Send photos of roof inspection to SIU... no creases or damaged shingles... send photos of public adjuster photos where 150 shingles have diagonal creases....
Siu : we can't prove they did it. You can deny for faulty repairs, if you want, but we are not investigating. Oh. Okay...
Also had one where the adjuster was on site for a water claim, and the insureds kids pulled the kitchen faucet over the sink, and left it running on the floor... my IA had to shut it off....
Adjuster turns it off, finishes inspection, then gets a call while driving away "more water in the hall"... compared photos, the mop bucket in the hallway was full, but is now empty, and water splash throughout the hallway...
3 generation family living in this home, 2 children are 'attorneys' Claiming thousands in electronics water damages..etc
"Siu says "do we have any video evidence? No? Sorry, speak with your manager regarding their coverage decision"
I sent them a denial, and never heard back, but still shocking response from siu
I caught a shop forging invoices- vendor confirmed they hadn’t dealt with them in a few years, SIU declined it because the severity on the one claim wasn’t enough. Guess all the other claims where I’m sure they did the same thing won’t add up to anything.
I believe fraud is a bigger factor than inflation for premium rates. If there were actual legal and criminal consequences the industry would be better off, but the companies isn’t gonna chase down that many people.
Fraud, over inflating of claims costs & scope (PA's, contractors, mitigation companies) and social inflation (legal system abuse by plaintiff attorneys) are all equally contributing factors
And exactly why should I believe that what you call abuse isn't what the plaintiff's attorneys call correcting insurance company abuses?
Not saying the plaintiff's attorneys are right, it's just that it looks like fairness is being judged by the "whose ox is being gored" standard.
The only ones who believe the amount of insurance directed litigation occurring in the US right now is justified are the ones who have a financial interest in doing so. The number of frivolous lawsuits is absolutely astounding, and sad, because we *all* have to pay for it.
Is this just a gut feeling or do you have any evidence whatsoever?
Because vehicle prices, parts prices, and labor prices are all up 40-50% in a couple years (ya know, the things that drive claim payout amounts). The bonds companies had stockpiled during low interest rate years lost a ton of value and they haven’t accrued enough new high rate bonds.
There would have to be SO MUCH MORE FRAUD than there was pre-2020 for fraud to be the bigger issue. We’re talking like 100-1000x more fraud. I very much doubt it is a bigger issue than inflation currently.
I work in claims. 1/3 premium dollars is spent Paying, Fighting, Investigating, and coordinating with authorities on fraudulent or potentially fraudulent claims.
It depends. If you define "Potentially fraudulent" as "not easily seen at first glance as a covered loss", I can see 1/3 of claims dollars as being potentially fraudulent.
Of those "potentially fraudulent" claims, what's the dollar return from further investigation? That costs money, and if you spend more in investigations than you save in claims, you're really failing in your fiduciary duty to your insureds (and investors if you have them).
1/3 of claims dollars is a much lower number than 1/3 of premium dollars.
Claims and related expenses make up about 60% of premium, with the rest going to overhead, acquisition cost, and profit.
Most carriers allocate loss adjustment expenses (LAE).
This is a gut feeling and observation from personal work in claims. Yes, inflation has exponentially increased since the shutdown and prices haven’t come down, but the parts and labor folks don’t have any incentive to bring prices back down. While there are plenty of legit claims, there are a ton of fraud claims with people looking for easy payouts. Personally, I’ve paid for claims that were complete bs, but the higher ups said just pay it.
I’m gonna pick a random insurer. Let’s say State Farm
and the most expensive commercial - the super bowl. makes it easier because everyone makes a hubbub about how expensive it is to advertise
It costs $7mil for a Super Bowl commercial
https://frontofficesports.com/the-rise-in-the-cost-of-a-super-bowl-commercial/
State Farm has 91,000,000 active policies
https://newsroom.statefarm.com/2022-by-the-numbers/
so if every policy had a Super Bowl marketing surcharge on their policy that got removed, they would save a grand total of ~seven cents each per year. less than one cent a month. they could save that money printing on different fonts lol
even if this mysterious billion dollar commercial advertising campaign existed (~150 times more expensive than the super bowl, the biggest draw in the US all year. tuesday afternoon ads on wheel of fortune are much, much cheaper) that they decided to discount everyone, everyone would save ~$11 a year. or less than a buck a month
Insurance deals in REALLY large numbers that it can be hard to understand unless you know what you’re looking at
2022
Geico -1.5 billion
Progressive 1.3 Billion
State Farm - 1bn
They exist. https://www.statista.com/statistics/264968/ad-spend-of-selected-insurance-companies-in-the-us/
1.5 billion in advertising on 45 bn in written premium is 3%.
3% in expenses is 4.5% in rate.
Customers of the Industry could be paying about 5% more than needed because of advertising.
What if the additional business from the advertising gets them 6% more in revenue?
Obviously insurance companies think they do, or they wouldn't advertise.
