The CCRE Exposes Fallacy of 'Premium Increase' Threats
16 November 1999
The CCRE Exposes Fallacy of 'Premium Increase' Threats PRINCETON, Ill., Nov. 15 -- The CCRE, a nationwide coalition
of collision repair facilities that take a consumer advocacy stance against
fraudulent auto insurance industry practices, 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 "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 do this and premiums are increased ... Not because
insurance companies need to increase premiums ... but rather because they CAN
increase 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 CCRE.
Ann Spink, vice-President of the CCRE, 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' what
they wanted. However, state legislators and regulators are now beginning to
realize they have been duped by the insurance Industry, believes Dennis
Howard, founder and executive director of the Insurance Consumer Advocate
Network. "We are seeing to it that consumers are also made aware of these
insurance industry tactics," Howard notes.
Per Jack Aigner of the Pennsylvania Collision Trades Guild ... "That Dog
Just Won't Hunt Anymore!"
