The UNFAIR Insurance Act
The mandate to purchase insurance is a pervasive aspect of modern life. Whether it’s the requirement for car insurance to legally drive, health insurance to avoid additional taxes, or home insurance to secure a government-backed mortgage, we are compelled to participate in an industry that is ostensibly designed to protect us in times of need. However, this mandated relationship between the consumer and the insurance industry is marred by a significant imbalance of power and trust.
The government’s reliance on the insurance industry, despite its record of inadequate regulation and oversight, places consumers in a precarious position. The very institutions that require us to have insurance often fall short of ensuring that these policies will deliver on their promises. All too often, when a claim is filed, policyholders are left with little more than a denial letter or a payout that is far less than expected, leaving them to bear the brunt of their losses alone.
This situation underscores the urgent need for comprehensive reform. The establishment of the “Upholding National Fairness and Accountability in Insurance Reforms (UNFAIR) Act” would be a significant step towards addressing these issues. This legislation should aim to enforce greater transparency and fairness in the insurance claims process, ensuring that consumers are not only treated fairly but are also provided with clear and understandable information about their policies and rights.
The UNFAIR Act would seek to establish the following key provisions:
1.
Establish a claims appeal process or arbitration system independent of the insurance company providing policyholders recourse outside the court system.
Why: The legal process can be slow, expensive, and overly burdensome on consumers, making it difficult for policyholders to challenge unfair claim denials or diminishments.
2.
Miranda Rights for Policyholders: Require disclosure of the claims process, including required documentation, evidence collected, how it is used, and what reviews and testing will be done.
Why: Consumers need transparency to understand how their claims are evaluated and to ensure that their rights are protected during the process. Inform consumers making initial recorded disclosure statements while under stress that their statements may later factor negatively into claims approvals.
3.
Create a guaranteed loan facility for claims so that insureds can borrow against their final settlement if it cannot be settled within a short period of time.
Why: Delays in claim settlements can create financial hardship for policyholders, and access to a guaranteed loan facility would provide immediate relief while ensuring accountability.
4.
Mandate insurance company claims rate reporting, including the number of claims, original dollar value, number of denials, denial reason codes, and final payout amounts.
Why: Transparency in reporting would help identify patterns of bad faith practices and illuminate issues of consumer fraud, holding insurers and policyholders accountable.
5.
Implement mandatory independent testing by third-party labs for claims involving environmental factors like mold, asbestos, lead, and other toxic materials.
Why: Independent testing ensures transparency and reduces conflicts of interest where the insurer might otherwise control the outcome by selecting the testing company.
6.
Grant policyholders the right to request a public appraiser who is not financially dependent on the insurance agency.
Why: The current valuation process is often skewed in favor of the insurance company, creating an unfair bias against citizens.
7.
Ensure policyholders have the right to review all evidence collected by the insurance company and provide additional evidence before a final decision is made.
Why: The current system allows insurance companies to withhold test results and other evidence, creating a power imbalance that disadvantages policyholders.
8.
Where insurance is mandated by law or alternative tax, then legal proceedings, payouts, and settlements cannot be subject to confidentiality or nondisclosure agreements.
Why: This protects the public interest by preventing the concealment of important information that could affect policyholders, promote equitable treatment, and uphold trust in the insurance system.
9.
Increase criminal penalties for insurance fraud and enhance penalties for insurers found to engage in bad faith practices, including punitive damages and regulatory actions.
Why: Strengthening penalties for bad faith practices will deter insurers from engaging in unethical behavior and protect consumers from fraudulent claims handling.
10.
Require a Plain Language Summary of Coverage and Exclusions.
Provision: Mandate that all insurance policies include a plain language summary that clearly outlines scenarios covered versus those not covered. This summary must highlight exclusions that may reasonably surprise policyholders, including examples such as wind-blown water exclusions in flood insurance policies.
Why: Policyholders often assume that common situations, such as storm surge flooding during a hurricane, are covered, only to discover exclusions buried in complex contract language. Providing a clear, plain language summary ensures transparency, helping consumers make informed decisions and avoid unexpected denials of coverage.
The UNFAIR Act would aim to level the playing field between consumers and the insurance industry, ensuring that the protections promised by insurance policies are actually delivered when they are needed most. By enforcing fairness and transparency, this legislation would help rebuild trust in the insurance system and provide consumers with the peace of mind that they are genuinely covered in times of need.
How you can help:
Step 1. Sign our change.org petition to take to our legislators:
Step 2. Share your denial/diminishment story to train ChatBot (and to share your story to the masses):