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10 Worst Insurance Companies for Consumers Ranked; No. 1, 3, 4 and 7 Sell Policies in AL – WHNT

10 Worst Insurance Companies for Consumers Ranked; No. 1, 3, 4 and 7 Sell Policies in AL – WHNT

MONTGOMERY – In recent years, Alabama homeowners have seen sharp increases in their insurance premiums.  A new study put out by the American Association for Justice ranks the 10 worst insurance companies in the U.S. for consumers and explains the overall rise in premium costs to an industry-wide strategy of denying claims, delaying payments and defending those positions as long as possible in hopes that weary claimants will settle for less than their claim is worth. (I am not sure how denying claims leads to an increase in premium – maybe this is article and ranking has something besides the truth as its purpose.)

“Nationally, we’ve seen insurance companies continue to put profits over the best interest of their policyholders,” Gibson Vance, president of the Alabama Association for Justice (ALAJ), formerly the Alabama Trial Lawyers Association, said, adding that “in Alabama it’s no different.”  

In Alabama, State Farm (#4 on the 10 Worst Insurance Companies List) is the leading insurer of property and casualty insurance, followed by Allstate, AIG and Farmers (#’s 1, 3 and 7 on the 10 Worst Insurance Companies List).  Alabamians pay the ninth-highest average homeowners premiums in the nation, which insurers say is because of hurricane risk, but interestingly only 12 percent of the state is coastal.  In addition, property and casualty insurers took in $6.6 billion in premiums from Alabama policyholders in 2006 but only paid out $3.5 billion in losses.

10 Worst Insurance Companies for Consumers Ranked; No. 1, 3, 4 and 7 Sell Policies in AL – WHNT

Most of flood insurance revenue is not going to pay claims

http://www.al.com/news/press-register/metro.ssf?/base/news/124272451749570.xml&coll=3

WASHINGTON — Across the country, federal flood insurance policyholders ponied up more than $3 billion in premiums to protect their homes and businesses in the last fiscal year. Less than half of that money was set aside to pay claims for actual flood losses, according to government figures.

Instead, the Federal Emergency Management Agency spent almost $1.5 billion to cover overhead in two areas: interest on the program’s debt to the federal treasury, and compensation to the insurance companies that largely run the program day to day. Other costs included taxes and grants.

About $1.4 billion went for claims, reserves and adjustment expenses, according to figures supplied by FEMA at the Press-Register’s request.

Three and a half years after Hurricane Katrina swamped the program with claims, the numbers offer a snapshot of its continuing struggle to recover.

Created in 1968 because private insurers were reluctant to cover water damage, the initiative, formally known as the National Flood Insurance Program (NFIP) was generally self-supporting for much of its history. Now, it is considered effectively bankrupt.

As Hurricane Ike and other recent storms have spawned more losses, the program’s borrowing from the treasury has crossed the $19 billion mark. Last month, President Barack Obama’s administration urged Congress to forgive that debt or face the possibility that interest payments will eventually consume every dime in premium revenue.

So far, lawmakers have deadlocked on the specifics of a remedy. The flood program formally expired last fall, and Congress has since approved only a stopgap measure to keep it going through this September.

http://www.al.com/news/press-register/metro.ssf?/base/news/124272451749570.xml&coll=3