This may not be considered rebating, but it should not be allowed. Allowing this is only going to continue to inflate insured’s premiums, all insured’s, not just thoes who have losses.
Shops squeel like stuck pigs when their estimates are questioned. No shop is going to give back between $100 – $1000 on a collision deductible without first burying it in inflated repair costs. What incentive would they have to legitimately refund deductibles at a time when profit margins have shrunken dramatically? It doesn’t make sense. Depending on the scope of loss, shops routinely tell their customers they’ll “try and get their deductible covered”. In essence, they’re saying “I’ll inflate my estimate by the amount of your deductible so you won’t have to pay.”
It ain’t as easy as it sounds to hide $500-$1,000 in a shop estimate that a trained eye will review. They can write the moon, but that doesn’t mean that the claims dept has to pay for it.
If shops are hiding the deductibles in unjustified labor times and rates, redundant operations, shop materials, labor supplements and so on, and get caught routinely, they’ll knock it off soon enough as they watch their profits walk out the door in the claimants’ pockets.
Yes but as soon as every shop gets wind of that, there rates increase another say $5 an hour. Now every claim has an increased hourly rate, and unless you have some agreement with that repairer on charges you are going to pay that rate. Which means that everything will trickle down to the consumer through higher rates. We claims adjusters are still tied by fair claims practices. Repairers should be tied to the same laws. Very poor public policy once again….
it’s not fraud! how many of those claims do you see where the glass folks will waive the ded to replace your windshield? i have seen that here. they truly want your business. if the same is for the repair shop and costs are not increased, why not allow it? some companies might need the work to get more income. afterall, claim related work is guaranteed paid work. whereas, if i just took it in for work, i might not be able to pay for the job right away. as a business owner, i might take this as an added bonus — knowing i am getting paid for parts and labor. but let me make this clear, only fair if i don’t increase my costs because i did agree to waive collecting the ded or reducing it. i might have not only got the insurance industry looking at creating business, but what about the consumer? if he had a minor repair, he might remember me and come back for repair and pay out of his own pocket.
Look at what happened to the Chicago AS admin caught with his hand in the cookie jar. And the LA Auto Club admin same deal. Insurance folks don’t have a problem stealing as long as they/we are the benefactors.
How can a shop possibly take dollars out of the job and still produce safe, complete, aesthetically indetectable repairs? Simple.
They cannot. Neither by the way can insurers for whom most who read here all work.
Most competent repairers are and have been “balance” billing the vehicle owner for years. The owners pay properly and then they change insurance companies – only to find the same treatment.
All this in years of absolute record profits for insurers. We should be ashamed of the insurance industry. Given the profits generated by the boxing gloves claims handling practices insurance employees should probably be getting paid more.
The idea of a deductable is to put some responsibility of damage back on the consumer. The higher responsibility level chosen, the lower the premium will be charged. Repair shops hiding the deductible’s should be penalized for further pushing this economy in the wrong direction. If a repairer wants to get more business, they should do excellent work and maintain a great reputation in the communities they work in.
Helping people avoid their financial responsibility only fosters the mentality of getting something for nothing. They want lower rates so they take larger deductibles. Then, they don’t want to have to pay them so the shops conjure up this bogus scheme to get more people in the door. Those “rebated” deductible don’t just fall off trees. They’re hard dollars no shop has the margin to cover. The only plausible way to do it is to inflate the estimate. People just don’t get it. They think they’re getting something for nothing. In the end (literally and figuratively) they’re paying for this through higher premiums.
[b]””Post On: April 22, 2008, 6:22 pm CDT
Post By: Jake
Comment:
The idea of a deductable is to put some responsibility of damage back on the consumer. The higher responsibility level chosen, the lower the premium will be charged. Repair shops hiding the deductible’s should be penalized for further pushing this economy in the wrong direction. If a repairer wants to get more business, they should do excellent work and maintain a great reputation in the communities they work in. “”[/b]
Hey Jake…
Point 1 … The idea of a deductible is to Discourage insured’s from filing a Claim. Lets say one has an $1000.oo deductible and suffers $1289.oo in damage. At the risk of paying a higher rate or worse, being canceled, is an insured likely to file a claim to recover $289.oo?? In the end, that $1000.oo deductible became an $1289.00 deductible.
