When Insurance Companies Are Less Than Honest About Overcharges

 I've had an interesting day today, dealing with an insurance company that overcharged one of our clients in Illinois for Workers Compensation insurance by using the wrong classification (and thus the wrong manual rate) for year after year after year.

My client reached out to the audit manager at this insurance company, based on information provided by us, and instead of getting apologies for their mistake got vituperation and lies.

The audit manager told my client that companies like ours "extort" money from insurance companies. You know, because we insist they actually follow the goddamn terms of the policy, which requires insurers to use the correct class and rate even if different than what was originally used. Some extortion.

Then, the insurance company manager said they had reached out to the Illinois Department of Insurance for guidance. That's because Illinois has a unique statute on the books, one I consulted on when it was drafter way back in 1983. That statute requires insurers to refund any overcharges of Workers Comp premiums due to errors in classification (and other technical errors). In all my past dealings with the Illinois Department of Insurance over the enforcement of this statute, the department has consistently held that the statute means what it says and that insurers must refund any overcharges that have occurred since the statute went into effect in 1984.

But this insurance company audit manager told our client that the Department told them that they only had to go back three years in refunding overcharges, and even dropped the name of a particular guy at the Illinois Department of Insurance.

Now, if this client didn't have Advanced Insurance Management as a resource, they might well have accepted this at face value. Too bad it was all falsehoods. As we explained to our client.

You see, I've worked with that particular guy they named, the guy at the Illinois Department of Insurance, as part of my work getting refunds for clients. I've worked with that particular guy for decades and he has always taken the position that the statute means exactly what it says. And I confirmed that the Illinois Department of Insurance has not revised their position on that.

Oh, one last thing: that particular guy at the Illinois Department of Insurance, the guy the insurance company said was the basis for their intransigence about those refunds for older policies?

That guy retired back in 2015. So I don't think he gave them any guidance on the department's position about the statute and its requirements. Instead, the insurance company manager probably still had his name on a Rolodex and tossed it out to bolster his bald faced lie.

What really gripes me is that insurance companies go apoplectic if they think a policyholder has misrepresented material facts that impact coverage or premium. Sometimes they find a friendly prosecutor to bring criminal charges against a policyholder they think was dishonest with them.

Yet if this particular policyholder didn't have someone knowledgeable to catch these lies, the insurance company would likely have gotten away with it.

But somehow, in their collective mind, we're the bad guys, for insisting they retroactively fix an obvious mistake that they should have never made in the first place. Grrr.