(4/16/2004) - The Foundation for Taxpayer and Consumer Rights (FTCR), a non-profit consumer group based in California, has reported that new data released by the insurance industryâ€™s main data source, the Insurance Services Office (ISO), show that property & casualty insurance companies in the United States increased profits by 1000% in 2003 over 2002 to $29.9 billion. According to a press statement issued by the FTCR, the increased property and casualty profits combined with dramatic increases in capital gains and investment income allowed the private insurance industry to increase its surplus by $61.6 billion in 2003. The study is available at http://iso.com/press_releases/2004/04_14_04.html
According to the FTCR, the increased profits are the result of skyrocketing premiums on doctors, businesses and individual consumers, as well as a series of new laws around the country further limiting the rights of policyholders and injured victims to file and collect legitimate claims. According to the FTCR, the insurance industry did not, however, pass the savings associated with the new legal limits on to their policyholders, according to the data. The study found that while insurers increased dividends to shareholders by 28.8%, the companies actually decreased dividends to policyholders by 3.7% in 2003, according to the FTCR.
“This new information should set off alarms in statehouses and Congress among those who argue that limiting insurance company liability will result in savings for consumers,” said Douglas Heller, Executive Director of the Foundation for Taxpayer and Consumer Rights. “It is clear that insurers do not and will not lower rates or refund overcharges if they are not required to do so by regulation. This profit data should stop the push to limit consumer rights and spur a new push for insurance industry regulation.”
Consumer Group Calls on Rep. Oxley to Investigate Insurer Statements to Congress
The FTCR also reports that Representative Michael Oxley (R-OH), Chairman of the House Financial Services Committee, has held a series of hearings, recently, on a proposal to deregulate the insurance industry. Oxley has argued that there has been a “substandard return on equity among insurers;” in other words, he claims that industry profits have been too low.
The industry, at the Oxley hearings and others concerning crises in medical malpractice insurance and workersâ€™ compensation insurance, has argued that insurance companies have been losing money and that companies need increased limits on consumer rights and decreased regulation of insurers in order to salvage profitability and reduce premiums. FTCR is calling on Oxley to investigate insurance industry claims made to Congress about both the industryâ€™s financial status and the effects of liability restrictions, the so-called “tort reforms.”
“The insurance companies are crying poverty even as they have seen profits skyrocket at an unprecedented rate. Representative Oxley, who is leading the charge for reducing oversight of the insurance industry, has been lied to and he, or someone in Congress, should investigate the contradictions between what insurance companies have told the public and what is actually going on,” said Heller.