In this scenario the insured paid for insurance but effectively didn’t have insurance because they would likely pay the entire cost out of pocket. Nice, real slick on the insurer’s part.
Point 2 … The one’s further pushing this economy in the wrong direction are the Over paid upper layer of Corporate Executives that, through lucrative Stock Options, are raiding the Company Profits by using these options to Transfer these profits into their personal Bank Accounts. Again.. Nice, real slick on the insurer’s part. (and other Billion $$ companies.)
Point 3 … When a repairer tries to get more business, by doing excellent work and maintaining a great reputation in the communities they work in, they Must receive an higher scale of pay to cover the expense of using better quality *Parts* & *Materials*, and a whole lot more. Now here’s the Rub..! When the insurance companies see this Better Shop charging what is needed to be the “Better Shop” they (the insurers) will effectively black-ball this shop and use every conceivable method they can think of to *STEER* any and all consumers away from this “Better Shop” that does all Necessary & Reasonable repairs in a Profession manor. Why you ask?? Because no matter how much an insurer profits… its never enough!! And they will beat down any Doctor, Hospital, Contractor, and Body Repair Shop that gets in their way.
Helping people avoid their financial responsibility only fosters the mentality of getting something for nothing. They want lower rates so they take larger deductibles. Then, they don’t want to have to pay them so the shops conjure up this bogus scheme to get more people in the door. Those “rebated” deductible don’t just fall off trees. They’re hard dollars no shop has the margin to cover. The only plausible way to do it is to inflate the estimate. People just don’t get it. They think they’re getting something for nothing. In the end (literally and figuratively) they’re paying for this through higher premiums.””
——————-
Dread,
I somewhat agree that the insurer’s conjure up this bogus scheme to get more people in the door. Those “rebated” deductibles that some insurer’s are advertising currently don’t just fall off trees. The only plausible way to do it is to inflate the Premiums.
And to make matters worse… the add another $100 for each year (up to 5) without a claim hurts those that go for Decades without an accident. How so…?? Well… if an insured has an accident every 5 years over a twenty year period they will have been forgiven $2000.oo, while during that same 20 years the other insured has one accident they are forgiven $500.oo?? Seems a little backward to me.
Point 1: The insured chooses what deductible they want. Poor example on your part.
Point 2: Don’t single out insurance cos. Most companies are like that, take your pick.
Point 3: I know of a lot of high end shops that don’t rebate deductibles and have all the work they can handle because of their reputation for quality work.
Point 4: Apparently you are not in the insurance industry.
Point 1: The insured chooses what deductible they want. Poor example on your part.
[[“The idea of a deductible is to Discourage insured’s from filing a Claim”.
So an insured gets to choose the $$ amount of Discouragement he/she wishes to endure.
What was your point??
Now that you mention it… isn’t it interesting that the less an insured can afford to pay for insurance the Higher an Deductible they need choose in order to lower Premiums so they fit their limited budget. Which further discourages (no prohibits) them from filing a Claim. ]]
Point 2: Don’t single out insurance cos. Most companies are like that, take your pick.
[[ Did you miss this part?? “(and other Billion $$ companies.)” Sure I put Insurer’s up front, but then isn’t this Article about insurance?? ]]
Point 3: I know of a lot of high end shops that don’t rebate deductibles and have all the work they can handle because of their reputation for quality work.
[[ Are you referring to Luxury / Exotic automobiles. If so the reason is because the insurer’s don’t have other shops to STEER consumers too. ]]
Point 4: Apparently you are not in the insurance industry.
[[ What… because one can see through questionable tactics, it somehow implies they can’t be on the inside of this industry?? ]]
On the positive end, at least you tried to respond.
