Diving Into Deflection - Part 1

By Mark Goldwich

If you are current on my blogs, you know we have been talking about the various ways insurance companies are able to create and take advantage of delays – to their financial gain, and your financial loss. It’s not easy, but these delaying efforts can be overcome.

Even if you endure all the delays, and even if you somehow work your way through the labyrinth of denials, the insurance industry may well have one more coincidence up its sleeve. This coincidence catches a lot of insurance consumers by surprise. It often contributes to the exasperated, exhausted homeowner’s conclusion that it’s better to give up, settle for what they can get, and perhaps accept dimes, nickels, or even pennies on the dollars they are actually owed.

The coincidence is known as deflection, and it’s what happens when the insurance company finds reasons to avoid paying you money that you actually have coming on your claim. Although listed last in this blog series (after delays and denials), deflections can be encountered at any time during the claim.

In this blog, I’ll give you a broad overview of the “deflection game”; in the chapters that follow, we’ll look at how the game is actually played to the detriment of you, the policyholder.

Like the coincidences mentioned in previous chapters, this one requires the help of a professional if you want to stand the barest chance of getting all you are owed. All too often, though, this is a game that non-professionals lose … simply because they don’t realize they’re playing in the first place.

Q&A: What you should know

What, exactly, does the “deflection game” involve? It involves the insurance company finding ways to avoid giving a direct, truthful answer to what would seem to be a fairly basic question: “Who has the moral and legal responsibility to make sure that my legitimate claim is paid in full, promptly and to my complete satisfaction?”

Isn’t that obvious? Doesn’t the insurance company itself have the obligation to pay the claim? That answer may perhaps seem obvious to the policyholder, but sometimes it’s not all that obvious to an insurance company with a multitude of adjusters, engineers, restoration companies, attorneys, insurers, re-insurers, and third-party administrators at its disposal. There are so many cases of insurance companies dodging this issue that I can’t really do justice to the topic in a blog of this size. I can say, though, that it seems the legal system has finally begun to catch up with a few of the worst offenders.

What kinds of cases are we talking about? In Ohio, a jury held that a life insurance and disability management services company was guilty of breach of insurance contract; the jury awarded the plaintiffs $429,400 in compensatory damages for nonpayment of claims. But that wasn’t all. The jury also found the insurance company guilty of bad faith insurance practices, and mandated an award of $1,130,000 to the plaintiffs.

They coupled this with a whopping punitive damages award of $3 million. Documents from the case give some sense of the elaborate lengths to which some companies will go to avoid paying people the money they are owed. This particular insurance company used a third party administrator, and an affiliate re-insurer (which was also a 40% owner of the third party administrator) to combine their efforts in an illegal scheme to avoid paying completely legitimate claims.
The scheme involved a whole host of complex accounting maneuvers, as well as false information that was submitted to an insurance commission. Now, I realize that, at this point, you may be having some difficulty getting your head around all this. That’s because a) such cases are pretty complicated and b) you’re probably still thinking of insurance companies as responsible businesses with an obligation to take care of their customers over the long term. All too often, it seems they’re simply not very responsible, and not thinking about the interests of their customers in any time frame, short or long.

Are there other cases like that Ohio case mentioned? Plenty. Many have a disturbing, and all-too-common, theme – the insurance company says that paying you is actually someone else’s responsibility.

But the “someone else” either never follows through or only partially follows through on its obligation to you. Or they say that the other party’s report or advice “prevents” them from paying you (as if they can’t override the opinion of an outside party). I’ve personally seen this happen many, many times.

Do all of these cases wind up in court? No. In my opinion, very few of the cases that could go to court ever get there, and most policyholders in these situations do not get the impartial hearing they deserve.

Why not? Because many individual policyholders simply can’t tolerate the idea of wandering into another bureaucratic maze with no clear outcome that they can see benefiting them in the near future. (As we all know, going to court can be a long, expensive process.) After all the delays, and after all the denials, many people are simply sick of the process of trying to get the insurance company to pay up. They either take whatever crumbs they’ve already been tossed, settle prior to trial, give up altogether, or even die (yes, we’ve seen claim victims pass away before seeing the claim check arrive).

As I’ve suggested elsewhere in my blogs, I suspect a fair number of people suffer one of these outcomes. We’ll dive deeper into deflection next time.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.


  1. As they say you need to look before you leap. Thanks for the head's up.

  2. Good to know! Nobody likes to take responsibility when it involves paying up!!

  3. Hmmm. I once had a (now ex) girlfriend who was good at the deflection game as well. I recognize its characteristics, alas.