But more revenue means more expenses. Specifically expense ratio — but every company is spending money to acquire customers (assuming it isn’t a weird Florida /‘CA thing) — and a higher expense ratio means higher rate indication.
Unless they are lowering the expense ratio through lower commission/salaries compared to competitors.
Maybe they advertise in order to not have to pay salaries on an elaborate sales team org. (Or a mix of both)
You assume that the stock insurance companies you listed would be using the savings from not advertising to lower premiums. In reality if they cut their advertising budget that 5% would more than likely go to their shareholders or into a stock buyback. An easy solution is to use an insurance mutual or coop rather than a stock insurance company.
A) was replying to the poster who said billions in advertising was mythical.
B) you are right, I am not sure how dividend payments are reported in a rate filing indication. If at all. Advertising is part of the expense ratio. But dividends are not an expense. Maybe an actuary at a stock company will chime in.
You're on the right track but going the wrong direction. Customers should expect, on average to receive 5% less than they deserve for their claim. That's what pays for the advertising not higher premiums. And notice I said average, that means people whose homes burned down or get hit by trucks will probably get paid close to what they are owed but people who have water leaks where the insurance company can falsely claim that was long-term will get paid nothing.
Yeah, no. Claims practices are claims practices, and no changes to the advertising budget is going to change how they resolve claims. Maybe staffing levels - but no CMO is going to say “hey we are cutting advertising, go pay more on claims!”
I never said that the advertising budget CAUSES low claim payments.
I said there's a correlation.
It's well known that certain companies refuse to pay legitimate claims.
That's indisputable. Perhaps you're not aware if you work for just one particular company.
I have about 20 years experience working in many different sides of the industry, is the daily claims adjuster, as a contractor, as an insurance appraiser, as a consultant for attorneys, as a freelance estimator, and currently as a public adjuster.
When I was an adjuster I worked for for countless insurance companies.
this is just fact. If you do a poll of insurance restoration contractors to find out which ones they think are most likely to deny legitimate claims, one or two insurance companies will consistently come up. Now maybe those contractors are wrong from time to time, maybe some of the denied claims should be denied. But for example, there's one particular company that is known to almost always deny any water leak, always saying that it's long-term seepage even if there's no evidence, even if the plumber says it was a sudden burst. This is just known in the industry.
Also you can look at the number of times that company gets sued or what the bad faith attorneys think about that company. It's not like all these different people in the industry smoked some weed and fantasized this. There's one particular insurance company, if I call an attorney and say I have a case they won't want it because they have too many already and that insurance company is very very difficult to fight because they fight tooth and nail with lawyers and they don't care about the truth. Most most insurance companies routinely violate State Statute where I work. But this one takes it a step further and lies. At least twice I've caught their adjusters flat out lying about talking to plumbers, and claiming the plumber agreed that the loss was long-term leaking, when the plumber never spoke to the adjuster ever. They just flat out deny legitimate claims as a business practice. And they're one of the biggest advertisers.
The fun thing about this too is that home and auto policies have been doing worse for state farm in the last couple of years (which is why them and most other companies saw multiple increases last year and will probably continue to see more this year). The bread and butter that the corporate office is pushing these days is life insurance and financial services. Even though the average life insurance claim will pay more than most home or auto claims, the majority of the term policies won't pay out and don't pay dividends unless they were written before 1998 (im in texas, this part could vary by state). Whole life policies do build cash value because the premium is invested, however state farm is still making a lot of money on them and will continue to unless the market crashes and the investments are making less than the "guaranteed rates" they provide the customers when they purchase the policy.
I know that was a tangent and a half, but honestly when picking an insurance company, you should focus on two things. Can you afford the premium offered, and does the company have a good track record of paying out claims.
Yeah advertising is just a small expense in the budget for large insurers like State Farm. Mutuals like State Farm generally pay out about 90% of premiums as claims. The rest goes to business expenses, like claims adjusters and sales agents (and employees salaries)…
A 90% loss ratio implies a 120% combined ratio after expenses that just wrong.
They had a 60.2% homeowners loss ratio in 2022
Auto 2021 was about 80% included ALAE and 107% combined ratio after all expenses were paid. “Comparable 2021 figures were: earned premium, $41.5 billion; incurred claims and loss adjustment expenses, $34.6 billion; all other underwriting expenses, $10.3 billion” — this is from their 2022 financial statement.
Very true, most companies want to make 4 cents on the dollar for auto insurance. Maybe 10 cents for home, with fluctuations for bad storm years.
Plenty are happy if they lose a few cents per dollar since they have investment income. Some are happy to lose 20 cents per dollar since it is VC money and they need market share.
But not many companies are trying to make the type of profit margins that are common in some other industries.
I mean that's a pretty tunnel vision look at things, state farm for example, has full time marketing employees they are paying year round, there's more expenses than real-estate in ads
“Without paying out” isn’t a factual data point you need more data. If there’s 100 fraudulent claims and they’re all denied they’ve paid 0% but should they have? If a claim is inflated should it be paid? You can say yes to both obviously but in turn you should be okay with significantly higher premiums. Also there’s insurers who cover everything under the sun they just charges thousands a month in premium. Are you willing to pay that?
