Is your insurance company honest?
"Insurance companies," said attorney Haim Kalir, "have built large claims mechanisms, which need to prove their worth. So they just do not approve claims. They reject claims if there is any doubt that it meets the definitions in the policy, and they reject claims even when they have no doubt that the claim needs to be paid. The important thing is to reject," concluded Kalir, who specializes in insurance.
It is true that Kalir cannot be accused of being objective when it comes to insurance firms. He is not. Kalir makes his living by suing the companies on behalf of the insured who have had their claims denied by the companies.
Obviously, this gives him a particular view of the matter. It is also impossible to ignore the fact that the insurance companies pay out thousands of claims a year. Thus the statement that they regularly avoid paying claims is an over-generalization. Nevertheless, most Israelis would instinctively agree with Kalir, as do most insurance consultants.
"Insurance companies profit from every claim that they do not pay out," said one leading consultant. "Therefore, they always want to reject claims."
There is nothing more maddening than an insurance company that avoids paying out as a matter of policy. The insured pay premiums for years for only one purpose: to protect themselves if something bad happens. A refusal to cover a claim causes the insured double damage: They have paid money for nothing all those years, and they also find themselves without protection exactly when they need it most. The insurance company that they trusted and relied upon dumped them just when they were most vulnerable.
The insured, even if they are wise and experienced consumers, can do nothing about their suspicions that the insurance companies are not fulfilling their purpose - protecting the insured in times of trouble.
Consumers cannot stop a company from continuing a policy of rejecting claims, if one exists, nor can they reward a fairer company. The consumer simply has no way of knowing about an insurance company's claims policies, and therefore cannot compare different firms on this issue. Except for deciding not to buy insurance, the consumer is impotent. The unavoidable result is that competition is only about numbers, i.e. who charges the lowest premiums, and not about quality: who provides the best service.
The insurance companies have something to say in their defense: The percentage of insurance fraud in Israel is one of the highest in the world, and it forces them to be suspicious of every claim submitted. This is a fair argument, but it certainly does not justify a policy of purposely rejecting claims - especially in light of the situation in the Israeli courts.
The policy of forcing the insured to sue in order to get what is rightfully theirs translates into a policy of wearing down the customer for years, and causing him no small expense. Most of the insured will prefer to compromise, or even give up, in the face of this challenge - especially given their already significant losses. And this is what the companies bank on.
Most of Israel's insured are honest people who are willing to pay to protect themselves. Many would presumably be willing to pay even higher premiums if they were sure that they would be treated fairly when the time comes.
The person who may change the current sorry situation is the Supervisor of Insurance. He is about to force the companies, and their pension funds, to publish information about their claims policies, including what percentage were denied, either partially or completely.
This information will allow the consumer, for the first time, to know which insurance companies are fair and honest with their customers, and are therefore worth paying. This could be one of the most important consumer revolutions Israel has ever experienced.
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