(Photo of an actual sign in the UK, via hugovk.)

In the insurance industry and in insurance litigation of claims, there is no phrase that is used with more stigma (and, frankly, misused at times by folks on both sides of the cases) than "bad faith."  It is also the phrase that scares the bejeebers out of insurance boards of directors and investors, and can make millionaires out of lawyers on both sides of a case.

I don't often use the phrase as a result of all of this — because I think it ought to be reserved for the sort of truly egregious behavior that needs to be called into question in the strongest of terms.  And today, I open the NYTimes business section, and find this:

After more than four years, Mrs. Derks, now 81, has yet to receive a penny from Conseco, while her family has paid about $70,000. Her daughter has sent Conseco dozens of bulky envelopes and spent hours on the phone. Each time the answer is the same: Denied.

Tens of thousands of elderly Americans have received life-prolonging care as a result of their long-term-care policies. With more than eight million customers, such insurance is one of the many products that companies are pitching to older Americans reaching retirement.

Yet thousands of policyholders say they have received only excuses about why insurers will not pay. Interviews by The New York Times and confidential depositions indicate that some long-term-care insurers have developed procedures that make it difficult — if not impossible — for policyholders to get paid. A review of more than 400 of the thousands of grievances and lawsuits filed in recent years shows elderly policyholders confronting unnecessary delays and overwhelming bureaucracies. In California alone, nearly one in every four long-term-care claims was denied in 2005, according to the state.

"The bottom line is that insurance companies make money when they don’t pay claims," said Mary Beth Senkewicz, who resigned last year as a senior executive at the National Association of Insurance Commissioners. "They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die."…  (emphasis mine)

Now, I have no idea what the insurance contracts say in these cases with these particular insurees. But I do know this: taking advantage of the elderly, whose terror of watching their fixed income dissipate under the sheer weight of increasing energy costs, and the rapidly rising costs of prescription medications and health care is unconscionable. And when you add in the "hard sell" practices that many of these companies do ("do you want to be a burden to your children, ma'am?"), the word "scam" just leaps to mind for some reason.

For every person out there who has ever bitched about the scourge that is a "trial lawyer," let me ask you this:  If your elderly parents had paid for long-term care insurance, planning ahead — or so they thought — to deal with increased costs and care needs as they aged, and then had the insurance company give them the run-around about paying a valid, sincere claim after all those years of premiums being paid to the company, how angry would you be?  Would you say words such as "fraud," or "bad faith," or even "scam?"  I think I might.

And if you think for one minute that each and every one of these companies are going to hold themselves independently accountable out of the goodness of their hearts, I've got some oceanfront property in Arizona to sell you.  Not all insurance companies operate in a smarmy way — a number of individual agents that i know are caring, decent people who work hard for their clients.  But the few rotten apples out there — especially those who would take advantage of the nation's elderly to make a quick buck, hoping to hold off on paying a claim until after their insureds kick the bucket?  That is just scummy at the highest possible level.  Accountability on this one, please.  Now.