Insurance Companies: not on your side, not good neighbors, not in good hands
To the surprise of nobody, new information has emerged today about even more unconscionably bad behavior by automobile insurance companies. This time, research by the Consumer Federation of America(“CFA”), a non-profit which advocates for consumers against corporate America, shows that insurance companies appear to blatantly discriminate against folks with less education and lower-paying jobs. Everyone knows that the insurance industry is among the most loathsome, for a host of reasons. This is not news. But the realization that the industry, in essence, charges a premium to people whom it knows to be less able to pay it, is pretty much a new low.
Published on July 22nd, 2013, the report is based on some clever research that the CFA conducted with an eye to ferreting out this type of business practice by the insurance companies. Operatives for CFA went to the websites for ten large insurers, and submitted applications for automobile liability coverage. On each application, the CFA operatives entered identical information: a 30-year old female, renting rather than owning a house, in a moderate-income area, who drives a 2003 Honda Civic, who had no accident or citation history in the previous ten years. Only two variables were introduced into the applicant’s profile: whether she was a blue collar worker (such as a factory worker) or white collar (such as a factory superintendent), and whether she had or had not completed college. CFA conducted these studies in cities across the country.
Its key finding was that many insurance companies—including large carriers like GEICO and Progressive—appear to use education and occupation in their rate determinations. Specifically, the “blue collar” applicants, and those without college education, were quoted higher premiums than the “white collar’ and college educated applicants, despite precisely identical age and gender metrics, precisely identical driving records, and precisely the same coverage. The upshot is that insurance companies will penalize you monetarily for being a blue collar worker (the kind of worker who built this country into what it is after World War II), even if you have a super-clean driving record.
We at TLO recognize that insurance companies have the right to use whatever underwriting guidelines they want: there’s nothing unlawful about it. But as lawyers for individuals, who spend our entire professional lives fighting with insurance companies for fair compensation, we have the right to say the following: what CFA discovered is an ugly, cynical approach to insurance underwriting, and is exactly the kind of behavior that makes the insurance industry the most despised in the country.
Of course, unfair underwriting practices like those uncovered by CFA are just the beginning of bad behavior by insurance companies. In car wreck, tractor trailer wreck and wrongful death cases, insurance companies do not act to resolve legitimate claims fairly and quickly; they employ siege-like tactics under which delay and avalanches of paper are designed to grind rightful plaintiffs into accepting less than fair compensation. In first-party claims (when a person makes a claim under his own policy, as when his house burns down or his underinsured motorist coverage kicks in in a personal injury case) insurers have such a history of mistreating their own policyholders that South Carolina and other states have had to create entire new areas of law, called bad faith law, in order to compel insurers to play fairly and by the rules of their own policies.
The simple fact is that insurance companies laughably hold themselves out to the public as being willing partners in the public’s welfare: whether with your “good neighbors” at State Farm, or the “no problem people” at Auto Owners, or Allstate, one way or the other “you’re in good hands”. Who knows what shameless platitude AIG foisted on the public before it became the #1 player in the financial collapse that is still crushing the American economy. So while the insurance industry presents itself as your friend, the history of insurance litigation in South Carolina shows that nothing could be further from the truth. That history shows that insurance companies want to collect premiums that generate massive profits for years on end, and then clam up and pay as little as possible the one or two times in each person’s life when he or she has to make a claim.
Claiming to be “on your side” and then crushing the little guy in a time of need? Now “that’s progressive”.
When you’re forced to make a claim–personal injury, bad faith, wrongful death, workers’ compensation–attorneys Ben Traywick and David Traywick are here to validate your rights, and to keep our good friends in the insurance industry honest.