Sunday, January 13, 2008

Insurance Companies Underpay Auto Claims and Overcharge Customers

By Mark Schofield
Attorney at Law

One of the reasons we practice the type of law that we do is because the insurance industry is only out to protect its selfish interests over anything else, including the public at large, consumers, and companies. We have long known that the insurance industry and big business put their own profits above their customers, and now independent research is confirming the despicable lengths to which the insurance industry will go to make a profit. Don’t get us wrong: we believe that a business should be profitable, but not at the expense of your customers and not when done in bad faith.

According to a recent study published by the Consumer Federation of America in corroboration with the Consumers Union and several other consumer organizations, their research found that in order to increase profits and protect their “bottom line,” United States insurance companies overcharge their customers and underpay both home and automobile claims. The study, released this week by the Consumer Federation of America, found that the insurance industry’s overcharges reached an average of $870.00 per United States household over the last four years.

According to J. Robert Hunter, the insurance director for the Consumer Federation of America, insurance companies have enjoyed record profits, while minimizing losses, by “methodically overcharging customers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of to the tab for risks the insurers should cover.” The study, based on the insurance industry’s own data and financial reports, estimates that the insurance industry’s net income after taxes in 2007 will be $65 billion dollars, a small decrease from the previous record of $67.6 billion set in 2006, but still a large jump over the 2005 net income of $48.8 billion.

An examination of the full report, available online at: http://www.consumerfed.org/pdfs/2008_INSURANCE_RELEASE_FINAL.pdf and indicates a number of startling facts about the recent success of the insurance industry:

• The insurance industry enjoyed record profits in 2004 and 2005, despite significant hurricane activity.
• In recent years, insurers have sharply increased premiums for homeowners and commercial insurance policies, while reducing or eliminating coverage for thousands of Americans in costal areas.
• Insurers are seeking additional subsidies from Congress for catastrophe insurance.
• Consumers have experienced a drastic drop in the amount of claims payouts.
• In the past five years, the insurance industry has enjoyed record level profits, and record low losses. Consider that the industry’s net income (post-tax) in 2003 was $31.2 billion dollars. In less than five years, this number has more than doubled to $65 billion dollars.

As always, consumers need to remember that despite what they see in the news, and on television commercials, insurance companies (even their own insurance companies that claim to be looking out for them) are companies in the business of making a profit: given that the insurance industry is experiencing record profits, it is clear that these companies are making these profits at the expense of their individual consumers, as well as at the expense of those who dare make a claim for insurance after an accident, injury or loss.

Insurance companies will fight to protect their profits, and their bottom line and do not care who gets in their way. Consumers and those with claims against these insurance companies need someone in their corner, fighting for their rights. The attorneys at Goldberg, Finnegan and Mester fight insurance companies on a daily basis for the rights of the individuals we represent.

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