New Consumer Activist Report Shows U.S. Property Insurers Overcharging Policy Holders

Greg Webb

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A report made by consumer activists claims the United States property/casualty insurance agency systematically overprices policy holders and underpays their claims. This report shows, in 2007, the insurers paid fifty-five cents in benefits from each dollar collected. The insurance companies are overcharging their consumers while cutting back on benefits and not fully paying claims. This new rise in profits comes after the nightmare faced by insurance companies in 2005, in which the companies suffered not only major media scrutiny, but also lawsuits, losses and complaints. While the profits for 2007 are still being formulated, the profits for insurance companies in 2006 escalated to about $63.7 billion, a nineteen year record. While the Dow Jones Nonlife Insurance Index, with such major stocks as Allstate and Travelers, soared in late 2006 to early 2007, it has now started to reach as low as it did 2005.

Against the demands of the consumer federation, Congress has lengthened 2002's Terrorist Risk Insurance Act (TRIA), which pledges federal support to insurance companies hit with massive damages due to damage claims from terrorism. By allowing the insurance companies to avoid paying private reinsurance premiums, the new report estimates the TRIA has saved the insurance industry about four billion dollars to date. http://www.reuters.com/article/latestCrisis/idUSN10186339