“Sliding Insurance” shows exactly why discussions about fraud must also include illegal insurance industry practices. Insurance sliding is a deceitful and aggressive behavior used by insurance salesmen to defraud their customers. According to the State of Michigan’s Department of Insurance and Financial Services, sliding is:
“An agent’s failure to fully disclose all elements of an insurance transaction; get informed agreement to the purchase of all products and services.”
Problems emerge when the total cost of the insurance premium is higher than expected; as a result of the consumer not being informed of all expenses related to the insurance premium.
Related Articles: INTELLECTUAL PROPERTY LAWYERS: Career Guide and 2022 Salaries
The following are some examples of insurance sliding:
- Claiming that roadside assistance is part of an individual’s insurance plan when it is not.
- Claiming that roadside assistance is necessary when purchasing auto insurance in Michigan, when it is not.
- Failing to disclose, explain, or break down all of an insurance policy’s coverages, as well as the cost of those coverages.
- Failing to appropriately disclose the insurance coverage’s actual cost.
These are by no means the only examples of insurance rates dropping. Rather, they serve as examples of the phenomena.
The director of the Department of Insurance and Financial Services has the authority to take action against persons who engage in insurance sliding. Probation, suspension, or revocation of the applicable license or the imposition of a fine are all possible punishments.
MCL 500.1239(1)(h) states that anybody who engages in “fraudulent, coercive, or dishonest activities or demonstrates ineptitude; untrustworthiness, or financial irresponsibility in the operation of a business in this state or elsewhere” shall face penalties.
Related Articles: Bear River Car Insurance in Utah: Claims and Reviews
In recent years, much has been made about fraud in the Michigan no-fault insurance system. The insurance industry has been keen to bring out instances where doctors and lawyers have tried to defraud the system. The insurance business has used the poor conduct of a few to justify the repeal of Michigan’s no-fault rule; which has aided thousands of people injured in vehicle accidents.
The Department of Insurance and Financial Services has published bulletins demonstrating the other side of the argument: what about insurance firms and their brokers defrauding Michigan consumers?
Insurance in Sliding
When it comes to the insurance sector’s unfair trading practices, we don’t need the law to figure out a handful of them. Misrepresenting benefits, overcharging for coverage, and underpaying claims — better known as lying, cheating, and stealing — are universally acknowledged to be unfair trade practices. Yes, brokers and agents may attempt to rationalize the half-truth, and insurance companies may engage in promotional puffery, but the limits for all three sins are drawn.
The unethical behavior of an insurance business does not end there. There are less well-known practices that Florida law prohibits. Even if they don’t rate among the seven deadly sins, who’s to say the eighth or ninth isn’t just as dangerous?
“Sliding” is a practice that has just come to our attention. In February, the Florida Office of Insurance Regulation released an “informational memorandum” on travel insurance policies and sliding premiums.
Related Articles: Is REMCO Insurance the Best Insurance Agency in Texas in 2022?
Sliding is about an insurance agent or company misrepresenting either the scope of the cost of coverage to a consumer, For example, the insurer may inform a customer that state law mandates that everyone buying a homeowners policy also buys auto insurance.
The law also prohibits an insurer from charging a customer for coverage that he or she has not consented to buy. Without the consumer’s informed consent, an insurer cannot charge for coverage.
Sliding Scale Insurance
Sliding scale fees are a sort of tax or expense that fluctuates based on a variable. Such fees are design to capture a value according to the movement of an underlying variable; most commonly income.
In the instance of healthcare, for example, a low-income person would pay less for services than a high-income person. This pricing strategy spreads out consumption of products and services, however, it may lower consumption among the wealthy.
- Fees on a sliding scale vary depending on a related aspect, such as income.
- When it comes to healthcare, a low-income person pays less for services than a high-income earner.
- Businesses and organizations can make up income losses by offering lower-than-market pricing to the less fortunate while utilizing grant funding or donations.
