A consumer group has accused the insurance industry of systematically overcharging consumers, and underpaying claims.
The Consumer Federation of America has released this study, in conjunction with the Consumers Union and several other watchdog bodies. It alleges that in the past four years, each household in the country has on average been overcharged for insurance by 870 dollars. The report looks at the historical loss ratio for insurance companies â€“ that is, the percentage of premiums paid out to policyholders in claims. Last year it was just under 55 percent â€“ in the late 1980s loss ratios were routinely around 75 percent, according to the consumer groups. The report estimates that net income for the insurance industry in 2007 will hit 65 billion dollars, down slightly from the record set in 2006 of almost 68 billion. Meanwhile, trade groups for the insurers say the consumer watchdogsâ€™ math is fatally flawed. The Insurance Information Institute says the figures arenâ€™t accurate, and grossly distort the financial position of auto home and business insurers.