Lloyd’s of London Disability Claim Tips for Physicians
Our law firm has extensive experience handling disability claims for physicians. Our attorneys understand how Lloyd’s of London operates and what it takes to file a successful Lloyd’s of London disability claim, and are happy to set up a free consultation to discuss your particular Lloyd’s of London disability claim.
Below are some answers to the most common questions our attorneys receive from physicians about the disability claim process, generally, and their Lloyd’s of London disability benefits, specifically.
Table of Contents
4. I am a physician filing a disability claim. How will Lloyd’s of London determine my “occupation”?
9. Do I need to hire a Lloyd’s of London disability attorney to file my physician disability claim?
10. When should I contact an attorney about my physician disability claim?
________________
1. Is Lloyd’s of London a disability insurance company? What is a syndicate? What is “excess and surplus” lines insurance?
Technically, Lloyd’s of London (“Lloyd’s”) is not an insurance company. Rather, Lloyd’s is an insurance exchange, sometimes described as an insurance and reinsurance marketplace. Consequently, Lloyd’s of London operates differently than most other disability insurance companies that issue policies to physicians.
Within the marketplace, several individuals and companies form syndicates that focus on certain types of risks that can be insured, such as a physician’s loss of income due to disability. Lloyd’s then provides the infrastructure to sell the corresponding insurance policies to prospective buyers in the United States, or other places around the world.
There are multiple layers to this infrastructure; for example, in the United States, Lloyd’s works with underwriters (such as Petersen International Underwriters) that will likely be mentioned throughout your policy documents, in addition to Lloyd’s of London.
For physicians filing disability claims, one of the more notable differences between Lloyd’s and other physician disability insurers is that the liability for the underlying claim is split between multiple individuals and companies. Usually, your Lloyd’s documents will include a schedule towards the end of the policy listing how many individuals/companies are insuring the risk. The participants are identified by anonymous syndicate numbers, but you can see how many there are, and how the percentage of risk is divided among them.
Lloyd’s and its syndicates also stand out from other disability insurers because they are willing to insure losses that are considered high-risk (sometimes referred to as “excess” or “surplus” line insurance) that other insurers may not be willing or able to cover.
These policies should be read carefully at the outset, as they typically contain more stringent policy provisions that can make it more difficult to collect disability benefits. However, for high-earning specialty physicians, it may be something that your financial advisor recommends exploring, as many U.S. disability insurers set limits on the total amount of monthly disability benefits that they are willing to issue to physicians.
2. My disability policy is with Lloyd’s of London. Why isn’t Lloyd’s of London handling my disability claim? What is a third-party administrator?
Lloyd’s of London does not personally administer many claims filed under its disability policies, instead opting to hire third-party administrators to investigate physician disability claims.
A third-party administrator is a company that sets up a claim administration framework and then oversees claims for insurance companies (often times many different disability insurers). This is most common with disability insurers who exited the market and stopped selling policies years ago, but sometimes active disability insurers also utilize third-party administrators.
Essentially, the third-party administrator’s “job” is to keep claim costs down for the company that hires them. In doing so, the third-party administrator is supposed to administer claims fairly; however, as you might imagine, the way to save the insurer the most money is to deny claims.
This can create bad incentives, as third-party administrators seek to secure more contracts with insurers and do not want insurers to drop them for paying out too many claims. As a result, in our experience, third-party administrators are typically more aggressive when investigating and vetting claims. In our experience, one third-party company that often handles Lloyd’s claims is DMS/Davies—a particularly difficult claims administrator to deal with.
3. I am a physician with a Lloyd’s of London policy. What do I need to be aware of if I have a Lloyd’s lump-sum disability policy?
As noted above, Lloyd’s of London policies typically have much higher benefit amounts than other physician disability policies. Lloyd’s also offers disability policies that can provide for one-time lump-sum payments of several million dollars if a physician can establish that he or she has a total and permanent disability.
Given the high amount of money on the line, these claims are subjected to a high degree of scrutiny before a claim determination is made. Lump-sum policies will also usually have much longer elimination periods that can require a physician to be disabled for a year (or longer) before they are eligible for a lump-sum payment.
Lloyd’s may further limit the scope of the policy to only cover a period of a few years. For example, unlike other disability policies that provide monthly benefits and allow disability claims up to age 65, a Lloyd’s lump-sum policy may only provide coverage if a claim falls within a short period (e.g. 5 years) following the effective date of the policy.
Some of these policies also have preexisting condition limitations, that can preclude disabilities that begin in the first 12 months (or some other specified period) if the disability is caused by, or related to, a preexisting condition.