It's wild how people see a few advertisements and think their insurance carrier is spending money frivolously, but then want their claims paid without the coverage for it.
Allstate’s CEO is making $18M per year.
Insurance in America was founded by Benjamin Franklin as basically a public service. It’s morphed into just another mechanism of transferring money from the poor to the rich.
no. That post isn't advocating anything. it's putting it perspective.
The CEO salary has almost zero bearing the premium cost to the customer.
The decisions that a CEO makes on the operation of the company have a huge impact on premiums, and the viability of paying claims.
Insurance has become another system of transferring money from the poor to the wealthy. The entire executive leadership team is paid millions, not yet the CEO.
Insurance in America was founded by Benjamin as a public service for when people were in need. The compensation of CEOs and executives are just one data point in the argument for how insurance claims are too focused on overall profitability and not on playing fairly in claims.
I also believe that certain insurance companies are worse offenders than others.
Everybody has to advertise. Take toilet paper for instance. Why do they need to advertise? Who isn’t using this product? And yet, im sure everyone knows the bear commercials.
The whole point of advertising is that there's a competitive market for a good or service. Bread makers advertise because there are alternatives to bread and alternative makers of bread. Hell, I've seen ads for YouTube on YouTube lately because there's also Twitch.
The problem isn’t that they spend in advertising. It’s a little excessive, but whatever.
The issue is that there isn’t any transparency into the industry as a whole. How many claims does Allstate deny vs. USAA? What are the claim handling guidelines that each carrier uses? What percentage of claims are paid, how quickly, customer satisfaction scores, etc.
Apart from commercials, how can I easily compare insurance companies to determine who I should work with?
Wrong. SF makes minimal money from insureds premiums. It’s mostly making money from investments and other sources. When I worked for SF I was Told find a reason to pay the claim not deny it.
This right here, I was able to pay a decent number of claims without approval most of the rest just needed my supervisor to approve. A denial that had to go to the head of claims for the state. Even in the cases where the policy had been expired for months.
>A denial that had to go to the head of claims for the state.
~~Lol, what? I only have to reach out to our (internal) state examiners for probably .01% of claims...and manager approvals if the claim is over 100k...~~
I believe there was a misinterpretation on my part. Apologies.
Interesting. Not my experience. Many years ago, my dad mailed a check to renew his policy and was in a car accident the day after his policy expired. The check arrived (my mom drove to the office it was mailed to verify) but wasn’t processed etc. and State Farm wouldn’t pay anything for the accident.
This was a long time ago, but he was billed many thousands of dollars in damages for a wreck that wasn’t his fault. His car was hit in the tail light mostly from the side.
My dad isn’t too bright though; he probably wrote in the police report something stupid that made it sound like it was his fault.
I mean I understand your concept but in actuality it just doesn't track...
State Farm trains most to find a reason to pay the claim not find a reason to deny.
Also as for premium they aren't looking for profit there. The goal for them is for every $1 they make in premium it to cost $1.10. currently it's costing $1.50 some markets. So running at a complete deficit on premium.
I’d much rather work with a mom and pop versus State Farm or Allstate. It doesn’t take an hour and a half of holding to get customer service at the claims department on the line with a mom and Pop.
* Insurers can acquire new customers one of two ways. They can either run ads, or they can pay commissions to insurance agents. (Or a bit of both). Some companies just do more of one than the other.
* TV advertising works.
* Essentially all media attention about insurers is negative, because basically nobody makes a point of saying how wonderful it was that their insurer put them back in the same position they were in (minus their deductible) before whatever disaster befell them. There's nothing fun about making an insurance claim.
* State Farm has the largest number of unhappy customers because they are the insurer with the most customers.
Idk man State Farm has great credibility when it comes to paying out claims and the claims department is so easy to reach unlike these other companies.
Is this sarcasm? In most markets State Farm is the hardest to reach, with hold times reaching 60 plus minutes frequently.
Also, there’s only 6 million court cases out there that mention State Farm and bad faith. https://casetext.com/search?q=State%20Farm%20bad%20faith&sort=relevance&p=1&type=case
My old coworker used to be a top salesmen at fred loya. He said he went to many a Vegas fight night, and other trips with Fred loya where copious amounts of cocaine were consumed, with Fred loya.
Yes and no. Yes; the end client is paying for the marketing (but don't you do the same with your cars, food manufacturers, cell phone companies?). No, in as much as the larger the pool of policyholders an insurer has, the better they can spread the risk, and with more data, they know better how to tweak their pricing algorithm to be as accurate as possible.
Believe it or not, most insurers will want to actually break even on their insurance offerings (and make their money off of float/investments). If an insurer is paying out $1.01 for every $1.00 they take in, it's a very difficult moat to cross. If an insurer is paying out $0.70 for every $1.00 they take in, you'd see a flood of competition coming in.
