- Article
- Comments ()
- Videos
NEW YORK
The headline numbers were eye-popping: Allstate reported a record $5 billion profit for 2006. State Farm Insurance's profit climbed 65 percent for the year. St. Paul Travelers' earnings rose sixfold in the fourth quarter, American International Group's rose eightfold.
A year and a half after Hurricane Katrina devastated the Gulf Coast, profits at the nation's major property-casualty insurance companies soared -- and are expected to be strong again in 2007, according to estimates by the A.M. Best Co. rating agency.
Critics contend the insurers are doing well financially by shorting the people who bought their products -- including hundreds of consumers who still haven't received settlements for their Katrina claims. The industry, in turn, denies taking advantage of consumers, instead crediting its growing profitability to fewer storms last year and improved business procedures.
One of the harshest critics, J. Robert Hunter, director of insurance for the nonprofit Consumer Federation of America in Washington, D.C., accuses the nation's insurers of using Katrina and other major hurricanes to try to justify "overpricing insurance, underpaying claims and reaping unjustified profits" at the expense of homeowners and business owners.
Mr. Hunter, a former Texas state insurance commissioner, added that he expects the industry to continue to do exceptionally well because it is pushing more risk and more cost onto policyholders.
"They're making homeowners and business owners take on more of the risk through high deductibles, caps on replacement costs and other limitations," he said. "And they're refusing to renew tens of thousands of homeowner and business property policies, especially along the coasts."
Mr. Hunter argues that state regulators "have not done the job to control excessive prices" charged by the insurers.
For consumers, the situation is both frustrating and financially burdensome.
Joyce Ridgeway, whose four-family house in the Esplanade Ridge neighborhood of New Orleans was damaged when Katrina hit in August 2005, is still waiting for a final settlement from British insurer Lloyd's. So far, she has received $30,000 toward the $85,000 needed to cover living expenses and to repair the roof, gutters and wood siding wrecked by the storm.









Post a comment
There are comments on this article, submit your opinion!
If you feel there is still something worth mentioning about this entry please contact the author or the site admin.