarding the process and a little reading between the lines.
My experience with USAA which has been broad, is they are a very, very unique company. They are very competetive but not a “low price leader” in that they provide superlative service to their insureds and tend to be very accomodating in their payment of 1st party claims. They are tough on 3rd party and do not roll over for plaintiff attorneys. Their # 1 assett, in my view, is their client base. They have broadened it over the years but they still get a much better “typical insured” than most other carriers. The military is a pretty good pool of reputable prospects. This very loyal client base gives them an inherent advantage which allows for typically competetive pricing, not lack of service to their insureds.
USAA has, in my case, been a nightmare to deal with. A USAA customer backed into my car, and left a note admitting it was her fault. A week later, USAA sent out an adjuster, who was rude, mentioned how many people try to cheat insurance companies, and then lowballed the estimate. The USAA agent stalled for a month, didn’t finish up processing the claim, and didn’t return my repeated phone calls. I finally got resolution when I called another USAA agent and threatened to take further action. She “somehow” spoke to a manager and offered to finish up the claim. After further pressure she ended up promising to FedEx a check (we’ll see how long that takes to arrive). It’s obvious their approach is to deny, delay, and lowball, assuming that most people will assume good will and won’t put up much of a fight. Not surprising that there are a plethora of lawsuits against them.
Rule number 1 in being a product low-price leader is to restrict overhead cost. Restricting coverage and denying claims is the most potent overhead control of the low-cost leaders. This suit comes as no surprise.
I have been with USAA since 1998. They are awesome. I have had a couple of wrecks, and never had any problems with them. The last accident I had (someone else’s fault), and I got sued one year later for the accident. USAA provided me a local lawyer to help with the suit and the service from both the lawyer and USAA were tops. Other companies claim to have lower rates, but you can’t beat the service. I bet the denied claims were from non-USAA members that were trying to cash in.
Actually, to the other commentor (Tim Martin), it appears that this action is being taken on behalf of USAA insureds, not third party claimants. I am assuming, from what I read in the press releases, that it stems from the practice of “utilization reviews” which is where an insurance company contracts with a firm that prepares reports alleging that treatment received was unneccessary. State Farm and other companies have been sued doing the same thing to their policyholders.
When using these reports to deny or limit first party claims, a company runs the risk of bad faith suits. However, from a cold-hearted business standpoint, the savings they realize from the practice will likely dwarf any judgements they pay out for bad faith.
USAA also has the added risk that their doing so will be characterized an assault on our troops, since that’s who they insure. Potential PR nightmare.
The fact is, from what I have seen, is that those reports almost always say the same thing, sometimes verbatim from one report to the next… “The injuries are non-existant or overstated therefore the medical bills are not reasonable and necessary.”
These suits are the inevitable consequence of the practice and surely the companies calculate that into their decision to adopt such a practice.
Or it could be much more simple: that the insured submitted unrelated, unnecessary, not customary, and unreasonable medical treatment on a PIP, Med Pay, UM or UIM claim. The practice of INVESTIGATING AND EVALUATING may very well be alive and well at USAA. Claim denied? Sometimes it should be.
Absolutely some claims should be denied. From what I have seen, utilization reviews are most often used in claims where there is questionable injuries due to low impact. To use them in medium to hard impacts would likely get one laughed out of court. I am not opining on the merits of the case, just trying to fill in a few blanks with some insight I have regarding the process and a little reading between the lines.
My experience with USAA which has been broad, is they are a very, very unique company. They are very competetive but not a “low price leader” in that they provide superlative service to their insureds and tend to be very accomodating in their payment of 1st party claims. They are tough on 3rd party and do not roll over for plaintiff attorneys. Their # 1 assett, in my view, is their client base. They have broadened it over the years but they still get a much better “typical insured” than most other carriers. The military is a pretty good pool of reputable prospects. This very loyal client base gives them an inherent advantage which allows for typically competetive pricing, not lack of service to their insureds.
USAA has, in my case, been a nightmare to deal with. A USAA customer backed into my car, and left a note admitting it was her fault. A week later, USAA sent out an adjuster, who was rude, mentioned how many people try to cheat insurance companies, and then lowballed the estimate. The USAA agent stalled for a month, didn’t finish up processing the claim, and didn’t return my repeated phone calls. I finally got resolution when I called another USAA agent and threatened to take further action. She “somehow” spoke to a manager and offered to finish up the claim. After further pressure she ended up promising to FedEx a check (we’ll see how long that takes to arrive). It’s obvious their approach is to deny, delay, and lowball, assuming that most people will assume good will and won’t put up much of a fight. Not surprising that there are a plethora of lawsuits against them.