Florida Consumer Viewpoint
Keep up to date with Florida Consumer Action Network (FCAN) the state's largest consumer group. FCAN fights for consumers on environmental, insurance, utility, and health care issues.
Wednesday, October 18, 2006

Insurers Make $60 BILLION Profit
An article in the Wall Street Journal's Market Watch, aptly titled, "Sweet are the uses of adversity," says that "Industry experts are forecasting a $60 billion industry profit in 2006." The article quotes the Insurance Information Instutite as saying that this profit, which doesn't even include investment income, is "the best in a generation (or two)." All this at the expense of consumers.For comparison, an Insurance Information Institute analysis indicates that the cumulative underwriting loss on Florida homeowners insurance from 1990 through 2005 was $13 billion.While you really should read the entire article, I will quote further for those who wish to read only briefly.
"Following every major disaster or scandal, a simple formula protects insurance industry profits: raise rates, reduce coverage and deny claims."
"The American insurance Association justifies increases on account of "horrific" forecasts for upcoming storm seasons -- based on dubious new risk modeling formulae that J. Robert Hunter of the Consumer Federation of America has called 'collusive.'""Over the past ten years, the insurance industry has sought relentlessly to reduce the scope of homeowners' coverage.""As reported by the AP, Cori and Kerri Rigsby, two sisters who had long performed claims work for State Farm on a contract basis, have provided homeowners' attorneys and regulators with 15,000 pages of evidence suggesting that while processing Katrina claims, State Farm had its claims managers memorize language to avoid acknowledging wind damage when water contributed to the loss. Further, these brave whistleblowers allege that when State Farm disliked the results of an engineer's report, the company regularly substituted a second "cookie-cutter" report concluding that the bulk of damage was caused by rising water (as opposed to wind) and therefore excluded. The Rigsby sisters state simply:, "We believe State Farm has committed fraud, and we have turned it over to be investigated."The insurance industry must be regulated to prevent these abuses. The industry is pressing for deregulation, but it is clear it has not earned the right for more responsibility.What is most appalling here in Florida, is that the hurricane "risk models" are grossly wrong and have resulted in vast overcharging of consumers. Where is the Office of Insurance Regulation? Why don't we have a stronger insurance consumer advocate? Why has the legislature not investigated these ripoffs?
posted by Bill Newton @ 9:36 AM 1 comments links to this post

1 Comments:
At 3:16 PM, xchagalx said... $60 Billion profit for Insurers .. sky high costs and rock bottom/diminishing coverage for insurees

Thanks for this information. This insurance gouging is another example of a regulated industry with a powerful lobby force being facilitated by our elected officials in Tallahassee. Result .. out of sight rates and planned increases about which the Florida government feigns action but seldom delivers. The hurricanes and storms are bad enough for realtors, home builders and other segments of the housing arena. Now the 24/7 media have focused on these outrageous costs to the homeowner. The advantage of no personal income tax, in most cases, is nullified by soaring insurance policies. All this contributes to scaring potential residents from coming south of North Carolina. When one considers the mud slides, fires and potential earthquakes in California, flooding throughout the U.S., tornados in the midwest .. why do we stick out like a sore thumb?
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