“When I speak to people in this industry, in my own company, I try to remind them that
we are not in the ‘insurance business,’ we are in the business of making money.”
William R. Berkley, W.R.
Berkely Corp. chairman and CEO
15th annual Executive Conference for the Property-Casualty Industry Meeting
BestWire, November 24, 2003
Welcome to InsurerFraud.com
A project of the Center for Legal and Responsible Commerce
Every so often you see on the news a story about the bust of an insurance fraud ring, or an article or government report on how insurance fraud costs insurance companies billions of dollars each year. What amazes us is the lack of discussion on how insurance companies cheat their insureds and third party claimants, and how the department of insurance of a given state is indifferent to the complaints of its citizens against insurers. This web site was established so that consumers could share their experiences regarding various insurers, the response of state regulators to the complaints of consumers and to establish some balance in the insured/insurer relationship.
Many states have an insurance crisis on their hands, due in large part to ineffective enforcement of insurance laws and regulations already in existence, in addition to, a failure to enact new laws and regulations to deal with developments in the insurance industry. A sure sign of this crisis is, despite the profits of property and casualty insurers surging more than 1000% from 2002 to 2003, these insurers are still demanding premium increases. Personal health insurance rates continue to climb faster than the cost of health care services and technology. Despite the leveling off or decrease in jury verdicts in medical malpractice cases, medical malpractice insurers continue to raise premiums. Even attorney malpractice insurance premiums are starting to soar, without any evidence of an increase in the number of malpractice suits or increase in the size or frequency of payouts. Every state's insurance code grants significant discretion to the Department of Insurance to set rates in many lines of insurance, yet most DOIs have failed to ensure that the rates allowed do not result in windfall profits for insurers.
The availability of reasonably priced insurance is essential to the functioning of the economy, and is mandated by law with respect to driving and many commercial enterprises. The failure of insurers to meet their obligations results in the shifting of costs to the government, and ultimately the taxpayers. It is our position that the insurance industry has created many of the problems that they are now claiming justify increases in premiums, one example being the health insurance market. Health insurers created a schedule of fees for various services based on what they were willing to pay, not on the actual cost of providing the service. Insurers have used the managed care system, and the fact that most insureds are insured by a managed care entity to force medical care providers to accept the HMO/PPO's cartel pricing. Insurers are allowed to engage in these unfair practices through their exemption from federal antitrust laws, poor enforcement of state antitrust laws, and the fact that medical care providers have no similar exemption.
Despite little or no increase in the fee schedules, insurers are claiming a need to raise basic health insurance premiums. Health insurers have also engaged in numerous fraudulent activities to reduce costs including: silent PPOs, bundling of separate services into one procedure, not paying claims promptly, etc... These practices have resulted in among other things, doctors being forced to increase patient volume by shortening exams. When doctors cannot spend the time required to properly treat the patient, the likelihood of misdiagnosis, mistreatment and malpractice increase.
The underlying purpose of insurance is the spreading of risk. Unfortunately, the present view of many insurance companies is that they should make a profit on every policy, and when a particular policy becomes unprofitable, the insured is dropped. Since the major insurance companies tend to share the same underwriting criteria, prospective insureds are forced to either insure themselves with substandard insurers, many of whom have questionable solvency, or through the high rate assigned risk pool, or not insuring themselves at all.