“how would you respond to a $1,200 loss and a $500 deductible?”
“So, what would your answer be with a $500 deductible?”
Answer to what?? Whether a person would file a claim for the $700 ? Well that would be each persons individual decision based on their personal financial situation.
Hi Fred, Jake’s comments are excellent. As for your example, how would you respond to a $1,200 loss and a $500 deductible?
As for high end shop, it did not ever occur to me about luxury/exotic cars. I was thinking more in the GM/Ford/Toyota range, you know, regular everyday cars. The shops I had in mind do an excellent job in repairing all types of vehicles without rebating deductibles. They have the reputation they have because of quality work and service.
Oh, and my name is “Hey Fred”.
“why should anyone be able to buy a $500 or $1k deductible at a reduced rate be able to have the same loss with the same damage as someone that has paied the higher premium for the zero deductible and have the claims examiner write a check out for the same amount to be paid to both customers?”
Where did that come from?? I’ve re-read this Thread and can’t find any reference to such a thing as you just presented.
But, anyway, Here is a thought. Instead of a Deductible, wouldn’t a “minimum claim” be more consumer friendly?? With a minimum claim one would have to reach that amount of a loss before filing a claim. But, when the minimum has been met, the insurer pays the full amount. A minimum claim would eliminate nuance claims much like the Deductible does, while at the same time not be a punishing to the consumer when losses exceed their ability to pay.
==============
“The fact is that insurance companies are one of the most highly state regulated companies and if we as insurance companies were doing something wrong, there are very heavy penalties.”
That may be true, but, with the current lack of enforcement and when something is enforced the DOI’s insignificant fines are barely a hand-slap.
The following excerpt from a speech by Ernst Csiszar, [ Vice President National Association of Insurance Commissioners] back in oct. 2003 said a lot.
“Why Are Insurance Companies and Agents Regulated?
As the Senate Commerce Committee evaluates state insurance regulation, members of the NAIC hope you will start by asking the fundamental question: “Why are insurance companies and agents regulated in the United States?” Government regulation of insurance companies and agents began in the states well over a century ago for one overriding reason – to protect consumers. [[ Our most important consumer protection is to assure that insurers remain solvent ]] so they can meet their obligations to pay claims, as recently evidenced in the aftermath of September 11th and Hurricane Isabel. Beyond that, states supervise insurance sales and marketing practices, as well as policy terms and conditions, to ensure that consumers are treated fairly when they purchase insurance products and file claims.”
Above [[Brackets]] were added by me to highlight what was likely the Core component. And boy, have they ever done a great job of keeping the Insurance Industry very, very Wealthy. err Solvent.
As for catastrophic losses… does Re-insurance ring any bells?? Think *Katrina* The worst disaster ever in the United States, and the Top insurer’s are still showing Record Profits??
As I’ve read the stories and followed the Trials that followed… well its just plan sickening. :-( So please don’t go there with the *Poor Insurer* lines.
===============
“About your part 3:
just like any type of business in this world, if you want more business, you have to portray a valuable image to the public. Maybe instead of inflating repair orders in an effort to hide deductibles, repair shops could take action that is good for the community, advertise, sponsor the local baseball team, ask for referrals, and network a little…..all these things will increase the shops visibility and reputation, thus getting more business in the door.”
You are correct… that is how it works in a Free Market… Free of Insurer dominance. But in the real world, Medical and Repair industries are under the thumb of insurers and the above only happens if one has a Niche Business or they play by the Third Party (insurers) Rules.
Hey we are getting a bit deeper into this subject than needed on a Public Board.
As for a different deductible level, I was using your example:
The idea of a deductible is to Discourage insured’s from filing a Claim. Lets say one has an $1000.oo deductible and suffers $1289.oo in damage. At the risk of paying a higher rate or worse, being canceled, is an insured likely to file a claim to recover $289.oo?? In the end, that $1000.oo deductible became an $1289.00 deductible.
In this scenario the insured paid for insurance but effectively didn’t have insurance because they would likely pay the entire cost out of pocket.
