by foxykid143 » Mon Aug 02, 2010 06:55 pm
I am thinking of switching my car insurance over to progressive but am lery with all of the negativity surorunding their handling of claims. My situation is unique in that for the year they will be saving me over $4000 & YES I understand their quotes are only 6 months I did the math and even called them to make sure. can someone let me know what their thoughts are on this large of a savings vs the issues with their claims
Posted: Mon Aug 02, 2010 11:36 pm Post Subject:
You don't think there are negative comments about every carrier... including your current one?
Posted: Tue Aug 03, 2010 12:49 am Post Subject:
$4000 savings? Impressive. What changed, and what quotes did you get from other insurers?
Someone else's experience with an insurance company when it comes to claims must be taken with a grain of salt. Some folks fail to cooperate in the claims process and then get crossways with the insurer, only to complain about how bad the company is, when the company isn't even at fault.
If you're concerned about any company's claims practices, you should be able to check on their history with your state's Dept of Insurance. California's DOI has an extensive history on all insurers doing business in the state. www.insurance.ca.gov
Posted: Tue Aug 03, 2010 07:19 am Post Subject:
What companies do I hear the most complaints about....... All State, Farmers, Nationwide, State Farm, Progressive, Travelers, The Hartford, American Family, Travelers.....
Who don't I hear complaints about.....ABCXYZ Mutual Insurance Company. The regional insurance company no one outside your region knows and doesn't waste posting complaints on line about cause no one really cares about them and doesn't know their name (out side of your region.)
So the larger nationally known companies are going to have more of a public bad name since most people know their name.
Posted: Tue Aug 03, 2010 11:50 am Post Subject: insurance
I had Progressive, when I first moved here (about 14 years ago). I thought Progressive's rates were reasonable (really nevr compared other companies. However.., over time, (every 3 months or so..) seemed like their rates went up. I was paying $160, per month, for Liabilty. I started out paying $65.00 per month, with them. They could nevr clearly explain why the rates soared like they do. I changed to Nationwide, about 7 years ago. I pay ALOT less and their Claim department is wonderful!! OP..I guess you would have to go with your 'gut feeling', etc...see what's best for you.
Posted: Tue Aug 03, 2010 04:19 pm Post Subject:
They could nevr clearly explain why the rates soared like they do. I changed to Nationwide,
The basic formula for any type of insurance ratemaking is
RISK (minus) INTEREST (plus) EXPENSES
"RISK" is the cost of covering whatever the insurable loss is (in life insurance it is known as "Mortality", in disability/health insurance it is known as "Morbidity") -- it is an "actuarial" function (statistics, mostly) of predicting future claims based on known occurrences in the past, and the insured's likelihood of matching the predicted experience of the insurance company.
"INTEREST" is the expected earnings of the insurance company on its invested reserves. Some reserves must be conservatively invested by law (4%-6% rate of return), unrestricted investments can seek greater risk/reward. But, effectively, these are "earnings" in addition to the premiums paid by insured's to cover their risk.
"EXPENSES" are simply all of the costs of doing business, just as any other business might incur, including rent/loan payments, utilities, maintenance, salaries/commissions, legal expenses, licenses in every state the company does business, the list is almost endless -- but it also includes the money for claims the company pays, which always comes out of present money before it ever comes out of long term reserves.
Accounting for all the money the insurer will have available, the actuaries take the pure cost of covering the risk and the premiums insureds will pay for the protection, add the "expected" earnings of the company's money, and deduct the "expected" cost of doing business, plus a little extra for the sake of profit (for policyholders or stockholders depending on the form of organization) and this establishes the basic premium rate structure. If everything works as predicted, rates remain constant or can be reduced.
Granted, it's a lot more complex behind the scenes than this, but this is the nuts and bolts of ratemaking.
Now, the question is, "I don't know why my rates keep going up."
And the answer is: one or more of the three basic elements (RISK, INTEREST, EXPENSES) has not matched the actuarial predictions. Could be that a series of catastrophic hurricanes have occurred, or several million vehicles are suddenly known to have inherent defects, doesn't matter really, the RISK has suddenly exceeded expectations, and we need more money to cover the future, if these kinds of risks are going to continue to occur.
Or, the financial markets don't seem to be doing too well, and our invested money is not matching expectations or, worse, our investments have lost money in the last year or longer. We need to make up the shortfall by charging more money, because we are also forced to increase our reserves.
Or, our cost of doing business has increased. Congress has raised corporate taxes, the states have raised taxes on premiums or profits or both, the county and city where our offices are located have raised property taxes, sales tax on the paper and office supplies we buy has increased, inflation sort of forces us to raise the pay for our workers, utility costs are rising, our landscape maintenance company is charging more to mow the lawns and trim the hedges around the corporate headquarters, you name it . . . AND THE CLAIMS ARE COMING IN greater than we expected due to the series of hurricanes, vehicle recalls (or damages to the vehicles before the recalls occur), or the cost of medical care is accelerating because of technological advances or because the insurance companies are paying providers less for each service, so the providers are billing for more services, the pig flu has swept the country, there's a measles epidemic, and so on.
Insurance companies have only a limited ability to control each of these three areas, and in some cases, they have absolutely no control (like taxes -- so they spend money in an attempt to "influence" the outcome -- or weather -- or actual volume of claims).
If your risk has not changed and you haven't had any claims, then one or more of the other two areas has been affected, and you, along with all other policyholders, may have to pay more to help maintain the stability of the insurance company.
Because we all want our insurance companies to be profitable and stable don't we? If you don't see it that way, then you need to understand that for insurance to work the way WE expect it to, the insurance company had better make a profit.
Politicians often fail to understand this, too, and amid all the rhetoric surrounding the health care "debate" ("debacle" in my book), insurance companies were vilified by Obama, and virtually every other Democrat, as evil for being profitable. Obama now wants to scale back or eliminate Medicare Advantage plans for seniors because they cause government money to flow to private insurance companies, despite the fact that these same insurance companies are actually saving the government billions of dollars in claims that would have been paid under "Original Medicare", and seniors are getting broader services than Original Medicare courtesy of the HMOs and PPOs.
Now that health care is off the front burner for a while, the current target is Big Oil. BP has a "little" problem in the Gulf of Mexico, and they get hammered when they are about to pay dividends to their shareholders based on past profits. "Why is BP paying big dividends when they need to be cleaning up the Gulf?"
Government meddling caused BP to retract the dividends, their stock price got hammered, they were forced to bend over and set up an additional $20,000,000,000 slush fund not under their control for future cleanup operations that they are already paying for (and which the government is ineptly managing). Why? Because they are too profitable.
It's all a vicious cycle, and in the end it's all of us, as "consumers", who take the ultimate hit as insurance premiums, or the cost of oil/gasoline and related products, increase, which fuels inflation, which forces prices up . . . .
So does it start with the insurance companies or does it start with the governments? I'll let you decide that one.
(( Sorry for the extended rant on government and taxes, but someone's got to do it ))
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