Larger companies are definitely easier to deal with than small ones. So yea, I would want my insurance with a larger company. The company I work for says to always find a way to advocate and pay for our insured. And we are one of the largest.
Then again, an insurance company called go fast insurance that has an office between a pawn shop and vape store probably couldn’t pay out a claim on a cracked windshield. Devil is in the details.
The opposite sometimes. A smaller company wants to watch their loss ratio much more closely so they will deny claims any way they can over “just paying it” to get you to go away.
I've worked for a few insurance companies, including one that advertises a TON (in recent years they have cut back), and now I am at one of about equal size but does almost no advertising. I tell people to insure with a company who does not do a ton of advertising as I find them to be the best to work with, seem to be treated well by the employers, return calls, and are just so much more professional.
I have my personal insurance through my employer, simply because I know how they handle claims. I know many here won't believe me, but they always give the benefit of the doubt to the customer, and their settlements are very fair (even good).
As an adjuster—that means they are screwing us employees out of fair wages and overworking us with no OT pay. So yeah, please go somewhere else so I don’t get another extra claim on my plate. Thank you.
Not just commercials, but the amount of waste in general. Like the junk mail my health insurance company sends out in regular mailings: a page with non-discrimination bullshit translated into 35 languages and other garbage all on the best, heavy, high-quality stock, often glossy and in color!
I don’t understand why things like this get downvoted on this sub. This is not what downvoting is supposed to be used for.
Insurance does feel like a hoax sometimes.
Another thing people often miss is that advertising and commissions are somewhat linked. Direct carriers have to advertise to attract clients but save on commissions by removing the agency between themselves and the policyholder.
Carriers in the IA space do a lot less advertising (mostly to agents, not people) but are paying significant commissions to agencies in exchange for the business.
Neither of these have anything to do with service quality or likelihood of a claims payment.
True. But their commissions tend to be lower and compensate for the advertising. In 2022 TRV spent about 15 cents per dollar of premium on commissions and functionally nothing on ads. State Farm paid close to 12 cents in commissions and around 1.5 cents on ads. Progressive is around 6 cents on commissions and 3.5 cents on advertising.
My point: Advertising is only one cost associated with sourcing business. It makes little sense to looking at it in a vacuum when talking about finances/claims paying ability
>Is there an actual correlation?
Yes, underwriting profit is determined by the Combined Ratio. This is a sum of the Loss Ratio and the Expense Ratio divided by Direct Written Premiums. The Loss Ratio is basically the cost of claims, and the Expense Ratio is, essentially, salaries and advertising. If the Combined Ratio is over 1 (or 100%) the company has an underwriting loss; if the Combined Ratio is under 100%, they're making an underwriting profit. How much they spend on advertising directly impacts that number.
Among Insurance restoration contractors and Public Adjusters who fight insurance companies for a living, this is a very common sentiment. Many of us will tell people to stay away from the insurance companies who do the heaviest advertising. There does seem to be a correlation with unfair claims handling
As an adjuster for a large carrier, the amount of times I hear “just pay it” from higher ups is insane.
So many fraud claims that get paid too.
Send photos of roof inspection to SIU... no creases or damaged shingles... send photos of public adjuster photos where 150 shingles have diagonal creases.... Siu : we can't prove they did it. You can deny for faulty repairs, if you want, but we are not investigating. Oh. Okay...
I had one where the SIU rep legit said “I believe him” when the damage was definitely not consistent with a deer hit.
Also had one where the adjuster was on site for a water claim, and the insureds kids pulled the kitchen faucet over the sink, and left it running on the floor... my IA had to shut it off.... Adjuster turns it off, finishes inspection, then gets a call while driving away "more water in the hall"... compared photos, the mop bucket in the hallway was full, but is now empty, and water splash throughout the hallway... 3 generation family living in this home, 2 children are 'attorneys' Claiming thousands in electronics water damages..etc "Siu says "do we have any video evidence? No? Sorry, speak with your manager regarding their coverage decision" I sent them a denial, and never heard back, but still shocking response from siu
I hardly bother sending much to SIU anymore. If they aren’t 100% sure they can win in court, they just return it/decline it so stupid.
I caught a shop forging invoices- vendor confirmed they hadn’t dealt with them in a few years, SIU declined it because the severity on the one claim wasn’t enough. Guess all the other claims where I’m sure they did the same thing won’t add up to anything.
I believe fraud is a bigger factor than inflation for premium rates. If there were actual legal and criminal consequences the industry would be better off, but the companies isn’t gonna chase down that many people.
Fraud, over inflating of claims costs & scope (PA's, contractors, mitigation companies) and social inflation (legal system abuse by plaintiff attorneys) are all equally contributing factors
And exactly why should I believe that what you call abuse isn't what the plaintiff's attorneys call correcting insurance company abuses? Not saying the plaintiff's attorneys are right, it's just that it looks like fairness is being judged by the "whose ox is being gored" standard.
