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National consumer organizations and the Consumer Federation of America released a study in January stating that the property/casualty insurance industry has dramatically increased profits and surplus in recent years, in part by systematically over-charging for insurance and shifting costs to consumers and taxpayers. The groups say that the report provides extensive data demonstrating that property/casualty insurance companies are paying out lower claims in relationship to the premiums they charge consumers than at any time in decades. The combined ratio, the study contends, appears to be the lowest on record in 50 years. Profits, on the other hand, were high.
“We saw record profits in 2004 and 2005 despite significant hurricane activity,” said J. Robert Hunter, the Director of Insurance for the CFA and author of the study. “Profits in 2006 rose to unprecedented heights, with pre-tax profits likely to increase by over $30 billion for property/casualty insurers, a jump from the previous record of more than $100 for every man, woman, and child in America. Meanwhile, the amount that insurers paid in claims and expenses as a percentage of the premium collected in 2006 plummeted to a 50-year low.”
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