U.s. Insurers Defend Profits; Deny They Overcharge, Under-deliver On Home, Auto Policies

A national US consumer organization has charged that property/casualty insurers are unfairly overcharging for home and auto insurance at the same time they are reducing payments to insureds. According to the Consumer Federation of America, insurer overcharges over the last four years amount to an average of $870 per household. Insurer profits, reserves and surplus are at or near record levels, according to a http://www.consumerfed.org/pdfs/2008Insurance_White_Paper.pdf. ‘Profits in 2006 rose to unprecedented heights and 2007 may set a fourth consecutive profit record. Unfortunately, a major reason why insurers have reported record-high profits and low losses in recent years is that they have been 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,’ said J. Robert Hunter, the director of insurance for the CFA and author of the study. Hunter, an actuary, former state insurance commissioner, and former federal insurance administrator, is a long-time industry critic.