I-Can Exposes the Fallacy
of "Premium Increase" Threats !
Princeton, Ill. Nov 15, 1999 - The Insurance Consumer Advocate Network, an InterNet based Consumer Advocacy effort, has taken a close look at the insurance industry's threats to increase auto insurance premiums if not provided some form of relief through federal or state governments.
The property and casualty insurance industry has historically pulled out the old "We'll have to increase consumer premiums" threat every time it wants to either fight for (or against) any specific issue that would impact the way they do business.
Often insurers will make good on their threats . . . Not because insurance companies Need to increase our premiums . . . but rather because they CAN increase our premiums. Exempt from anti-trust laws, which prevents price fixing in virtually every other industry, the insurance industry is free to conspire to demand whatever corporate welfare it may seek from governmental agencies. Other legal monopolies, such as utility companies, are subject to governmental controls as to what they are permitted to charge. In most cases, insurance companies are not subject to even that level of consumer protection.
"It has become painfully clear over the past several years that insurance companies do WHAT they do because they CAN do it" says Mark Pierson, President of Princeton Auto Body, Princeton, Illinois.
Ann Spink, legislative liaison for the Louisiana Collision Association, points to a recent study, done in a joint effort between Risk Management Solutions and Oliver, Wyman & Co and reported in Best News, that shows the Property and Casualty Insurance Industry has $430 Billion in available capital, but only needs between $325-$365 Billion.
"Do the math" says Spink, "The Property and Casualty Insurance Industry, the very ones threatening to increase consumer premiums, already have at least $65 Billion in excess surplus. That comes to about 30% MORE surplus than is needed, according to the insurance industry's own experts".
The recent trial in Marion, Ill. revealed State Farm had accumulated a surplus of $42 Billion in 1998.
If you apply the apparent industry wide standard of 30% excess surplus to State Farm's admitted 1998 figures, it would appear that State Farm had already collected $12.6 Billion more in consumer premiums than was necessary. If State Farm insures one-out-of-five Americans as it claims, that means 50 Million consumers have over-paid State Farm by $12.6 Billion. When you put your pencil to it, State Farm should refund approximately $252.00 of Excess Premium Charges to Every Policyholder it has.
Even if State Farm were to pay the $1.2 Billion fraud penalty levied against it, State Farm would still have a projected $11.4 Billion excess surplus ($228.00 per policyholder).
The insurance industry's outcry of "Consumer premiums will increase" has worked well in the past. It has gotten the corporate welfare insurers' wanted. However, state legislators and regulators are now beginning to realize they have been duped by the insurance industry. "We are seeing to it that consumers are also made aware of these insurance industry tactics" says Dennis Howard, founder and executive director of the Insurance Consumer Advocate Network.
Per Jack Aigner of the Pennsylvania Collision Trades Guild . . . " That Dog Just Won't Hunt Anymore ! "
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