Disability insurance policies are sometimes provided as part of an employment package, but individual disability insurance policies are also sold to people who do not have group disability insurance coverage available through their employers. These insurance policies are part of an entire class of protections that employers and individuals can purchase, which generates big business and a need for oversight to protect consumers. Regulations handed down by the state and federal government are generally administered and developed by the Insurance Commissioner of the state. California’s Commissioner Insurance, Steve Poizner, has recently come under fire by his predecessor, Lt. Gov. John Garamendi, for proposing regulation changes that will weaken consumer protections.
Those changes include rolling back regulations that were meant to prohibit insurers from reducing group disability insurance benefits to account for pensions, workers’ compensation payments or wages that the policyholder might receive. Poizner countered the criticism and concerns about less protection for workers by explaining that offset clauses that reduce benefits in disability policies are “already illegal” and that rolling back the regulations was “the essence of cutting red tape.” This raises questions about why Poizner felt that the changes were necessary, especially when many are calling for legislative action in other areas. Many believe that the disability insurance providers may have the effect of harming the foundation the state has for controlling offsets. Without the regulations, it may be more difficult for the state to restrain insurance companies looking to reduce their exposure when workers are disabled and file a claim.
Poizner’s predecessor, a Democrat, and some attorneys who deal with disability insurance issues say that insurance companies will “do what they want” and that this would be a “disaster for policy holders.” In a time where the removal of regulations makes people think of the failure of the business and accounting sectors, and places the name of Enron on the lips of concerned parties, many question whether there will be severe problems on the horizon once the regulations are rolled back. Garamendi warned that “some of the biggest scandals in the last decade took place in the disability sector: denial of claims, denial of coverage and using offsets…All sorts of things were going on to deny benefits to policyholders, so I wrote regulations to deal with that.”
With those regulations going back, disabled workers may wait with bated breath to see the effects it will have on insurance coverage and claims. If you have been disabled at work and are having difficulty or concerns related to your insurance coverage, you may want to speak to an attorney. An attorney may also be able to assist you if your insurance company uses potentially illegal offsets to reduce your payout following a disability claim.