So, what would your answer be with a $500 deductible?
Yes insured’s do get to choose there deductible in personal lines insurance. Depending on the coverage (comprehensive only) they can choose, and pay for in premium $$, a zero deductible. With that being said, why should anyone be able to buy a $500 or $1k deductible at a reduced rate be able to have the same loss with the same damage as someone that has paied the higher premium for the zero deductible and have the claims examiner write a check out for the same amount to be paid to both customers?
Just because the insurance industry has billion $$ companies does that mean that they have the extra money to just give out in lue of deductibles? NO, it means that that Billion $$ company has many more customers and in fact will be at a higher risk bf loosing money in situations like this. You act like just because there are billion $$ companies in the industry that they industry is shady. The fact is that insurance companies are one of the most highly state regulated companies and if we as insurance companies were doing something wrong, there are very heavy penalties.
About your part 3:
just like any type of business in this world, if you want more business, you have to portray a valuable image to the public. Maybe instead of inflating repair orders in an effort to hide deductibles, repair shops could take action that is good for the community, advertise, sponsor the local baseball team, ask for referrals, and network a little…..all these things will increase the shops visibility and reputation, thus getting more business in the door.
Lastly your involvement in the industry:
I am sure you are in the indusrty, but as to what part??? I’d say you are a public adjuster….let me know because now i’m interested.
An insurance company sets a premium, which is, paid by an insured. There is no negotiation. When there is a claim, the insurance company does everything in its power to dictate and control repair allowances. The company decides what is to be repaired or replaced. They often try to dictate the use of cheap replacement parts and apply labor rates that do not come close to covering the repair shop overhead.
Repair shops must make a profit and are forced to inflate labor hours. They often “setup” vehicles and make damages appear more severe than they actually are.
Many insurance adjusters have little of no hands on repair shop experience. Most can’t tell the difference between a legitimate estimate and a setup.
Adjusting claims is a game played by both sides. In the end, right or wrong, an agreement is reached. Once an insurance company adjusts a claim and reaches an agreed price, they pay the amount of loss less the deductible. They have fulfilled their obligation under the insurance contract. It should make no difference if the insured paid the agreed price to repair the vehicle, completed all or part of the repair themselves, or if a repair shop did the job for free. Any transaction between the vehicle owner and another party (repair shop) is a separate contract. Insurance companies have no legitimate business interfering.
The insurance company should have the right to verify that repairs have been made and the vehicle is safely drivable, if they continue to insure the vehicle.
We could quibble over a few minor details.. but overall your comments are well stated. With that said, I’d like to add a bit to your ending comment, which was:
“”The insurance company should have the right to verify that repairs have been made and the vehicle is safely drivable, if they continue to insure the vehicle.””
If when verifying the condition of the auto they find that no repairs have been made, and they still insure the auto, should that insured’s premiums be lowered slightly??
My thoughts are…
Say the damage was from a Deer sliding down the passenger side of the car creating about $3000 in damage. The car is safe to drive [just looks like Crap].
At a later time another deer slides down that same side.(where I live that’s not an unusual event) If it had been repaired the insurer would be paying another $3000 to repair it again. But since it wasn’t repaired they likely won’t pay any Dollars at all, saving the insurer $3000.
Also,in the event of a subsequent Total Loss the Insurer will reduce the value of the car by an substantial amount, again saving the insurer somewhere close to $3000.
So, since the vehicle is worth less and one whole side is somewhat uninsured, why should they be paying the same Premium as an auto that is undamaged and worth more??
This may not be considered rebating, but it should not be allowed. Allowing this is only going to continue to inflate insured’s premiums, all insured’s, not just thoes who have losses.
It won’t affect premiums so long as the rebate is not a line item on the repair estimate. If it is, the adjuster should just whack it.