In addition, Lloyd’s policies can have very expansive definitions of “preexisting conditions” that include both conditions that you received treatment for and “any symptom, condition, disease or injury which would have caused an ordinarily prudent person to seek medical attention.” As a result, even if you did not receive any treatment, Lloyd’s and its third-party administrator may argue that you “should have” and that the condition was disabling earlier, based upon the severity of current symptoms.
Thus, there can be very narrow windows for collecting under lump-sum disability policies, depending on the nature of the disabling condition and onset date of the disability. And if the condition is a slowly progressive condition, this can lead to disputes over whether the condition became “disabling” before, during, or after the covered window.
4. I am a physician filing a disability claim. How will Lloyd’s of London determine my “occupation”?
As with any disability insurance policy, how “occupation” is defined is crucial in determining whether you are disabled and eligible for benefits.
Many of the Lloyd’s of London disability policies we have seen define “your occupation” as follows:
Your Occupation means the occupation (or occupations, if more than one (1)) in which You are gainfully employed for the majority of the time during the twelve (12) months prior to the time You become disabled. If You have limited Your Occupation to the performance of the substantial and material duties of a single specialty We will deem that specialty to be Your Occupation provided that Your industry widely recognizes that occupation as a specialty.
This can be a favorable definition for physicians in particular, as it has specialty-specific language. However, Lloyd’s and its third-party administrators will thoroughly vet whether you are actually limiting your practice to a specialty. Even if you are a board-certified specialist, Lloyd’s third-party administrators typically gather and review CPT codes to determine if they line up with your claimed specialty. In some instances, disputes arise over whether certain codes are more “generic” in nature (for example, Lloyd’s may contest whether you are a specialized surgeon or a general surgeon).
Another aspect that is arguably favorable, but can give rise to dispute is the phrase “for the majority of the time.” This language can provide some protection if there are gaps in employment during the prior twelve months, but can also lead to a high degree of scrutiny into all sources of a physician’s income.
In particular, physician disability evaluations also involve significant digging into whether the physician wore multiple hats, and how much time was spent on administration etc. This is often a focus because it is far easier for a disability insurer to dispute disability from administrative tasks in comparison to clinical tasks.
In short, even though there are helpful aspects of the definition, a physician filing a disability claim with Lloyd’s of London should expect a high degree of scrutiny when it comes to determining “occupation” and “specialty.”
5. Lloyd’s of London is requiring me to prove that my disability is “total and permanent.” What does this mean?
As discussed above, Lloyd’s of London lump-sum policies typically require both “total” and “permanent” disability to qualify for benefits. This is different than other physician disability policies that provide monthly benefits and only require a monthly showing of ongoing total disability.
Accordingly, if you have a Lloyd’s policy you may not only have to establish that you cannot do the material and substantial duties of your occupation/medical specialty, you may also have to establish that your disability is permanent. “Permanent total disability” will likely be a separately defined term, and will often require that you show that “in the opinion of a Competent Medical Authority recovery from such disability is not expected.” If you have an own-occupation policy, this requirement can also be own-occupation specific:
Permanent Total Disability means that if solely due to a Sickness or Injury, You are not able to perform the substantial and material duties of Your Occupation and in the opinion of Competent Medical Authority recovery from such disability is not expected, even if You are at work in another occupation.
In the above example taken from a Lloyd’s policy, Competent Medical Authority is then further defined as follows:
A Physician must be recognized (licensed and chartered) by the state or country in which he or she is practicing, cannot be You or a relative of Yours and must practice within the scope of his or her license. Treatment of a Sickness or Injury must be within the knowledge or expertise of the Physician.
In some instances, your doctor and Lloyd’s of London’s doctor may disagree about whether a disabling condition is permanent. In the event of disagreement, some Lloyd’s policies also specify a mechanism for breaking the deadlock. For example, the policy contract may provide that the policyholder’s doctor and Lloyd’s doctor will pick a third doctor to determine whether a disabling condition is “permanent,” and that third doctor’s decision is binding.
This may seem fairly straightforward, and in some instances, it can be—for example if there is a serious injury resulting in a loss of limb. However, it can also be a drawn out, nuanced process.
In addition to considering whether a condition is disabling, Lloyd’s and its third-party administrator will also be assessing whether there is any medical treatment or surgery that could improve the condition, or cut against the condition’s “permanency.” Your treating doctor may want to pursue more conservative treatment, while the insurance company’s doctor may push for more aggressive or invasive treatment. Most often, the sticking point is whether the potential benefits of a surgery outweigh the possible risks of that surgery.
As a result, questions of permanency often come down to a battle of the experts. If the Lloyd’s policy has a tiebreaker mechanism, the battle may not take place in court or before the jury. But it is still important to find the right expert/doctor to serve as your advocate, and ensure that your side of things is competently presented, whether the decision maker is a third doctor or a judge/jury.
