Wednesday, September 17, 2008


At Reason, Commerce, Justice & Free Beer, we recognize how important it is to have insurance. In our unpredictable world, an insurance premium is a small price to pay for the peace of mind that comes from knowing we will be covered in case of accident, illness or loss. Nonetheless, insurance professionals routinely face criticism that they do not effectively serve their clients. Customers complain that insurance companies do not respond to their needs, and all too often refuse to pay benefits when a covered event occurs. In the interest of fairness, we publish below an essay written by a highly-respected insurance industry executive. Although the essay pertains particularly to health insurance, it expresses sentiments that apply generally to any insurance program. We hope that the essay explains insurance-related issues from the insurer’s perspective, and contributes to a greater understanding of a vital industry in America.


By : Augusta D. Nye, Senior Policy Analyst, ForeverHealth® Insurance Co., Inc.

Insurance professionals—and the insurance industry in general—face unwarranted public criticism. In publications throughout the Nation, we are branded “cruel,” “heartless,” “callous, “profit-hungry,” “thoughtless,” “mean-spirited” and “insensitive.” Insurance companies routinely face lawsuits claiming that they act in “bad faith” by refusing to settle disputes, or refusing to pay benefits allegedly due under their policies. Here at ForeverHealth®, we deplore these developments. By way of explanation, we hope to shed some light on how insurance professionals think, work and act. And in so doing, we hope to show our good intentions. We never act in bad faith. We want to set the record straight by showing that we are a compassionate industry, not a cruel one. To do this, we will describe our mission, our policies and our values.

Our late founder, Mr. Cornelius Rex Massing (1937-2005), launched ForeverHealth® in 1989 with a simple mission statement: “To provide maximum customer satisfaction to our insureds at the lowest possible cost; to provide for the health of the Nation through an effective system of private health insurance; and to faithfully serve the interests of the shareholders of the ForeverHealth® Insurance Co., Inc.” Those words truly guide our conduct here at ForeverHealth®. We are dedicated to our shareholders and provide health insurance to our customers consistent with our shareholders’ interests. Our dedication to our shareholders has led to financial gains in every quarter since our Founding, and today we operate a company that employs over 1500 people in every State in the country. We insure over 750,000 Americans and we report annual revenues over $100,000,000. In short, ForeverHealth® is an American success story.

How did ForeverHealth® achieve such success? Simple: We serve our shareholders. Our shareholders’ financial interests motivate every step we take at ForeverHealth®, from policy drafting to claim evaluation to legal defense. Our dedication to our shareholders translates into benefits for our customers. By controlling costs, we keep policy prices low and health care affordable. Our employees understand the meaning of the word commitment in everything we do: When we review any claim, we promise to find any and all possible reasons to deny it. When we pay benefits, we promise to pay only the minimum amount that the policy permits. When we draft new policies, we promise to include as many exclusions as possible, so as to reduce exposure as much as we can. In any interaction with an insured, we promise to assume that he is lying about his health background and to perform exhausting searches through his medical history in order to find a pre-existing condition that excludes coverage. We promise to reward employee excellence by providing bonuses for outstanding claim denials. We promise to provide minimal information to customers so that they forget to send in their premiums, leading to coverage lapses. In short, we promise to do all we can to avoid paying benefits; and we promise to pay the smallest amount legally required. That is what we mean by commitment. And we take it seriously.

It is difficult for us at ForeverHealth® to understand why customers label health insurers like us “insensitive.” We simply act as any other professional would: In a manner calculated to best serve our employers. Many consumers say that health insurance is different from other businesses. They say that we are different because our products help protect life, and that our decision whether or not to cover medical care could lead to death. We disagree. Surely many other businesses sell products that help protect life, yet consumers do not complain about those businesses in the same way they complain about health insurers.

Consumers blame us for disregarding their interests when we review their claims. In response, we repeat the ForeverHealth® promise: We promise to find any and all reasons to deny them. How can consumers complain when we merely fulfill our promise to them? Additionally, all too many customers fail to recognize that, by denying their claims, we actually keep prices low for them. By paying claims, policy prices would rise, hurting everyone. Customers should not feel that we are denying claims to hurt them personally. We are denying claims to fulfill the ForeverHealth® promise to provide low-cost health insurance for all.

At ForeverHealth®, we work under a common credo: “Maximum customer satisfaction subject to shareholder interests.” What does “maximum customer satisfaction” mean? You might think it means doing everything we possibly can to suit the individual customer’s needs. You might think it means approaching every situation with a bias favoring the customer. In other words, you might think it is the insurance industry equivalent of the old business mantra: “The customer is always right.” But you would be incorrect to think any of these things. At ForeverHealth®—and in the insurance industry generally—“maximum customer satisfaction” refers to what we think would satisfy the customer. And we think low cost premiums satisfy just about anybody. Denying claims keeps premium costs down. Thus, our promise to deny claims leads to “maximum customer satisfaction” and happy shareholders.

ForeverHealth® operates the same way as any other business. We provide top-notch products and top-notch customer service at the lowest possible price. Our business practices are not “cruel;” they merely help us fulfill our ForeverHealth® commitments. Surely customers cannot complain when a business adopts responsibility and commitment as core principles? This is precisely what we do: We responsibly serve both our shareholders and our customers with low prices and maximum revenues. That is our promise. It is unfortunate that so many misunderstand insurance professionals. We hope this essay has shown that we have only good intentions. We value our commitments, our employers and our mission. At the same time, we help the Nation stay healthy. Can we hope to do anything more than that in business?

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