‘Bad faith’ in insurance claims – The emerging face of deception

Raj Kiron Das: Insurance, by definition, is a promise of protection- a system built on trust, fairness, and answerability. It is designed to offer economic security and emotional relief when life takes an unexpected turn. Yet, the actual foundation of this promise is increasingly being undermined by a disturbing reality: the rise of bad faith insurance practices.

Across the industry, an alarming number of policyholders are finding themselves victims of deceitful tactics- claims delayed without justification, legitimate cases denied on vague ground and payout unjustly reduced. Instead of standing by clients during distress, some insurers deliberately exploit loopholes and legal jargon to safeguard their own financial interest. This unethical conduct, often referred to as bad faith insurance, is not just a breach of professional ethics; it is an outright betrayal of public trust.

When a policyholder files a claim, they expect transparency, empathy and efficiency. However, the experience is often anything but fair. Many companies complicate the process through excessive documentation demand, ambiguous interpretation of policy clauses, or technical excuses designed to confuse the claimant. The result? Genuine claim is denied or delayed indefinitely, leaving policyholders economically drained and emotionally devastated.

Such misconduct is not only morally wrong- it is legally indefensible. The principle of good faith is at the heart of insurance law. Insurers are legally obligated to act honestly, reasonably and in the best interest of their clients. Any global act that undermines this duty- be it delay, denial, or manipulation- constitutes bad faith. Unfortunately, most consumers are not aware of their rights or the extent of the legal safeguard available to them. The dense, complex language of insurance contracts only adds to their vulnerability.

To counter this, awareness and documentation are key. Policyholders must preserve every piece of communication- letters, emails, call logs and notices- as potential evidence. Consulting an experienced insurance lawyer may also make a crucial difference. Legal professionals can identify misconduct, interpret the policy accurately and negotiate fair settlement. In many cases, the mere threat of legal action prompts insurers to fulfill their obligation swiftly.

The mounting prevalence of bad faith claims points to a deeper systemic issue- fragile regulatory enforcement and inadequate consumer protection. Regulatory bodies must intensify oversight, penalise unethical practices and ensure insurers are held answerable for violating public trust. Stronger laws alone are not enough; enforcement must be consistent and uncompromising.

At its core, insurance is meant to uphold human dignity in times of uncertainty. When that safeguard turns into a source of distress, it signals a failure of ethics and governance. Rebuilding confidence needs not only legal reform but also a cultural shift in the industry- from profit-centered practices to people-centered principles.

For customers, silence is never the solution. Those who face unjust delay or denial must speak out and seek justice. Only through collective awareness and assertive action may we dismantle the deceptive face of bad faith insurance and restore integrity to a system that many rely upon for peace of mind.