CONSUMER GROUP SAYS PROPERTY INSURANCE COMPANIES ARE MAKING RECORD PROFITS

01/09/07

Our guest today, Robert Hunter, says: "Profits and a solid insurance industry are a good thing but unjustified profits and

excessive capitalization harm consumers," said J. Robert Hunter, the Director of Insurance for

the Consumer Federation of America (CFA) and author of the study. Hunter is an actuary,

former state insurance commissioner and former federal insurance administrator.

"We saw record profits in 2004 and 2005 despite significant hurricane activity. Profits in

2006 rose to unprecedented heights, with pre-tax profits likely to increase by over $30 billion for

property/casualty insurers, a jump from the previous record of more than $100 for every man

woman and child in America. Meanwhile, the amount that insurers paid in claims and expenses

as a percentage of the premium collected in 2006 plummeted to a 50-year low," he said.

"Unfortunately, a major reason why insurers have reported record high profits and low

losses in recent years is that they have been methodically overcharging consumers, cutting back

on coverage, underpaying claims, and getting taxpayers to pick up some of the tab for higher

risks," said Hunter.

As this study is being released, many insurers are sharply increasing premiums for

homeowner’s and commercial insurance and reducing or eliminating coverage for tens of

thousands of Americans in coastal areas of the country. Insurers are also urging Congress to

continue taxpayer subsidies for terrorism losses and to create a federal catastrophe insurance

program that could also involve taxpayer support."

 Hunter discussed with WMNF's Rob Lorei various proposals to deal with Florida's insurance crisis: higher rates, requiring companies that write auto insurance to also write homeowners, hurricane proofing of houses, what was learned after Hurricane Andrew and giving greater power to a state consumer advocate.

comments powered by Disqus