6. My Lloyd’s of London policy has a “claim cooperation” clause? Do all physician disability insurance policies have this?
Over the years, “cooperation clauses” have become more common in disability policies, and Lloyd’s of London policies are no exception. Lloyd’s cooperation clauses can be more expansive than other disability companies, and often say something along these lines:
Claim Cooperation
The Owner and You shall provide, assist and cooperate with Us and Our authorized representatives in the administration of the claim. Failure to cooperate with Us in the administration of a claim may result in the termination of a claim. Such cooperation includes, but is not limited to providing any information or documents needed to determine whether benefits are payable.
We have the right, at Our expense, to analyze or require an analysis of all relevant financial and operational records, including Your personal, business and corporate federal and state tax returns, as often as We may reasonably require by a financial examiner of Our choice. We can require that Your accounting practices be the same as those which were in effect at the time You first became disabled.
While most disability policies allow companies to review relevant financial information as part of a claim investigation, the actual policy language can provide some insight into how the company expects a claim investigation to play out. It should be apparent from the above that Lloyd’s and its third-party administrators want to run the show when it comes to the claim investigation, and want to have this language in the policy to fall back on if, in their view, a policyholder is not properly cooperating.
This does not mean that you must capitulate to every demand that Lloyd’s or its third-party administrator makes. But it does mean that, if you are going to object, it must be an informed, well-reasoned objection that is supported by the law or industry standards/norms.
It can be difficult to do this, if you have never filed a claim before and lack experience in this area. Accordingly, if you feel Lloyd’s or its third-party administrator is overreaching, it is a good idea to at least consult with an experienced disability attorney.
7. I have other disability insurance policies. Will this impact my physician disability claim under my Lloyd’s of London policy?
Because Lloyd’s of London often issues policies to high income earners, Lloyd’s is mindful of other insurance coverage and can add endorsements/riders that can offset your benefits if you end up receive benefits under other disability policies.
The provisions can be complex, but the general concept behind them is that Lloyd’s does not want you to be financially incentivized to file (or continue to maintain) a disability claim. Below is an example of what this type of policy provision can look like.
At any time during a claim, should the Benefit Amount ever exceed sixty-five percent (65%) of Your Prior Average Monthly Earned Income because of Valid and Collectible Insurance Benefits, or a diminished average Earned Income, the Benefit Amount paid under this Certificate will be adjusted so as not to exceed sixty-five percent (65%) of Your Prior Average Monthly Earned Income.
Valid and Collectible Insurance Benefits means all disability benefits, prior to cost of living adjustments, payable for the sole purpose of disability or income replacement. It does not include military disability compensation, Social Security Disability, or Workers Compensation Disability Benefits.
Your Prior Average Monthly Earned Income means Your highest average monthly Earned Income for twelve (12) consecutive months out of the last twenty-four (24) months, just prior to the date that You are deemed disabled under this Certificate.
If the Cost of Living Adjustment Rider was purchased, any Cost of Living Adjustment increases will be applied to Your Benefit Amount after the above calculation.
In connection with these types of provisions Lloyd’s can perform audits of financial records to determine prior income and may contact your other disability insurers to verify the amounts you are receiving under other policies. Prior income calculations are not always straightforward, and if you have a policy that factors prior income into your claim it is important to ensure that it is calculated correctly at the outset of the claim.
8. I am a physician with a mental health condition, can I file a disability claim under my Lloyd’s of London policy?
Mental health conditions, including those such as anxiety disorders, panic disorders, and/or depression, may be excluded from coverage under your Lloyd’s of London policy.
While many disability insurers have shifted to including mental/nervous limitations in their disability policies that limit recovery to 24 months, some Lloyd’s policies opt to entirely exclude this type of disability claim from coverage as one means of limiting the scope of the liability under the policy.
For example, your Lloyd’s policy might include a provision that excludes “mental and/or nervous conditions” from coverage. The policy will then separately define what this in more detail, and that definition may look like something along these lines:
Mental and/or Psychiatric Disorders defined as “any condition which includes any form of neurotic or psychotic condition or behavioral disorder due to any cause.” Conditions may include, but are not limited to: psychiatric disorders, manic disorders, paranoia, schizophrenia, personality disorders, depression, or anxiety. Mental and Psychiatric Disorders do not include Alzheimer’s Disease, Parkinson’s Disease, Multiple Sclerosis or other progressive neurological diseases.
As you can see, these exclusions can be fairly broad, although they will often include carve-outs for neurological diseases, such as Alzheimer’s, Parkinson’s, or Multiple Sclerosis.
