The great insurance hoax

In February, we told you how auto insurers were playing hardball in so-called “minor” crash cases (click here for February report).  Today, it’s homeowners who are under seige.

Yet again, we find an insurance industry that uses secret tactics to cheat customers out of payments as profits break records.  In a remarkable study which appears in the Sepetember 2007 issue of Bloomberg Markets magazine, authors David Dietz and Darrell Preston revealed the industry’s latest ploy on claims by homeowners:

When there’s a disaster, the companies homeowners count on to protect them from financial ruin routinely pay less than what policies promise. Insurers often pay 30-60 percent of the cost of rebuilding a damaged home–even when carriers assure homeowners they’re fully covered, thousands of complaints with state insurance departments and civil court cases show.

To read the full article, click here.

The study was also discussed in a PBS newsmagazine NOW special called Home Insurance 9-1-1.  To view the show video, click here.  In the show, these insurance industry abuses and others were detailed.  The show even included comments from California Lieutenant Governor and former Insurance Commissioner John Garamendi who observed:

“The insurance industry…is purposely misleading customers.  The first commandment of the insurance industry is, ‘Thou shalt pay as little, as late, as possible.’…You go to financial heaven if you can carry out that commandment.”
 

The NOW show also featured the author of From Good Hands to Boxing Gloves book David Berardinelli of Sante Fe, New Mexico who spoke of industry abuses in auto claims cases.  Insurance company responses to the show can be viewed by clicking here.

The study noted how insurers provide incentives to their adjusters for paying less on claims.  An internal e-mail shows how one company had pressured its adjusters, whom it calls claims representatives, or CRs, to pay out smaller amounts — and rewarded them when they did.

“As you know, we have been creeping up in settlements,” David Harding, a Farmers claims manager, wrote in an e-mail to employees on Nov. 20, 2001. “Our CRs must resist the temptation of paying more just to move this type file. Teach them to say, ‘Sorry, no more,’ with a toothy grin and mean it.” Harding praised a worker for making low settlements. “It can be done as Darren consistently does,” he wrote. “If he keeps this up during 2002, we will pay him accordingly.”

Unfortunately, while insurance industry profits continue to increase, it is the ordinary consumer that pays the price.

Fisher-Price Recalls Licensed Character Toys Due To Lead Poisoning Hazard

The U.S. Consumer Product Safety Commission, in cooperation with Fisher-Price, announced a voluntary recall of its Sesame Street, Dora the Explorer, and other children’s toys. Consumers should stop using recalled products immediately unless otherwise instructed. For additional information contact Fisher-Price at (800) 916-4498 anytime or visit the firm’s Web site at www.service.mattel.com.

About 967,000 units, which were manufactured in China, are involved in the recall because surface paints on the toys could contain excessive levels of lead. Lead is toxic if ingested by young children and can cause adverse health effects.

The recall involves various figures and toys that were manufactured between April 19, 2007 and July 6, 2007 and were sold alone or as part of sets. The photographs show examples of the products involved in this recall. The model names and product numbers for the recalled toys, which are all marked with “Fisher-Price,” are listed below at the CPSC site which can be viewed by clicking here. The toys may have a date code between 109-7LF and 187-7LF marked on the product or packaging. They were sold at retail stores nationwide from May 2007 through August 2007 for between $5 and $40.

Consumers should immediately take the recalled toys away from children and contact Fisher-Price. Consumers will need to return the product and will receive a voucher for a replacement toy of the consumer’s choice (up to the value of the returned product).