REPORT: Unsurance: The Ugly Truth about Unethical Business Practices in the U.S. Insurance Industry
by Christopher M. Davis, Attorney at Law
Part of the Washington Accident Reports Series
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In an effort to expose and better explain the unethical business practices that plague the U.S. insurance industry, this report highlights some of the disturbing business strategies employed by these companies.
I wrote Unsurance because there is no such thing as a 'good neighbor' who is 'on your side' with 'good hands' holding an 'umbrella' that will keep you and your pet gecko dry when mayhem strikes. Unfortunately, you'll have to take 'responsibility' for yourself—which also means that you may have to hire a lawyer. I think that people deserve to know the truth about the insurance industry and how it works. - Chris Davis, Attorney at Law
References in quote:
Travelers Insurance - Umbrella logo.
Geico Insurance - Gecko mascot.
State Farm Insurance - Tagline 'Like a good neighbor..."
Allstate Insurance - Tagline "You're in good hands."
Nationwide Insurance - Tagline is 'On Your Side"
Liberty Mutual - Tagline "Responsibility"
Publisher: Davis Law Group, P.S.
ID Number: 50-22747213-01
Product Dimensions: 8.5 x 11.0 x 0.3 inches
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An Insider's Look At The Insurance Industry
The United States insurance industry is one of the most profitable industries in the world. According to numerous studies the industry as a whole sees profits of approximately $30 billion each year.
The profitability of the industry pays off for company executives, who make millions - sometimes even tens of millions - of dollars in salary each and every year. But the rampant greed in the industry leaves paying customers shortchanged.
Advertising strategies throughout the industry are designed to build trust with those seeking insurance coverage. But insurance companies show their true colors once a policyholder makes a claim as claims adjusters fight tooth-and-nail with accident victims over fair compensation.
Unfortunately, many policyholders do not realize just how difficult it can be to deal with an insurance company until it comes time to make a claim.
Insurance Companies' Unethical Business Practices
There have been a number of documented investigations into insurance companies' profit-focused business strategies over the years. Although these corporations spend billions of dollars every year on advertising campaigns designed to gain consumers' trust, the story is much different behind closed doors. Here are some of the unethical business practices common to the American insurance industry:
Denying Valid Claims. Claims adjusters are rewarded with incentive programs and other forms of bonuses for successfully denying claims payouts that would cause the insurance company to lose money. Though these claims may be completely legitimate, insurers will do everything in their power to avoid compensating their own paying customers in order to remain highly profitable.
Delaying/Prolonging the Claims Process. Insurance companies know that if they fight their policyholders long enough, the odds are they will eventually give up and either forget about the claim or settle for a low-ball offer. This is especially true in cases of elderly policyholders and victims with serious injuries and/or medical conditions.
Confusing Customers with Insurance-Industry and Legal Speak. The truth is, most average consumers are not well-versed in legal terminology and have a very basic understanding of their own insurance policies. And although many states in the U.S. have enacted laws that require insurance policy contracts to be communicated in "plain English," there are plenty of ways for insurance companies to confuse policyholders and avoid fair compensation.
Credit Score Discrimination. There has been a lot of controversy regarding insurance companies who use credit scores to screen potential customers and determine premium payments. This practice has a particularly negative influence on minorities, senior citizens and low-income families.
No Coverage for the Sick. Insurance claims adjusters are also rewarded for weeding out the more costly policyholders in order to save the company money. Sadly, this practice is especially common among cancer patients and those with other terminal conditions whose treatment can become quite expensive.
Quick to Cancel Coverage. Insurance companies will often try everything within their power to drop a paying customer as soon they realize a policyholder could pose a risk to their overall profitability. They will even sometimes complicate this process by offering refund checks to customers without telling them that they have been dropped from coverage.