Before filing a claim, it is always important to carefully review your policy and note any exceptions or exclusions that may apply to you.
9. Do I need to hire a Lloyd’s of London disability attorney to file my physician disability claim?
While there are certainly claims that may not require attorney involvement—for example, a disability claim due to the loss of a limb or something very serious, such as paralysis—in our experience physician claims are not that straightforward.
Many of our clients have more nuanced conditions, such as slowly progressive musculoskeletal conditions due to degenerative disc disease. Others have conditions like a tremor, that may not prevent them from working in other jobs, but have a significant impact on their ability to work as a physician. Others have mental health conditions (anxiety disorder, panic attacks, PTSD) that cannot be verified by a single, definitive objective test.
Obviously, if your claim is denied or you have a dispute over policy interpretation, you may need an attorney to become involved to resolve the matter. That being said, lawsuits with insurance companies are often costly, stressful, and, in some instances, can drag out over several years, all to the insurance company’s advantage. Even if you prevail, it can be an exhausting process, and companies typically appeal, which can take at least another year or more, all the while you are not getting paid benefits.
In our view, it is more prudent to approach your claim carefully from the outset and have your attorney address any concerns that Lloyd’s of London (or its third-party administrator) may have over the course of the investigation itself, so that you are not placed in a position where benefits have been cut off, you are not working and your only option is a lawsuit.
In our experience, the most common areas where complexities can arise in physicians’ disability claims include:
-
- The timing of the claim (particularly in situations where a disabling condition is slowly progressive);
- Claims made by physicians with multiple sources of income, some of which may continue post-disability;
- Claims made by physicians who have taken an active role in office/hospital administration or are involved in non-clinical work;
- Claims involving alleged preexisting conditions;
- Claims where the underlying condition is difficult to diagnose or diagnosed by exclusion;
- Claims involving multiple co-morbid conditions;
- Claims involving conditions that are irregularly and unpredictably disabling;
- Claims involving pain/musculoskeletal conditions;
- Claims involving mental health conditions; and
- Claims involving recommendations for or against certain treatments or surgery.
10. When should I contact an attorney about my physician disability claim?
Physicians who are considering filing a claim for disability insurance benefits should meet with a disability attorney well-before submitting a claim.
Each disability policy has different, complex language that insurance companies may manipulate to circumscribe and restrict coverage. Before filing, physicians should make a coordinated effort, with an attorney’s assistance, to determine whether their particular claim is covered, and if so, how that claim is best presented to ensure payment.
The information provided above is offered purely for informational purposes. It is not intended to create or promote an attorney-client relationship, and does not constitute and should not be relied upon as legal advice.
Every claim is unique and the discussion above is only a limited summary of information that may be relevant to your claim. If you are concerned that Lloyd’s of London and its third-party administrator is not handling your claim fairly, an experienced disability insurance attorney can help you assess the situation and determine what options are available to you.
Notable Lloyd’s of London Disability Insurance Cases
Liberty Corp. Cap. Ltd. v. Steigleman, No. CV-19-05698-PHX-GMS (D. Ariz. May 1, 2020).
Ward v. Certain Underwriters at Lloyd’s of London, No. C 18-07551 WHA (N.D. Cal. Sept. 27, 2019).
Certain Underwriters at Lloyd’s, London v. Cohen, 785 F.3d 886, 889 (4th Cir. 2015).
Hamilton v. Certain Underwriters at Lloyd’s of London Syndicates No. 1206, 1183 & 5000, No. 3:14-CV-906-CAB-JLB, 2015 WL 12660417, at *1 (S.D. Cal. Apr. 30, 2015).
Parse v. Those Certain Underwriters At Lloyd’s London, No. CV1400782MMMJEMX, 2014 WL 12561586 (C.D. Cal. Mar. 4, 2014).
Lagstein v. Certain Underwriters at Lloyd’s of London, 725 F.3d 1050, 1053 (9th Cir. 2013).
Martin v. Certain Underwriters of Lloyd’s, London, No. SACV101298AGAJWX, 2011 WL 13227729 (C.D. Cal. Sept. 2, 2011).
Tangletown, LLC v. Underwriters at Lloyd’s, London, No. C06-846C, 2006 WL 2781329 (W.D. Wash. Sept. 25, 2006).
Boghos v. Certain Underwriters at Lloyd’s of London, 36 Cal. 4th 495, 500, 115 P.3d 68, 70 (2005).
Lloyd’s of London Disability Insurance Blog Posts
What Physicians Need to Know About Claims Administered by Davies/DMS
Disability Insurance for the Professional Athlete: Can it Protect Your Value?