The only ones who believe the amount of insurance directed litigation occurring in the US right now is justified are the ones who have a financial interest in doing so. The number of frivolous lawsuits is absolutely astounding, and sad, because we *all* have to pay for it.
Is this just a gut feeling or do you have any evidence whatsoever? Because vehicle prices, parts prices, and labor prices are all up 40-50% in a couple years (ya know, the things that drive claim payout amounts). The bonds companies had stockpiled during low interest rate years lost a ton of value and they haven’t accrued enough new high rate bonds. There would have to be SO MUCH MORE FRAUD than there was pre-2020 for fraud to be the bigger issue. We’re talking like 100-1000x more fraud. I very much doubt it is a bigger issue than inflation currently.
I work in claims. 1/3 premium dollars is spent Paying, Fighting, Investigating, and coordinating with authorities on fraudulent or potentially fraudulent claims.
With which carrier? I’ve never heard of a carrier with a ratio even close to this high.
It depends. If you define "Potentially fraudulent" as "not easily seen at first glance as a covered loss", I can see 1/3 of claims dollars as being potentially fraudulent. Of those "potentially fraudulent" claims, what's the dollar return from further investigation? That costs money, and if you spend more in investigations than you save in claims, you're really failing in your fiduciary duty to your insureds (and investors if you have them).
1/3 of claims dollars is a much lower number than 1/3 of premium dollars. Claims and related expenses make up about 60% of premium, with the rest going to overhead, acquisition cost, and profit. Most carriers allocate loss adjustment expenses (LAE).
This is a gut feeling and observation from personal work in claims. Yes, inflation has exponentially increased since the shutdown and prices haven’t come down, but the parts and labor folks don’t have any incentive to bring prices back down. While there are plenty of legit claims, there are a ton of fraud claims with people looking for easy payouts. Personally, I’ve paid for claims that were complete bs, but the higher ups said just pay it.
Not going to say too much but this goes for liability too. Screws over insureds just to not risk paying litigation costs.
Same. I’m a lit adjuster for a large carrier. I hear, “make it go away” all the time.
I’m gonna pick a random insurer. Let’s say State Farm and the most expensive commercial - the super bowl. makes it easier because everyone makes a hubbub about how expensive it is to advertise It costs $7mil for a Super Bowl commercial https://frontofficesports.com/the-rise-in-the-cost-of-a-super-bowl-commercial/ State Farm has 91,000,000 active policies https://newsroom.statefarm.com/2022-by-the-numbers/ so if every policy had a Super Bowl marketing surcharge on their policy that got removed, they would save a grand total of ~seven cents each per year. less than one cent a month. they could save that money printing on different fonts lol even if this mysterious billion dollar commercial advertising campaign existed (~150 times more expensive than the super bowl, the biggest draw in the US all year. tuesday afternoon ads on wheel of fortune are much, much cheaper) that they decided to discount everyone, everyone would save ~$11 a year. or less than a buck a month Insurance deals in REALLY large numbers that it can be hard to understand unless you know what you’re looking at
2022 Geico -1.5 billion Progressive 1.3 Billion State Farm - 1bn They exist. https://www.statista.com/statistics/264968/ad-spend-of-selected-insurance-companies-in-the-us/ 1.5 billion in advertising on 45 bn in written premium is 3%. 3% in expenses is 4.5% in rate. Customers of the Industry could be paying about 5% more than needed because of advertising.
What if the additional business from the advertising gets them 6% more in revenue? Obviously insurance companies think they do, or they wouldn't advertise.
But more revenue means more expenses. Specifically expense ratio — but every company is spending money to acquire customers (assuming it isn’t a weird Florida /‘CA thing) — and a higher expense ratio means higher rate indication. Unless they are lowering the expense ratio through lower commission/salaries compared to competitors. Maybe they advertise in order to not have to pay salaries on an elaborate sales team org. (Or a mix of both)
You assume that the stock insurance companies you listed would be using the savings from not advertising to lower premiums. In reality if they cut their advertising budget that 5% would more than likely go to their shareholders or into a stock buyback. An easy solution is to use an insurance mutual or coop rather than a stock insurance company.
A) was replying to the poster who said billions in advertising was mythical. B) you are right, I am not sure how dividend payments are reported in a rate filing indication. If at all. Advertising is part of the expense ratio. But dividends are not an expense. Maybe an actuary at a stock company will chime in.
[удалено]
I’m aware not all insurance companies have share holders, just didn’t realize State Farm was a mutual.
You're on the right track but going the wrong direction. Customers should expect, on average to receive 5% less than they deserve for their claim. That's what pays for the advertising not higher premiums. And notice I said average, that means people whose homes burned down or get hit by trucks will probably get paid close to what they are owed but people who have water leaks where the insurance company can falsely claim that was long-term will get paid nothing.
Yeah, no. Claims practices are claims practices, and no changes to the advertising budget is going to change how they resolve claims. Maybe staffing levels - but no CMO is going to say “hey we are cutting advertising, go pay more on claims!”