Shops squeel like stuck pigs when their estimates are questioned. No shop is going to give back between $100 – $1000 on a collision deductible without first burying it in inflated repair costs. What incentive would they have to legitimately refund deductibles at a time when profit margins have shrunken dramatically? It doesn’t make sense. Depending on the scope of loss, shops routinely tell their customers they’ll “try and get their deductible covered”. In essence, they’re saying “I’ll inflate my estimate by the amount of your deductible so you won’t have to pay.”
It ain’t as easy as it sounds to hide $500-$1,000 in a shop estimate that a trained eye will review. They can write the moon, but that doesn’t mean that the claims dept has to pay for it.
If shops are hiding the deductibles in unjustified labor times and rates, redundant operations, shop materials, labor supplements and so on, and get caught routinely, they’ll knock it off soon enough as they watch their profits walk out the door in the claimants’ pockets.
Yes but as soon as every shop gets wind of that, there rates increase another say $5 an hour. Now every claim has an increased hourly rate, and unless you have some agreement with that repairer on charges you are going to pay that rate. Which means that everything will trickle down to the consumer through higher rates. We claims adjusters are still tied by fair claims practices. Repairers should be tied to the same laws. Very poor public policy once again….
it’s not fraud! how many of those claims do you see where the glass folks will waive the ded to replace your windshield? i have seen that here. they truly want your business. if the same is for the repair shop and costs are not increased, why not allow it? some companies might need the work to get more income. afterall, claim related work is guaranteed paid work. whereas, if i just took it in for work, i might not be able to pay for the job right away. as a business owner, i might take this as an added bonus — knowing i am getting paid for parts and labor. but let me make this clear, only fair if i don’t increase my costs because i did agree to waive collecting the ded or reducing it. i might have not only got the insurance industry looking at creating business, but what about the consumer? if he had a minor repair, he might remember me and come back for repair and pay out of his own pocket.
There is no such thing as a free lunch.
Look at what happened to the Chicago AS admin caught with his hand in the cookie jar. And the LA Auto Club admin same deal. Insurance folks don’t have a problem stealing as long as they/we are the benefactors.
How can a shop possibly take dollars out of the job and still produce safe, complete, aesthetically indetectable repairs? Simple.
They cannot. Neither by the way can insurers for whom most who read here all work.
Most competent repairers are and have been “balance” billing the vehicle owner for years. The owners pay properly and then they change insurance companies – only to find the same treatment.
All this in years of absolute record profits for insurers. We should be ashamed of the insurance industry. Given the profits generated by the boxing gloves claims handling practices insurance employees should probably be getting paid more.
The idea of a deductable is to put some responsibility of damage back on the consumer. The higher responsibility level chosen, the lower the premium will be charged. Repair shops hiding the deductible’s should be penalized for further pushing this economy in the wrong direction. If a repairer wants to get more business, they should do excellent work and maintain a great reputation in the communities they work in.
If the Adjusters do their job properly and repair costs are fair to Insurers who cares how repairers attract business if its legal and consumer wins.
Helping people avoid their financial responsibility only fosters the mentality of getting something for nothing. They want lower rates so they take larger deductibles. Then, they don’t want to have to pay them so the shops conjure up this bogus scheme to get more people in the door. Those “rebated” deductible don’t just fall off trees. They’re hard dollars no shop has the margin to cover. The only plausible way to do it is to inflate the estimate. People just don’t get it. They think they’re getting something for nothing. In the end (literally and figuratively) they’re paying for this through higher premiums.
[b]””Post On: April 22, 2008, 6:22 pm CDT
Post By: Jake
Comment:
The idea of a deductable is to put some responsibility of damage back on the consumer. The higher responsibility level chosen, the lower the premium will be charged. Repair shops hiding the deductible’s should be penalized for further pushing this economy in the wrong direction. If a repairer wants to get more business, they should do excellent work and maintain a great reputation in the communities they work in. “”[/b]
Hey Jake…
Point 1 … The idea of a deductible is to Discourage insured’s from filing a Claim. Lets say one has an $1000.oo deductible and suffers $1289.oo in damage. At the risk of paying a higher rate or worse, being canceled, is an insured likely to file a claim to recover $289.oo?? In the end, that $1000.oo deductible became an $1289.00 deductible.
