Consumer Federation of America Report: Property insurers fleece public

[seafan]

Report: Insurers fleece public

By TOM ZUCCO, Times Staff Writer
Published January 11, 2008

The property insurance industry not only racked up near-record profits in 2007 - about $65-billion after taxes - but overcharged American homeowners an average of $870 per household over the last four years, says a new report from major consumer groups.

That study's conclusion - insurers systematically overcharge consumers and underpay claims - was released Thursday by the Consumer Federation of America, Consumers Union and several other consumer groups. The findings blasted a powerful industry about to be challenged anew in Florida on several alleged price-gouging fronts by the state government.
The report by the Consumer Federation, one of the nation's largest and long-standing consumer watchdog organizations, was based on insurance industry data and the companies' financial statements. It estimated insurance industry profits from 2004-2007 at more than $253-billion.

Robert Hunter, director of insurance for the CFA and author of the study, accused the industry of "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."
Nowhere is that better illustrated, Hunter said, than in Florida, where nearly two-thirds of the property insurance risk is shouldered by the state in the form of Citizens Property Insurance and the Florida Hurricane Catastrophe Fund.

.....

One striking finding in the Consumer Federation report is that the insurance industry keeps an increasing portion of the premiums. In the 1980s, insurers returned 72 cents for every $1 of premium charged to policyholders either through benefits or claims. But that figure has steadily shrunk to about 55 cents in 2007, even in years with no major natural disasters. ..... The Florida Office of Insurance Regulation will hold a two-day public hearing next week with executives of Allstate, which has requested a 42 percent rate hike. And Gov. Charlie Crist last month appointed three lawyers to look for grounds for a class-action lawsuit against the industry for potential collusion.

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"Insurance was put together to spread the risk," (retiree Charlie Rutz) said, "and the companies should get a fair return. But billions of dollars? These guys are robbing us. The only thing they don't have is the mask and the gun."

[Kittycat]

1. No surprise. We had a minor claim due to lightening damage. Rates went up 60%

Fortunately we were able to switch to a more reasonable company without our rates going up with them as well. What a shock that was! (Was with All State when the claim was filed - just this past summer)

More insurance fun... We had water damage from a leak years back through another insurance company. They came out, said it wasn't covered - then raised our rates just for reporting it. (This was with State Farm)

The best one was when some woman opened her car door in to ours. We had the same insurance carrier, so they wouldn't fight for one or the other. In the end, we were told they would fix it if we paid the deductible. I couldn't for the life of me understand why I would have to pay the deductible if she was at fault. I was simply told that in State Farm v. State Farm, they refuse to make a ruling - so each insurer is responsible for their own. They wouldn't raise the rate, but we had to pay the deductible. Total BS!

We were later told they wouldn't insure our home because it had knob and tube wiring - which we had already contracted an electrician to replace it within the first 30 days after close. That sent us scrambling to find a new insurance company with only a couple weeks before close. We left state farm permanently after that. I had been with them 10 years, and my spouse 12 or more at that point.

[seafan]

2. Thanks for sharing that story. I really believe this country is at critical mass outrage

over how we are being robbed, lied to and our children murdered in wars for the very rich to stay in power.


I don't see the bottom of this morass yet. This will be a tough year for us all.