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When Insurance Companies Merge

29 Jul

 

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Giant Insurance Company Logo Collage (courtesy of Hartford Courant)

Depending on who you ask, insurance company mergers will either help or hurt consumers. Whether a merger in general is a good or a bad thing is debatable. The problem today is that there have already been so many mergers of insurance companies that we are heading directly toward an oligopoly or monopoly, which is a well-established BAD thing for consumers. Healthy competition is a building block to a free market economy.

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Competition is a Spectator Sport (photo courtesy of Wikipedia)

As a general rule in the insurance world, any time the federal government is actually motivated to step in and do something, it’s probably because an issue of vital and imminent importance has entered their radar screen. And so, the Justice Department has stepped in to investigate the proposed mergers between Humana and Aetna, and Cigna and Anthem.

The Hartford Courant (based in the U.S. headquarters of the insurance industry, Hartford, CT) has written a very nice article about how different sectors of the population will be affected in the event of the proposed merger of these giant insurance companies – seniors, low income families, employers, and physicians and health care providers.

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Uber-like Insurance Sharing?

17 Jul

imageTwo creative entrepeneurs are all over insurance news for bringing the United States “insurance sharing” – you know, kind of like the Uber or AirBnB for insurance.

P2PProtect.com plans to use online user interfaces to bring “fairer cost, fairer treatment, more transparency, and more user empowerment.”

I am loving this concept; I’m just not sure excatly how they plan to beat the traditional insurance model. The problem with insurance products in general is that they are so maddenly complex. Yes, it will be great to offer policyholders the opportunity to pool risks with their own “communities,” and these entrepeneurs hit the nail on the head when they saw the desperate need for a fairer claims process in the United States. However, I think they will need to keep their insurance products very simple and homogenous in order to keep the claims management simple and be able to stay “fair.” Without simplicity, fairness quickly becomes too time-consuming.

Did Your Insurance Premiums Increase for No Reason? Switch Companies Immediately.

19 Sep

Have you ever heard of “Price Optimization“? It sounds harmless enough, but when these words are used by the insurance industry, they take on a whole new twisted meaning.

UPDATE:  Price Optimization has been declared ILLEGAL. If this happens to you, contact your state’s Department of Insurance immediately.

Gouging the Most Loyal Customers

Price Optimization is code for when an insurance company charges its most

Rolls Royce 1950 - I wonder what the insurance premium was?

Rolls Royce 1950 – I wonder what the insurance premium was? (courtesy of Wikipedia)

loyal customers the highest prices. When your policy is up for renewal, your insurer bets that you will be complacent and simply renew your coverage with them, without bothering to compare rates with other companies. So they increase your rates. Significantly. This way, your insurer quickly achieves higher profits and the company’s stock value rises, making their shareholders very happy.

It Happened to Me

I first heard of Price Optimization right after I purchased a new car and saw my insurance rates rocket an incredible thirty-five percent. I asked my insurer’s representative why and received absolutely no (rational) explanation. I have a completely clean driving record and I purchased the same exact car, only three years newer. So why was my insurance company of almost seven years punishing me? And why didn’t this happen when I changed cars before?

Price Optimization is Used by the Insurance Industry Only Periodically

The First Benz (1885), photo courtesy of Wikipedia

The First Benz (1885), photo courtesy of Wikipedia

What baffled me the most about the sudden increase to my premiums was that I had made the exact same vehicle switch three years previously, and my rates didn’t increase. In fact, they DECREASED.

My premium didn’t increase in the past because insurance companies don’t always use Price Optimization. The practice is used only periodically, depending on the current financial status of the company. They like to keep us guessing.

Take Action and Protect Your Wallet

If you see an inexplicable increase in your insurance rates, call another company for a quote immediately. Don’t let them rip you off.

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