In this scenario the insured paid for insurance but effectively didn’t have insurance because they would likely pay the entire cost out of pocket. Nice, real slick on the insurer’s part.
Point 2 … The one’s further pushing this economy in the wrong direction are the Over paid upper layer of Corporate Executives that, through lucrative Stock Options, are raiding the Company Profits by using these options to Transfer these profits into their personal Bank Accounts. Again.. Nice, real slick on the insurer’s part. (and other Billion $$ companies.)
Point 3 … When a repairer tries to get more business, by doing excellent work and maintaining a great reputation in the communities they work in, they Must receive an higher scale of pay to cover the expense of using better quality *Parts* & *Materials*, and a whole lot more. Now here’s the Rub..! When the insurance companies see this Better Shop charging what is needed to be the “Better Shop” they (the insurers) will effectively black-ball this shop and use every conceivable method they can think of to *STEER* any and all consumers away from this “Better Shop” that does all Necessary & Reasonable repairs in a Profession manor. Why you ask?? Because no matter how much an insurer profits… its never enough!! And they will beat down any Doctor, Hospital, Contractor, and Body Repair Shop that gets in their way.
Fred,
“” By: Dread
Comment:
Helping people avoid their financial responsibility only fosters the mentality of getting something for nothing. They want lower rates so they take larger deductibles. Then, they don’t want to have to pay them so the shops conjure up this bogus scheme to get more people in the door. Those “rebated” deductible don’t just fall off trees. They’re hard dollars no shop has the margin to cover. The only plausible way to do it is to inflate the estimate. People just don’t get it. They think they’re getting something for nothing. In the end (literally and figuratively) they’re paying for this through higher premiums.””
——————-
Dread,
I somewhat agree that the insurer’s conjure up this bogus scheme to get more people in the door. Those “rebated” deductibles that some insurer’s are advertising currently don’t just fall off trees. The only plausible way to do it is to inflate the Premiums.
And to make matters worse… the add another $100 for each year (up to 5) without a claim hurts those that go for Decades without an accident. How so…?? Well… if an insured has an accident every 5 years over a twenty year period they will have been forgiven $2000.oo, while during that same 20 years the other insured has one accident they are forgiven $500.oo?? Seems a little backward to me.
Fred,
Point 1: The insured chooses what deductible they want. Poor example on your part.
Point 2: Don’t single out insurance cos. Most companies are like that, take your pick.
Point 3: I know of a lot of high end shops that don’t rebate deductibles and have all the work they can handle because of their reputation for quality work.
Point 4: Apparently you are not in the insurance industry.
Response To: Hey Fred
Comment:
Point 1: The insured chooses what deductible they want. Poor example on your part.
[[“The idea of a deductible is to Discourage insured’s from filing a Claim”.
So an insured gets to choose the $$ amount of Discouragement he/she wishes to endure.
What was your point??
Now that you mention it… isn’t it interesting that the less an insured can afford to pay for insurance the Higher an Deductible they need choose in order to lower Premiums so they fit their limited budget. Which further discourages (no prohibits) them from filing a Claim. ]]
Point 2: Don’t single out insurance cos. Most companies are like that, take your pick.
[[ Did you miss this part?? “(and other Billion $$ companies.)” Sure I put Insurer’s up front, but then isn’t this Article about insurance?? ]]
Point 3: I know of a lot of high end shops that don’t rebate deductibles and have all the work they can handle because of their reputation for quality work.
[[ Are you referring to Luxury / Exotic automobiles. If so the reason is because the insurer’s don’t have other shops to STEER consumers too. ]]
Point 4: Apparently you are not in the insurance industry.
[[ What… because one can see through questionable tactics, it somehow implies they can’t be on the inside of this industry?? ]]
On the positive end, at least you tried to respond.
Thanks for the dialog.
Fred,
PS, What’s your Name?
.
.
.
