Group Claims Car Insurance Rates are Too High

According to the Consumer Federation of America, people are paying too much for their auto insurance and when you have to file a claim, the companies are not paying you enough. They say that changes have to be made in the auto insurance sector as these companies are ripping off Americans with the way they have been doing business.

The report says that on average, insurance companies have been overcharging somewhere in the vicinity of $870 too much for the past four years. They say that both home and auto insurance companies are “sacrificing consumers’ needs to make big profits.”

The study says that the percentage of premiums that have been paid out to policyholders has dropped drastically from the late 1980’s. They used to pay back 75% and now they only pay back 54%. This leads to the $65 billion in profit that the home and auto insurance industry made last year.

The insurance industry says that the only reason they have had such high profits as of late is because there have not been any major storms or earthquakes. They claim that in 2004 and 2005 they paid out so much money that it almost destroyed them in the process. The CFA says not so; and that their reserves are “clearly excessive.” They say that it would take more than five Hurricane Katrinas to wipe them out.




Back to February 2008 Archives