Recending Policies

Jan 7, 2008

  1. Golddoor
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    I had a Unicare policy that I wrote on a client that went into effect January 2007. I received a letter from Unicare today stating that they are rescinding the policy because of info left off the application. Can they do that a year later? Why didnt they discover this during underwriting? Why and how a year later? Also they are making me pay back my commissions that I received. Unicare will never receive another app from me again. Not just because of this issue. I have several problems with Unicare. Also they have been late on commissions for the last 3-4 months. Different excuse every time!!
     
  2. Crabcake Johnny
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    They can rescind up to 2 years. And yes, you will be charged back for the commish. I'd have your client look into the reason and possible fight it.

    I wouldn't blame Unicare - this is par for the course with all carriers after a claims review if the app does't match the records.
     
  3. TXINSURANCE
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    Because client filed claims for services or RX, and Unicare pulled medical records. In the medical records they found reference to something not disclosed on the application.

    One could argue the application is virtually impossible to complete accurately as it has a "ever" or "catch all" question on their application.

    There is clearly a balance between intentionally leaving off material information and the carrier trying to back out of all claims.

    I would like to eventually see a clearer rule on this, as rescinds are way up across the board with ALL carriers due to new computer systems, and new ways to catch common claims in the first 2 years.

    I do believe "catch all" questions i.e. "...have you EVER..." should be illegal.
     
  4. moonlightandmargaritas
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    How? Your insured made a claim and Unicare investigated and found something related (probably in an APS) which was not disclosed on the app.

    Why now? Some companies don't underwrite too vigorously at the time of application - it's cheaper for them. They wait when/if there's a claim, and do what they've done here.

    Not to fret, it happens to all eventually if they do enough biz. Sometimes they will lie to you!
     
  5. Crabcake Johnny
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    Golddoor - I'll state again that you shouldn't blame Unicare. The last policy I had rescinded it turned out the husband had a heart attack that he chose not to disclose. After the policy got yanked I spoke with him and he was very matter-of-fact about it - told me he knew if he disclosed the heart attack he wouldn't get coverage so he felt like he didn't have anything to lose.

    Another rescision of mine was a lady - kinda forgot that she had arthritis and was going through therapy. Told me nothing was wrong with her during the app. After talking with her she got indignant saying how it was none of anyone's business that she has arthritis.

    It also doesn't happen often. I've had 5 plans yanked in 4 years.
     
  6. TXINSURANCE
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    Happens 10X more often on Internet leads.

    Face to Face this is few and far between.

    Internet leads are notorious liars.
     
  7. Crabcake Johnny
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    Doesn't happen hardly at all when you explain the claims review process to clients before you take the app.

    I can't even imagine the percentage of policies yanked after a claims review when the client has done their entire app themselves.

    This is, almost verbatim, how I take an app:

    "Ok Tom, so a year's gone by and now you unfortunately have to file a large claim. Now the insurance company gets your medical records and matches them to the application. They come to find information was left off. The good news is you get a check for all the premiums you paid. The bad news is you no longer have a policy."

    Everyone gets that speech and all of a sudden the "I don't have anything" people end up with all sorts of things.
     
  8. HomeService
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    One more reason why I'm not too thrilled with writing health insurance
     
  9. Crabcake Johnny
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    Health? Write a life case and have the client die a few months later.
     
  10. Golddoor
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    I guess I will have to be more carefull. Thanks for the info.

    Agreed!

    Odds of that happening though are slim and none compared to health policies.

    Should we try to fight it or if possibe try another carrier? Not sure what the case was yet, but Im sure they found out she had a cold before the application was submitted and didnt mention of it on the app. She probably went in for this seasons bout with a cold for some anitbiotics and they found records of last winters episode. And people wonder why health insurance has such a bad rap!
     
    Last edited: Jan 7, 2008
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