Insurers Profited Big Time in 2020 by Overcharging and UnderpayingSeptember 7, 2021
Despite spending millions of dollars on big-budget advertising campaigns designed to paint themselves in a positive light, insurance companies have one goal in mind: increasing their profits—even during a global pandemic!
The Consumer Federation of America recently reported that auto insurers in particular overcharged policyholders by $29 billion in 2020, despite significantly fewer people being on the road that year due to COVID-related shutdowns. In Louisiana alone, drivers were overcharged by $558 million in total, or around $180 per licensed and insured driver.
With Fewer Claims Being Filed, Auto Insurers Pocketed the Savings
Because there were fewer drivers on the road and fewer auto accident claims, insurers paid out $42 billion less in settlements in 2020 than they did in previous years. But only a fraction of those savings—around $13 billion—were passed onto policyholders via rebates or bill credits. The rest of the money went straight back into the companies’ and executives’ pockets.
The Chicago Sun-Times reported that State Farm’s CEO netted a bonus of $18 million in 2020, which was double what he received in 2019. The company netted an additional $3.6 billion in profit in 2020 and its net worth increased from $106 billion to $116 billion. Allstate’s CEO was also handsomely rewarded with a $20 million payday after the company reported a $1.7 billion increase in profits due to a 30% reduction in claims.
Louisiana Isn’t Working to Refund Ripped Off Drivers
To date, three states—California, Washington, and New Mexico—have taken action to require insurers to refund the excess premiums that drivers paid while they weren’t driving due to COVID. But Louisiana isn’t one of them, and drivers are still out at least $180 each in excess premiums. In addition, auto insurance rates in the state are INCREASING despite promises from the insurance commissioner and lobbyists that new legislation would reduce them by 10%-25%.
Eric Holl, executive director of Real Reform Louisiana, sums it up:
“While everyone was suffering in 2020, big insurance companies and their executives were thriving. We got ripped off, and our insurance commissioner let it happen. If you’re an average licensed, insured driver in Louisiana, your auto insurance company owes you $180. It’s time for insurance companies to lower our rates and start paying claims on time.”
Insurers Work Hard to Protect Their Profits, Not Pay Fair Settlements
Insurance companies acting in their own interests is nothing new, but their behavior during a pandemic that put millions of Americans out of work is inexcusable. In addition to overcharging drivers for auto insurance, auto insurers also work hard to convince injured victims to accept lowball settlements or that they don’t need an attorney on their side.
At Dudley DeBosier, we know all the tactics insurers use to pay victims as little as possible. It’s their goal to make victims stressed, insecure, and frustrated enough that they’ll accept any money they can get, even if it’s far less than what they deserve. We never accept less than what our clients deserve, and we negotiate aggressively to ensure they get enough money to pay for ALL their accident-related expenses.