Insurers’ Profits Continue To Skyrocket

Insurance companies continue to profit at the expense of their policyholders and Georgia’s serious automobile and truck injury victims. The Atlanta Journal-Constitution reported today that property and casualty insurers’ profits are continuing to sky rocket. Allstate Insurance Company reported a record $5 billion profit for 2006. State Farm Insurance’s profit climbed 65% for the year. St. Paul/Travelers earnings rose six fold in the fourth quarter and American International Groups rose eight fold.
There are several reasons for these huge profits. First, insurers are shorting the people who bought their products, their own policyholders. Second, they are shorting injury victims of automobile and truck accidents by refusing to negotiate settlements in good faith. CNN recently aired an investigative report in which it featured several people who had been involved in automobile collisions. A former insurance insider was interviewed who explained that two of the largest insurers routinely utilize “lowball” and delay tactics in handling smaller personal injury and property damage claims. Essentially, they offer injured people less than the actual amount of their medical damages and lost wages and then take a “so sue me” attitude toward the claims. The injured victim is forced to retain a personal injury lawyer and then incur fees and expenses to try to get full compensation.
The insurance industry has become very adept at using crisis of varying types to justify enormous rate increases. Whether they blame so called “frivolous lawsuits”, “runaway jury verdicts”, the “malpractice crisis” or hurricanes, any excuse will do to raise rates. The bottom line is they are increasing profits by pushing more and more risk and costs onto policyholders and refusing to timely negotiate and pay legitimate injury and property damage claims. State insurance commissioners and other regulators need to wake up. We need insurance reform, not ‘tort reform’.