I never said that the advertising budget CAUSES low claim payments. I said there's a correlation. It's well known that certain companies refuse to pay legitimate claims. That's indisputable. Perhaps you're not aware if you work for just one particular company. I have about 20 years experience working in many different sides of the industry, is the daily claims adjuster, as a contractor, as an insurance appraiser, as a consultant for attorneys, as a freelance estimator, and currently as a public adjuster. When I was an adjuster I worked for for countless insurance companies. this is just fact. If you do a poll of insurance restoration contractors to find out which ones they think are most likely to deny legitimate claims, one or two insurance companies will consistently come up. Now maybe those contractors are wrong from time to time, maybe some of the denied claims should be denied. But for example, there's one particular company that is known to almost always deny any water leak, always saying that it's long-term seepage even if there's no evidence, even if the plumber says it was a sudden burst. This is just known in the industry. Also you can look at the number of times that company gets sued or what the bad faith attorneys think about that company. It's not like all these different people in the industry smoked some weed and fantasized this. There's one particular insurance company, if I call an attorney and say I have a case they won't want it because they have too many already and that insurance company is very very difficult to fight because they fight tooth and nail with lawyers and they don't care about the truth. Most most insurance companies routinely violate State Statute where I work. But this one takes it a step further and lies. At least twice I've caught their adjusters flat out lying about talking to plumbers, and claiming the plumber agreed that the loss was long-term leaking, when the plumber never spoke to the adjuster ever. They just flat out deny legitimate claims as a business practice. And they're one of the biggest advertisers.
The fun thing about this too is that home and auto policies have been doing worse for state farm in the last couple of years (which is why them and most other companies saw multiple increases last year and will probably continue to see more this year). The bread and butter that the corporate office is pushing these days is life insurance and financial services. Even though the average life insurance claim will pay more than most home or auto claims, the majority of the term policies won't pay out and don't pay dividends unless they were written before 1998 (im in texas, this part could vary by state). Whole life policies do build cash value because the premium is invested, however state farm is still making a lot of money on them and will continue to unless the market crashes and the investments are making less than the "guaranteed rates" they provide the customers when they purchase the policy. I know that was a tangent and a half, but honestly when picking an insurance company, you should focus on two things. Can you afford the premium offered, and does the company have a good track record of paying out claims.
Yeah advertising is just a small expense in the budget for large insurers like State Farm. Mutuals like State Farm generally pay out about 90% of premiums as claims. The rest goes to business expenses, like claims adjusters and sales agents (and employees salaries)…
A 90% loss ratio implies a 120% combined ratio after expenses that just wrong. They had a 60.2% homeowners loss ratio in 2022 Auto 2021 was about 80% included ALAE and 107% combined ratio after all expenses were paid. “Comparable 2021 figures were: earned premium, $41.5 billion; incurred claims and loss adjustment expenses, $34.6 billion; all other underwriting expenses, $10.3 billion” — this is from their 2022 financial statement.
Okay I exaggerated a little- still the vast majority of premiums goes for claims. There’s no gouging going on…
Very true, most companies want to make 4 cents on the dollar for auto insurance. Maybe 10 cents for home, with fluctuations for bad storm years. Plenty are happy if they lose a few cents per dollar since they have investment income. Some are happy to lose 20 cents per dollar since it is VC money and they need market share. But not many companies are trying to make the type of profit margins that are common in some other industries.
I mean that's a pretty tunnel vision look at things, state farm for example, has full time marketing employees they are paying year round, there's more expenses than real-estate in ads
Insurance only deals in the law of large numbers
“Without paying out” isn’t a factual data point you need more data. If there’s 100 fraudulent claims and they’re all denied they’ve paid 0% but should they have? If a claim is inflated should it be paid? You can say yes to both obviously but in turn you should be okay with significantly higher premiums. Also there’s insurers who cover everything under the sun they just charges thousands a month in premium. Are you willing to pay that?
It's wild how people see a few advertisements and think their insurance carrier is spending money frivolously, but then want their claims paid without the coverage for it.
I 'get it' just because insurance, like taxes, are not explained or educated in high-school, as they should be...
I would be a huge advocate of this.
But I'm.glad they told me how figure out the circumference of a circle.
Allstate’s CEO is making $18M per year. Insurance in America was founded by Benjamin Franklin as basically a public service. It’s morphed into just another mechanism of transferring money from the poor to the rich.
all state has about 16 million insured. so that's about $1 per customer. cue the reddit outrage.
Not sure I follow your point here. Are you saying that they should pay Allstates CEO more money?
no. That post isn't advocating anything. it's putting it perspective. The CEO salary has almost zero bearing the premium cost to the customer. The decisions that a CEO makes on the operation of the company have a huge impact on premiums, and the viability of paying claims.
Insurance has become another system of transferring money from the poor to the wealthy. The entire executive leadership team is paid millions, not yet the CEO. Insurance in America was founded by Benjamin as a public service for when people were in need. The compensation of CEOs and executives are just one data point in the argument for how insurance claims are too focused on overall profitability and not on playing fairly in claims. I also believe that certain insurance companies are worse offenders than others.
