Insurers rip off consumers-boost profits by overcharging policyholders, underpaying claims, study finds

Insurers rip off consumers, group says
Firms boost profits by overcharging policyholders, underpaying claims, study finds

Marcy Gordon, Associated Press

Friday, January 11, 2008


(01-11) 04:00 PST Washington --

U.S. insurance companies systematically overcharge customers and underpay home and auto claims to pad their already-fat bottom lines, a consumer group said Thursday.

The Consumer Federation of America's insurance director, Robert Hunter, said insurance companies have enjoyed robust profits and contained losses largely by "methodically overcharging consumers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurers should cover."

Hunter's comments came with the release of a study by Consumer Federation, Consumers Union and several other consumer organizations that said the industry's overcharges reached an average $870 per U.S. household over the past four years.

The loss ratio for property-casualty insurance companies, or the percentage of premiums paid out to policyholders as benefits, was 54.6 percent last year, according to the study, up from 53.3 percent in 2006 but far below the 75 percent level of the late 1980s.

The study - based on insurance industry data and companies' financial reports - estimates that the insurance industry's net income after taxes in 2007 will be $65 billion, down from the record $67.6 billion set in 2006 but above 2005's $48.8 billion.

The industry has reaped those profits at the same time that consumers are receiving less money after filing claims, the consumer group said. A study released a year ago by the organization put forward similar conclusions.

The Consumer Federation urged state regulators to require insurance companies to offer a homeowners policy that covers all risks, prohibit insurers from restricting certain policies by geography, and review policy forms for hidden exclusions.

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http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2008/01/11/BUEIUD5T0.DTL&type=politics

anything as long as it improves their profits! I can only hope, when we get a Dem Prez, the people they select to fill the LeAD positions will be competent and do their damn job!

The state insurance commissions that regulate the industry are always run by corporate-friendly types - yes, even in the blue states.