How a Sliding Scale Fee Works
The idea behind sliding scale fees is to make things more equitable. For example, a hospital may not charge a poor or patient without insurance the market value of medicine for an ailment because they cannot afford it, while a wealthy or patient with insurance may be ask to pay the market value. Companies and groups can compensate for income shortfalls by providing below-market services to the less fortunate while utilizing grant funding or donations.
Criticism of Sliding Scale Fees
Some people argue that sliding scale fees are ineffective, inappropriate, and troublesome. The reason for this is that most sliding fee scales used by nonprofits and other organizations base the charge on the billable party’s financial situation.
Critics of the practice argue that to effectively apply such a policy, entities must request specific information and possibly accompanying paperwork such as tax returns to verify the chargeable party’s income. The majority of private practitioners would want to avoid such activities.
Financial Advisors on a Sliding Scale Insurance Fees
Financial advisors are paid in one of two ways: commissions or flat fees. If a financial advisor gets his pay on a commission basis, the more business they produce, the more money they make. It is in their best interests for them to sell as many financial products to customers as possible. Some financial advisors use a sliding scale, although it usually operates in the opposite direction of how regular sliding scale fees function.
Example of Sliding Scale Fees
A mental health clinic at Hospital ABC aims to treat as many patients as possible. Some of the hospital’s specialty doctors do not accept insurance, therefore patients must pay out of pocket. A patient visit costs on average $500.
For treatment, the hospital has adopted a sliding scale pricing structure. The cost per patient visit will vary depending on income, ranging from $100 to $700, with the lowest income earners paying $100 and the richest earning $700.
What Is the Best Way to Set Up a Sliding Scale?
To create a sliding scale, calculate the charge for the service you deliver in the area first. You can get an average by looking at the lowest and highest fees. You should also think about all of your business’s expenses, as well as the pay you want to earn. Determine how many clients you will have, and then construct a sliding scale that will allow you to accomplish your goal monetary worth, taking into account all of these elements.
How Do You Calculate Sliding Scale Insurance Fees?
Sliding scale fees can be calculated in a variety of ways, as well as depending on the service being provided. Finding out the average rate charged for a service in your area is the best technique. You’ll need to factor in all the fees involved with the service you supply and modify the scale accordingly.
How Does a Therapy Sliding Scale Work?
Sliding scale insurance works for therapy in that the cost of therapy will depend on a person’s income. If your insurance doesn’t cover therapy, you’ll have to pay for it yourself. The cost of therapy will be cheaper if a person’s income is lower.
Related Articles: Best HIX Insurance Review: Products and Features
In contrast, the cost of therapy will be higher if a person’s income is higher. Both private practices and non-profit organizations use this strategy. This takes place so that a practice can stay in business by charging regular rates to high-income earners yet still being able to provide access to mental health to those that can’t afford it.
What Is the Sliding Scale for Inheritance Taxes?
Inheritance income is subject to federal taxation, as well as state taxation in some cases. 17 states have either an inheritance tax, an estate tax, or both as of 2021. The tax is based on a sliding scale in each state. The tax rate rises as the value rises.
Frequently Asked Questions
What does twisting mean in insurance?
The act of causing
Twisting is the act of persuading or attempting to persuade a policy owner to cancel an existing life insurance policy and replace it with a nearly similar policy by utilizing misrepresentations or incomplete comparisons of the two policies’ benefits and drawbacks.
What does churning mean in insurance?
Churning is a sales technique in which a current life insurance policy is replaced with a new one to earn more first-year commissions. This practice, commonly known as “twisting,” is prohibited in most jurisdictions and is also prohibited by most insurance policies.
What is insurance misrepresentation?
Misrepresentation – a false or misleading statement that allows the insurer to invalidate the insurance contract if it is intentional and material.
What is controlled business in insurance?
When an insurance salesperson sells insurance policies on himself and people with whom he or she has a financial relationship, this is known as “controlled business”. You can’t have a more “controlled” business than you can have an uncontrolled one.