“how would you respond to a $1,200 loss and a $500 deductible?”
“So, what would your answer be with a $500 deductible?”
Answer to what?? Whether a person would file a claim for the $700 ? Well that would be each persons individual decision based on their personal financial situation.
Fred,
Hi Fred, Jake’s comments are excellent. As for your example, how would you respond to a $1,200 loss and a $500 deductible?
As for high end shop, it did not ever occur to me about luxury/exotic cars. I was thinking more in the GM/Ford/Toyota range, you know, regular everyday cars. The shops I had in mind do an excellent job in repairing all types of vehicles without rebating deductibles. They have the reputation they have because of quality work and service.
Oh, and my name is “Hey Fred”.
Jake,
“why should anyone be able to buy a $500 or $1k deductible at a reduced rate be able to have the same loss with the same damage as someone that has paied the higher premium for the zero deductible and have the claims examiner write a check out for the same amount to be paid to both customers?”
Where did that come from?? I’ve re-read this Thread and can’t find any reference to such a thing as you just presented.
But, anyway, Here is a thought. Instead of a Deductible, wouldn’t a “minimum claim” be more consumer friendly?? With a minimum claim one would have to reach that amount of a loss before filing a claim. But, when the minimum has been met, the insurer pays the full amount. A minimum claim would eliminate nuance claims much like the Deductible does, while at the same time not be a punishing to the consumer when losses exceed their ability to pay.
==============
“The fact is that insurance companies are one of the most highly state regulated companies and if we as insurance companies were doing something wrong, there are very heavy penalties.”
That may be true, but, with the current lack of enforcement and when something is enforced the DOI’s insignificant fines are barely a hand-slap.
The following excerpt from a speech by Ernst Csiszar, [ Vice President National Association of Insurance Commissioners] back in oct. 2003 said a lot.
“Why Are Insurance Companies and Agents Regulated?
As the Senate Commerce Committee evaluates state insurance regulation, members of the NAIC hope you will start by asking the fundamental question: “Why are insurance companies and agents regulated in the United States?” Government regulation of insurance companies and agents began in the states well over a century ago for one overriding reason – to protect consumers. [[ Our most important consumer protection is to assure that insurers remain solvent ]] so they can meet their obligations to pay claims, as recently evidenced in the aftermath of September 11th and Hurricane Isabel. Beyond that, states supervise insurance sales and marketing practices, as well as policy terms and conditions, to ensure that consumers are treated fairly when they purchase insurance products and file claims.”
Above [[Brackets]] were added by me to highlight what was likely the Core component. And boy, have they ever done a great job of keeping the Insurance Industry very, very Wealthy. err Solvent.
As for catastrophic losses… does Re-insurance ring any bells?? Think *Katrina* The worst disaster ever in the United States, and the Top insurer’s are still showing Record Profits??
As I’ve read the stories and followed the Trials that followed… well its just plan sickening. :-( So please don’t go there with the *Poor Insurer* lines.
===============
“About your part 3:
just like any type of business in this world, if you want more business, you have to portray a valuable image to the public. Maybe instead of inflating repair orders in an effort to hide deductibles, repair shops could take action that is good for the community, advertise, sponsor the local baseball team, ask for referrals, and network a little…..all these things will increase the shops visibility and reputation, thus getting more business in the door.”
You are correct… that is how it works in a Free Market… Free of Insurer dominance. But in the real world, Medical and Repair industries are under the thumb of insurers and the above only happens if one has a Niche Business or they play by the Third Party (insurers) Rules.
Hey we are getting a bit deeper into this subject than needed on a Public Board.
Its been interesting.
Fred,
Well Hey Fred.
First I’d like to say that your parents had quite a sense of humor when they picked you name..!! :-)
As for your question
“how would you respond to a $1,200 loss and a $500 deductible?”
I don’t understand what your asking. Would you reword, add a bit more detail, or offer a premise??