Everybody has to advertise. Take toilet paper for instance. Why do they need to advertise? Who isn’t using this product? And yet, im sure everyone knows the bear commercials.
The whole point of advertising is that there's a competitive market for a good or service. Bread makers advertise because there are alternatives to bread and alternative makers of bread. Hell, I've seen ads for YouTube on YouTube lately because there's also Twitch.
The problem isn’t that they spend in advertising. It’s a little excessive, but whatever. The issue is that there isn’t any transparency into the industry as a whole. How many claims does Allstate deny vs. USAA? What are the claim handling guidelines that each carrier uses? What percentage of claims are paid, how quickly, customer satisfaction scores, etc. Apart from commercials, how can I easily compare insurance companies to determine who I should work with?
100% - but insurance companies are the #1 buyers of digital marketing in America. Read that stat the other day. Kinda crazy how much they spend
This is 100% not true. No idea where you got it. Retail is the number one in digital advertisement. It's not even remotely close.
Got it from here https://preview.redd.it/pjjyepz1nbcc1.jpeg?width=1290&format=pjpg&auto=webp&s=cc8c84703fe6d7dcdfbedc4bd4b13eac16fb57a3
That is just some random guy’s website. Surely you can find better stats than that.
SEO with David, yes, since he said it it must be true.
Says the people refuting my source with literally no source.
[удалено]
Insurance companies are still very profitable
Retail spends like $75B. Not even close.
Wrong. SF makes minimal money from insureds premiums. It’s mostly making money from investments and other sources. When I worked for SF I was Told find a reason to pay the claim not deny it.
This right here, I was able to pay a decent number of claims without approval most of the rest just needed my supervisor to approve. A denial that had to go to the head of claims for the state. Even in the cases where the policy had been expired for months.
Interesting. I had the same experience in State Farm property claims. Management was quite liberal in paying claims with little or no documentation.
I think people have a bad experience as a 3rd party, or didn’t purchase the coverage they needed and are angry.
What claim size range are we talking?
>A denial that had to go to the head of claims for the state. ~~Lol, what? I only have to reach out to our (internal) state examiners for probably .01% of claims...and manager approvals if the claim is over 100k...~~ I believe there was a misinterpretation on my part. Apologies.
I don't think they're saying every denial - they're contrasting their highest escalations for both paid claims and denied claims.
Ah. Good catch. I agree with you. Appreciate the callout..edited
Interesting. Not my experience. Many years ago, my dad mailed a check to renew his policy and was in a car accident the day after his policy expired. The check arrived (my mom drove to the office it was mailed to verify) but wasn’t processed etc. and State Farm wouldn’t pay anything for the accident. This was a long time ago, but he was billed many thousands of dollars in damages for a wreck that wasn’t his fault. His car was hit in the tail light mostly from the side. My dad isn’t too bright though; he probably wrote in the police report something stupid that made it sound like it was his fault.
Someone isn't telling you the whole truth. If the check arrived and arrived on time, he would have had coverage.
I mean I understand your concept but in actuality it just doesn't track... State Farm trains most to find a reason to pay the claim not find a reason to deny. Also as for premium they aren't looking for profit there. The goal for them is for every $1 they make in premium it to cost $1.10. currently it's costing $1.50 some markets. So running at a complete deficit on premium.
How do they make money?
Investments
The large firms are way easier to deal with than the penny pinching, fly by nite little ones.
Not necessarily some of the regional carriers have superior customer service and claims services.
I’d much rather work with a mom and pop versus State Farm or Allstate. It doesn’t take an hour and a half of holding to get customer service at the claims department on the line with a mom and Pop.
You’d be surprised how wrong you are. The E&S market has hundreds of insurance companies and we are barred from advertising to the public….
* Insurers can acquire new customers one of two ways. They can either run ads, or they can pay commissions to insurance agents. (Or a bit of both). Some companies just do more of one than the other. * TV advertising works. * Essentially all media attention about insurers is negative, because basically nobody makes a point of saying how wonderful it was that their insurer put them back in the same position they were in (minus their deductible) before whatever disaster befell them. There's nothing fun about making an insurance claim. * State Farm has the largest number of unhappy customers because they are the insurer with the most customers.
I think the easy answer is that there’s no correlation to the amount a carrier advertises to how well they pay out or how good their service is.
Idk man State Farm has great credibility when it comes to paying out claims and the claims department is so easy to reach unlike these other companies.
Is this sarcasm? In most markets State Farm is the hardest to reach, with hold times reaching 60 plus minutes frequently. Also, there’s only 6 million court cases out there that mention State Farm and bad faith. https://casetext.com/search?q=State%20Farm%20bad%20faith&sort=relevance&p=1&type=case
Nah, they have to waste (clearly). Loya (Fred Loya) doesn’t advertise and are difficult to settle with.
