Sheltering Claims: What Does It Mean?

The term sheltering claims refers to the practice of insurance companies hiding or withholding claim information from policyholders or attorneys. Before the world became electronic, most claim information was in written form and kept in one file. However, in our quest to become a paperless society, many claim files are now stored electronically – something insurers use to their advantage to hide or ‘shelter’ claim information.

We asked attorney Charles Surrano of Arizona, a 30 year insurance industry practitioner and member of the Advocate Law Group network, to explain what insurance companies are doing to make it more difficult to sue for denied policies. According to Surrano, “It would probably be accurate to say that insurance companies have become more proficient at sheltering information about claims and segmenting the claim process more. As with every industry, the insurance industry has become more automated. It has gone from largely a paper industry, where claim files themselves were the handwritten notes of adjustors’ correspondence kept in an actual hard claim file, to a totally online system.

I would say it’s the exception rather than the rule to find an actual insurer that simply uses the hard paper method of keeping a claim record. Almost all the bigger insurers and more sophisticated insurers have an automated claim system. That is, computerized claims. We all know what you can do with a computer, don’t we? It all depends on what you put in and where you put it. There is no such thing then as the hard claim file except to the extent that the insurance company wants to create one.”

The danger to policyholders

Surrano thinks that electronically stored information can be a danger to policyholders – especially when litigation arises. He said, “[insurers] can hide a lot of information in the ‘cyber claim file’, if you want to call it that. E-mails back and forth between supervisors and claim adjustors may not necessarily be reproduced and included in any claim file. If you ask for one in discovery, they might not know what you’re claiming since it’s in cyberspace.

Creating or not creating information – how you decide to deny a claim is often masked in the claim file. In the old days, it was very easy to see who was running the show, who the claim supervisor was, who was making the decisions and why because this was all recorded in the claim file somewhere.

Nowadays, you’re lucky to find out from the claim file who is actually making the decisions – and if you do find out who, the claim file will very typically be devoid of any discussion about the claim process or what led up to a particular claim decision. You’ll see mention of ‘Met with Mr. So and So’ and then after that some claim decision is made. Yet, you generally won’t see any recorded discourse between the claim adjustor and the claim supervisor over the issues regarding the claim and why one decision was favored versus another. So there’s a lot of empty information in the claim process and a lot of you know that a lot of internal activity was being conducted that yet remains unexplained.”

We asked Surrano what a policyholder should do if they believe their insurance company is sheltering claims information. He explained, “You need to get a good lawyer – one who understands where that information may be hidden and how it may be hidden and one who is prepared to fight for it. It won’t be turned over voluntarily in most cases.”