Fred,
Glad you like it! :-)
As for a different deductible level, I was using your example:
The idea of a deductible is to Discourage insured’s from filing a Claim. Lets say one has an $1000.oo deductible and suffers $1289.oo in damage. At the risk of paying a higher rate or worse, being canceled, is an insured likely to file a claim to recover $289.oo?? In the end, that $1000.oo deductible became an $1289.00 deductible.
In this scenario the insured paid for insurance but effectively didn’t have insurance because they would likely pay the entire cost out of pocket.
So, what would your answer be with a $500 deductible?
Fred,
Yes insured’s do get to choose there deductible in personal lines insurance. Depending on the coverage (comprehensive only) they can choose, and pay for in premium $$, a zero deductible. With that being said, why should anyone be able to buy a $500 or $1k deductible at a reduced rate be able to have the same loss with the same damage as someone that has paied the higher premium for the zero deductible and have the claims examiner write a check out for the same amount to be paid to both customers?
Just because the insurance industry has billion $$ companies does that mean that they have the extra money to just give out in lue of deductibles? NO, it means that that Billion $$ company has many more customers and in fact will be at a higher risk bf loosing money in situations like this. You act like just because there are billion $$ companies in the industry that they industry is shady. The fact is that insurance companies are one of the most highly state regulated companies and if we as insurance companies were doing something wrong, there are very heavy penalties.
About your part 3:
just like any type of business in this world, if you want more business, you have to portray a valuable image to the public. Maybe instead of inflating repair orders in an effort to hide deductibles, repair shops could take action that is good for the community, advertise, sponsor the local baseball team, ask for referrals, and network a little…..all these things will increase the shops visibility and reputation, thus getting more business in the door.
Lastly your involvement in the industry:
I am sure you are in the indusrty, but as to what part??? I’d say you are a public adjuster….let me know because now i’m interested.
An insurance company sets a premium, which is, paid by an insured. There is no negotiation. When there is a claim, the insurance company does everything in its power to dictate and control repair allowances. The company decides what is to be repaired or replaced. They often try to dictate the use of cheap replacement parts and apply labor rates that do not come close to covering the repair shop overhead.
Repair shops must make a profit and are forced to inflate labor hours. They often “setup” vehicles and make damages appear more severe than they actually are.
Many insurance adjusters have little of no hands on repair shop experience. Most can’t tell the difference between a legitimate estimate and a setup.
Adjusting claims is a game played by both sides. In the end, right or wrong, an agreement is reached. Once an insurance company adjusts a claim and reaches an agreed price, they pay the amount of loss less the deductible. They have fulfilled their obligation under the insurance contract. It should make no difference if the insured paid the agreed price to repair the vehicle, completed all or part of the repair themselves, or if a repair shop did the job for free. Any transaction between the vehicle owner and another party (repair shop) is a separate contract. Insurance companies have no legitimate business interfering.
The insurance company should have the right to verify that repairs have been made and the vehicle is safely drivable, if they continue to insure the vehicle.
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The Professor,
We could quibble over a few minor details.. but overall your comments are well stated. With that said, I’d like to add a bit to your ending comment, which was:
“”The insurance company should have the right to verify that repairs have been made and the vehicle is safely drivable, if they continue to insure the vehicle.””
If when verifying the condition of the auto they find that no repairs have been made, and they still insure the auto, should that insured’s premiums be lowered slightly??
My thoughts are…
Say the damage was from a Deer sliding down the passenger side of the car creating about $3000 in damage. The car is safe to drive [just looks like Crap].
At a later time another deer slides down that same side.(where I live that’s not an unusual event) If it had been repaired the insurer would be paying another $3000 to repair it again. But since it wasn’t repaired they likely won’t pay any Dollars at all, saving the insurer $3000.
Also,in the event of a subsequent Total Loss the Insurer will reduce the value of the car by an substantial amount, again saving the insurer somewhere close to $3000.
So, since the vehicle is worth less and one whole side is somewhat uninsured, why should they be paying the same Premium as an auto that is undamaged and worth more??
Just thinking out loud.
Fred,