The Insurance Industry Puts Profits Over Policyholders' Interests
According to a recent study, Allstate ranks as the worst insurer for consumers. At least that was the conclusion reached in a comprehensive investigation of thousands of legal documents and financial filings. The rankings show a distinct pattern of insurance industry greed amongst ten companies that frequently refuse to pay valid claims, employ hardball tactics against their policyholders, reward executives with extravagant salaries, and raise premiums while earning excessive profits. Many believe that Allstate sets the standard for insurance company greed and for placing profits over the interests of its policyholders. Thousands of court documents, materials uncovered from litigation and discovery, court testimony, complaints filed with state insurance departments as well as with the SEC, FBI records, and news accounts were reviewed by the researchers to compile the rankings and statistics. The rankings from the study are as follows:
- Allstate --this company has developed a system that is anti-policyholder when it comes to paying claims. The company plays hard ball on claims and makes it very difficult for claimants to settle valid claims. There has been a great deal written about Allstate's methods and tactics.
- Unum-- Unum's actions are even more shameful considering the type of insurance it sells: disability. Unum's behavior was epitomized when it denied the claim of a woman with multiple sclerosis for three years, stating her conditions were "self-reported," contrary to doctors' evaluations. In 2005, Unum agreed to a settlement with insurance commissioners from 48 states over their practices.
- AIG--The world's biggest insurer, AIG's slogan was "we know money." AIG, described by commentators as "the new Enron," has engaged in massive corporate fraud and claims abuses. In 2006, the company paid $1.6 billion to settle a host of charges.
- State Farm--It was reported that State Farm is notorious for its deny and delay tactics. Like Allstate, State Farm hired McKinsey consultants. State Farm's true motives became apparent during Hurricane Katrina. In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims.
- Conseco--Conseco sells long-term care policies, typically to the elderly. Amongst its egregious behavior, the insurer "made it so hard to make a claim that people either died or gave up," according to a former Conseco-subsidiary agent. Former Conseco executives were fined when they admitted to filing misleading financial statements with regulators.
- WellPoint--Health insurer WellPoint has a long history of putting profits ahead of policyholders. For instance, California fined a WellPoint subsidiary in March 2007 after an investigation revealed that the insurer routinely canceled policies of pregnant women and chronically ill patients.
- Farmers--Swiss-owned Farmers Insurance Group consistently ranks at or near the bottom of homeowner satisfaction surveys.
- UnitedHealth--The SEC opened an investigation into former UnitedHealth CEO William McGuire for stock backdating, which ultimately led to his ouster in 2006 and returning $620 million in stock gains and retirement compensation. Doctors have also reported that their reimbursements are so low and payments are delayed by the company to the extent that patient health is being compromised.
- Torchmark--Torchmark has a history of preying on low-income citizens. For example, it has charged minority policyholders more than whites on burial policies. This company has changed a great deal over the years and not for the better.
- Liberty Mutual--Like Allstate and State Farm, Liberty Mutual hired consulting giant McKinsey to help it adopt more aggressive claims tactics. Liberty Mutual's tactics were highlighted when a New York couple's insurance was "non-renewed" by Liberty, even though they lived 12 miles from the coast and never experienced weather-related flooding.
Financial documents reviewed revealed extravagant profits and executive compensation while policyholders' claims were routinely delayed and denied. For example, consider that:
- Over the last 10 years, the property/casualty and life/health insurance industries have each enjoyed annual profits exceeding $30 billion.
- The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries.
- The CEOs of the top ten property/casualty firms earned an average of $8.9 million in 2007. The CEOs of the top ten life/health insurance earned an average of $9.1 million.
- The median insurance CEO's cash compensation is $1.6 million per year, leading all industries.
To get an idea on how consumers can hold the insurance industry accountable and view a full copy of the study, visit http://www.justice.org/docs/TenWorstInsuranceCompanies.pdf.
Source: www.justice.org