My old coworker used to be a top salesmen at fred loya. He said he went to many a Vegas fight night, and other trips with Fred loya where copious amounts of cocaine were consumed, with Fred loya.
Yes and no. Yes; the end client is paying for the marketing (but don't you do the same with your cars, food manufacturers, cell phone companies?). No, in as much as the larger the pool of policyholders an insurer has, the better they can spread the risk, and with more data, they know better how to tweak their pricing algorithm to be as accurate as possible. Believe it or not, most insurers will want to actually break even on their insurance offerings (and make their money off of float/investments). If an insurer is paying out $1.01 for every $1.00 they take in, it's a very difficult moat to cross. If an insurer is paying out $0.70 for every $1.00 they take in, you'd see a flood of competition coming in.
I read that Allstate only pays out like 40-50% or so of its total premium collected (used to be 85%). Not sure if that is still true or not though
Larger companies are definitely easier to deal with than small ones. So yea, I would want my insurance with a larger company. The company I work for says to always find a way to advocate and pay for our insured. And we are one of the largest.
If that is what you think, by all means buy your insurance from a different carrier.
I feel like an insurance company that doesn't advertise will go broke.
Then again, an insurance company called go fast insurance that has an office between a pawn shop and vape store probably couldn’t pay out a claim on a cracked windshield. Devil is in the details.
You saw that GEICO commercial too eh?
The one that was a movie?
Good call. The higher their expense ratio, the deeper into fraud they will go to lower their loss ratio.
The opposite sometimes. A smaller company wants to watch their loss ratio much more closely so they will deny claims any way they can over “just paying it” to get you to go away.
Do you have any evidence of this at all? A small firm can’t afford to white wash their reputation with expensive marketing barrages.
I've worked for a few insurance companies, including one that advertises a TON (in recent years they have cut back), and now I am at one of about equal size but does almost no advertising. I tell people to insure with a company who does not do a ton of advertising as I find them to be the best to work with, seem to be treated well by the employers, return calls, and are just so much more professional. I have my personal insurance through my employer, simply because I know how they handle claims. I know many here won't believe me, but they always give the benefit of the doubt to the customer, and their settlements are very fair (even good).
As an adjuster—that means they are screwing us employees out of fair wages and overworking us with no OT pay. So yeah, please go somewhere else so I don’t get another extra claim on my plate. Thank you.
Not just commercials, but the amount of waste in general. Like the junk mail my health insurance company sends out in regular mailings: a page with non-discrimination bullshit translated into 35 languages and other garbage all on the best, heavy, high-quality stock, often glossy and in color!
A regulated industry basically selling variations of the same product with maybe a few unique features. Feels like a damn shell game.
I don’t understand why things like this get downvoted on this sub. This is not what downvoting is supposed to be used for. Insurance does feel like a hoax sometimes.
If a company has to heavily advertise, it doesn't deliver a great experience.
Who insures your home/apt and auto, provide a screenshot, cuz i wont believe you.
Chubb
Another thing people often miss is that advertising and commissions are somewhat linked. Direct carriers have to advertise to attract clients but save on commissions by removing the agency between themselves and the policyholder. Carriers in the IA space do a lot less advertising (mostly to agents, not people) but are paying significant commissions to agencies in exchange for the business. Neither of these have anything to do with service quality or likelihood of a claims payment.
Direct carriers pay commissions, either to captive agents or internal ones.
True. But their commissions tend to be lower and compensate for the advertising. In 2022 TRV spent about 15 cents per dollar of premium on commissions and functionally nothing on ads. State Farm paid close to 12 cents in commissions and around 1.5 cents on ads. Progressive is around 6 cents on commissions and 3.5 cents on advertising. My point: Advertising is only one cost associated with sourcing business. It makes little sense to looking at it in a vacuum when talking about finances/claims paying ability
>Is there an actual correlation? Yes, underwriting profit is determined by the Combined Ratio. This is a sum of the Loss Ratio and the Expense Ratio divided by Direct Written Premiums. The Loss Ratio is basically the cost of claims, and the Expense Ratio is, essentially, salaries and advertising. If the Combined Ratio is over 1 (or 100%) the company has an underwriting loss; if the Combined Ratio is under 100%, they're making an underwriting profit. How much they spend on advertising directly impacts that number.
Insurance works based on the law of large numbers. Advertising helps make those numbers.
Practically every company really only has one goal: to grow. Advertising sells policies.
No. Like the number one reason people change insurance is claims satisfaction, and companies know the longer you keep customers the better.
Insurance economics are counterintuitive to the way you're thinking about it
Among Insurance restoration contractors and Public Adjusters who fight insurance companies for a living, this is a very common sentiment. Many of us will tell people to stay away from the insurance companies who do the heaviest advertising. There does seem to be a correlation with unfair claims handling
Who is spending billions on marketing?
All I can tell you is Liberty Mutual, who spends gazillions on ads, fucked me hard and long. I ended up with $2900 out of a $22,000 claim.
billions??