Despite the television commercials telling America that we can trust them, insurance companies, for over two decades now, continue to place themselves first and their policyholders second.

Insurance was once something Americans could rely upon. If a disaster struck, we knew our insurance was there to protect us. If we made a mistake, and someone else had problems because of what we did (a car accident), we knew our insurance would protect us and cover the other guy. We felt secure. We felt safe. We felt that the money we paid to the insurance company was well spent. Our agent cared and wanted the best for us; our agent felt we mattered.

Insurance was our safety net. For most of us, not having insurance exposes us to the constant threat of financial ruin if just one unaffordable loss occurs; just one moderate disaster could devastate us. A lifetime of savings could be wiped out by a single loss. How could we pay the medical bills, rebuild our house, or compensate someone whom we injured? Insurance played an indispensable role in our lives and the security and protection was there if we needed it.

Insurance was a profession. In terms of trust, an insurance agent was like our banker, doctor or attorney. Insurers were not just about making money; our needs were first, above theirs.

All of this changed in the early 1990’s. Insurance companies became focused solely on maximizing profits rather than serving those they insured. Profits became so mind bogglingly outrageous it almost seems criminal. Policyholders were not told about this change in the values and practices of their insurers. Rather, changes were made that maximize company profits and minimize and delay recoveries. Profits are fine, but what the insurance industry did, and continues to do, is neither clean nor completely honest.

The United State Supreme Court, in 1914 — yes, 1914, over 100 years ago –said that the dealings of an insurance company are of the greatest public interest, like those of a bank. Insurers are a depository of the public’s funds, creating a public fund of assurance and credit. Insurers are constrained to act like a bank under a fiduciary principle to maintain the public’s trust and confidence in the public fund. Wow, get that? The top legal minds, almost a century ago, recognized the importance of insurance and insurers’ obligations to us. Is your insurer “on your side” or “like a good neighbor?” Based on your treatment by your insurer, would you prefer to imagine the caveman’s club smashing the perky gecko’s head in?

This month, a Judge recommended that State Farm refund tens of millions of dollars to its California customers and lower its rates after finding that the insurance behemoth charged excessive premiums over the last year for rental and home insurance policies. These policyholders should not expect the refund check right away however. The Insurance Commissioner must approve the recommendations; he has not yet indicated agreement.

Last year in Texas, after a protracted 12-year legal battle over homeowner rates the state deemed excessive, State Farm agreed to refund $352.5 million in premiums to about 1.2 million of it’s Texas homeowners. The issue began in the fall of 2003 when Texas’ insurance department told insurers to lower their rates. This came following a massive legislative insurance overhaul. State Farm was the only major company that refused to do so. It immediately filed suit to block the rate reduction and refund order.
It is the only fine that Louisiana levied against a homeowners insurance company since Hurricane Katrina, and the fine was the maximum penalty allowed by state law.In 2008 Louisiana’s Insurance Commissioner fined Allstate $250,000 and ordered them to reinstate the wind and hail coverage of several hundred customers whose policies were dropped in disregard of a key consumer-protection law. Allstate decided collecting small premiums was not worth the risk of potentially having to pay out huge homeowner damage claims. Allstate’s coverage removal left these folks effectively naked.

In 2007 the Maryland Insurance Administration fined Allstate and its affiliates $750,000 – the largest penalty ever from the regulatory agency – for failing to give tens of thousands of consumers proper notice about their policies, not making required filings with the state, and miscalculating some premiums.

Allstate had several prior run-ins with Maryland regulators before the fine. In 2006 they were fined $100,000 and ordered to return $18 million to policyholders who had been improperly notified of higher premiums stemming from accidents or speeding tickets.

In 2015 GEICO agreed to pay $6 million and change discriminatory auto-insurance pricing in a settlement with the California Department of Insurance.

The insurer was misrepresenting the minimum automobile insurance policy of $15,000 per person and $30,000 per accident to potential customers it considered to be less desirable, according to the department. They were given quotes that were more expensive, stating that $100,000 per person and $300,000 per accident was the lowest available coverage, so that these people would be inclined to look elsewhere for insurance.

In Montana last year Liberty Mutual subsidiary Safeco paid a $95,000 fine after shorting more than 35 auto collision victims. Safeco had used the concept of “comparative negligence” to support cutting the amount paid to both its own customers and those struck by policyholders, arguing they were partially to blame for the crashes too.

The practice is perfectly legal, but in many of the cases Safeco was ignoring the facts of the actual accident, according to the state agency that investigated 16 months of claims.

In 2013 in California, Safeco paid a $900,000 fine, refunded more than $3 million to its customers, and agreed to reform its approval process for homeowners and auto insurance coverage. The company was fined for the unapproved use of credit scores to deny homeowners coverage, for failing to follow its own approved rating guidelines, and for other auto rating violations.

In 2009 in Connecticut, Liberty Mutual companies paid $928,042 in fines and restitution for overcharging customers, settling claims improperly and other violations of state law.

The total is one of the largest amounts Connecticut has collected from an insurance company. Fines for violations totaled $296,000. Liberty Mutual also was ordered to pay $632,042 in restitution. Most of it – $628,875 – was returned to 3,595 policyholders who were overcharged for premiums on auto insurance.


A visit to an attorney to review all your insurance coverage is advised.

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