April 21, 2024

Do insurance companies profit by not paying after a loss?

Insurance Company profits increase at your expense

Insurance Company profits increase at your expense


Everyone has heard that “insurance companies don’t pay to increase their profits.”

But is this true?  Well…… maybe.

An insurance company can make a lot of money on the small claims

In a recent article (Dec. 13, 2011) on the Huffingtonpost.com, it was reported that “an insurance company can make a lot of money on the small claims.”  Jay Feinman, a professor at Rutgers University School of Law, goes on to say “because if you save a few dollars on a huge number of claims, it’s worth more than saving a lot of dollars on a very small number of claims.”  Insurance companies are following a less traditional method of claims adjusting developed by consulting firm McKinsey & Company.

Russ Roberts, a New Mexico-based management consultant and former business professor at Northwestern University  describes the process as  ” Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurers embraced a computer-driven method that produced purposefully low offers to claimants.”

This process also led to the publishing of the book Delay, Deny, Defend by Jay Feinman, a professor at Rutgers University School of Law.

The report also references an unpublished Harris Interactive poll conducted earlier this year and states that “16 percent of surveyed adults have experienced financial hardship while waiting for an insurance claim to be settled or know someone who has. The same poll found that 59 percent of adults believe that most insurers intentionally delay claims — and those with an income of $35,000 or less were more likely to agree.

With 15.3 percent of Americans — about 46.2 million people — living in poverty, close to 10 percent unemployment, and roughly 2 million people who’ve been looking for work for more than two years, Allstate’s business model is profiting off many consumers at their most vulnerable. A claim delayed by even a month can spell financial disaster for a family. As a National Bureau of Economic Research study found, about 25 percent of Americans could not come up with $2,000 in a 30-day period.”

The insurance companies use these tactics to force people into a position where they “need” to accept a lesser offer than they would normally be willing to accept because they need the money now.

Hiring a Public Adjuster can help get monies flowing to the homeowner to relive the pressures caused by having a mortgage on a damaged property, rent for a temporary to live or run their business from and the increased costs associated with having a large insurance claim.

Once the Public Adjuster helps with immediate stress of cash flow, then the PA can focus on the bigger problem; getting the claim right.

As always, we are more than willing to review and claim, any situation and questions that may arise from this process.  Call us at (855) 757 – APLS for a free property damage claim review with an experienced Public Adjuster.

full article: http://www.huffingtonpost.com/2011/12/13/insurance-claim-delays-industry-profits-allstate-mckinsey-company_n_1139102.html

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