Suit Sightings #2: Everybody Complains About the Weather, but Nobody Will Do Anything About It

Everybody Complains About the Weather, but Nobody Will Do Anything About It

The subject of today’s edition of Suit Sightings was chosen by my colleague, Philip A. Rahling, who is also the author of the summary of the complaint. Phil and I started working together about a year ago, and he has been a big contributor to our success. A retired collegiate soccer player turned part-time coach, he brings professional experience from the financial services industry, which has proven valuable in different areas of the business. One of Phil’s unsung attributes, as far as I was concerned, was his lack of direct exposure to insurance and the law that applies to it; he thus brings to the table a fresh perspective that is unimpeded by presumptions, prejudices, or pre-conceived notions. You will see what I mean below.

Thanks for your continued interest in our firm.

Steve Baker.

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Today’s Suit Sightings concerns a dispute over parts of a death benefit owed under a life insurance policy, upon the death of the insured.  Such a case is far from unique for the life insurance industry, which you will hear more about below.  But first, the case itself.

In a recent case commenced in the Circuit Court of Butler County, Missouri, two daughters claimed they had been done out of portions meant for them of the death benefit owed on a $1,000,000 policy issued on the life of their late father.  Their complaint pleads that their late father’s insurance broker assisted another woman in controlling and manipulating their father, such that he changed his beneficiary designations. The woman, rather than the daughters, benefitted to the tune of $200,000. As you would expect, we take no position–and never would–on whether the allegations in the complaint have merit or not.

Instead, for us, this case is a chance for me, an admitted novice in the world of insurance, to reflect on how frequent cases like this are. In the close to year I have worked with Steve, one of my jobs has been to be alert for new life insurance-related complaints. During this time, some themes and patterns have emerged.  The single biggest category I have encountered, and it’s not particularly close, is disputed beneficiary issues. Complaints on the subject pop up nearly every day, and that’s only from the sources I scrape.

What’s worse, if my sample is illustrative, history is repeating itself over and over. Below are some of the greatest hits, based on what I have seen:

• Allegations of agents forging signatures or altering beneficiary designations;
• Conflicts related to divorce or separation;
• Lack of specificity or illegible listed beneficiaries; and
• Complications around minors being designated as beneficiaries.

It feels like a problem in search of a solution–or at least a partial fix.  You might say that beneficiary issues are just a cost of doing business as a life insurance company. Although this assertion seems complacent, it has been historically true.  And yet, it stands to reason, that reduction of the average annual cost of these disputes for XYZ life insurance company should be possible. Creative fee arrangements with counsel (on the back end) or designating particularly knowledgeable claims professionals to handle beneficiary issues (on the front end), would be likely to reduce costs that may in turn be reducing aggregate ROI.

Steve and I would welcome your reaction to these thoughts.  I would enjoy hearing from you at phil@insurancelawauthority.com; you can reach Steve at steve@insurancelawauthority.com.

If you would like to see a copy of the complaint for the above-mentioned case, we would be happy to provide it upon request.