In what can only be call the “No Duh!” story of the week, the Consumer Federation of America has released a study that concludes the insurance industry overcharges U.S. consumers to the tune of about $870 per household.
According to Consumer Federation insurance director J. Robert Hunter, insurance carriers have enjoyed large profits by “methodically overcharging consumers, cutting back on coverage, underpaying insurance claims and getting taxpayers to pick up some of the tab for risks the insurers should cover.”
This report is probably no surprise to people who have had to actually make an insurance claim in recent years. Low-ball offers to settle legitimate claims are the norm, often requiring the hiring of a lawyer to get a fair offer.
For the first nine months of 2007, Allstate Corp.’s loss ratio was 51.6 percent, compared with 43.5 percent in the same period of 2006, according to the study. From January to September of 2007, American International Group Inc.’s loss ratio was 53.8 percent, compared with 50.9 percent; St. Paul Travelers Companies Inc.’s was 45.5 percent, compared with 46.8 percent; Progressive Insurance Group’s was 58.2 percent, compared with 53.1 percent; Berkshire Hathaway’s was 58.6 percent, compared with 56.1 percent and Hartford Insurance Group’s was 55.8 percent, compared with 53.2 percent.
The study estimates that the industry’s net income after taxes in 2007 will be $65 billion.