Insurance Industry

The Real Deal with Insurance

It’s next to impossible to pick up a copy of the newspaper without reading about another corporate scandal involving greed, deception, and fraud. The insurance industry is not immune from these corporate scandals. Recently, the nation’s largest re-insurance company AIG faced these very same allegations. Yet, the insurance industry as a whole has spent countless millions of dollars convincing us that it’s in fact lawyers who are the cause of higher premiums. They have been successful at passing legislation restricting consumer access to the courthouse especially in cases against big corporations.
Yet, like a spoiled child, they want more. The insurance industry claims these sweeping “tort reform” measures are necessary to protect Florida’s businesses from high insurance premiums caused by litigation. However, contrary to these claims, insurance companies are posting record profits:
U.S. property and casualty insurance companies increased profits by 1000 percent in 2003 over 2002 to $29.9 billion.(1) For the first half of 2004, the property and casualty insurance industry’s after-tax net income was the highest ever: a record-breaking $23.5 billion.(2) And in 2004, the property and casualty industry’s surplus reached over $370 billion, its highest level ever.(3)
In November 2004, Florida’s largest medical malpractice insurer, First Professionals Insurance Company (FPIC), reported that their yearly profits through September 2004, increased 81 percent ($21 million vs. $11.6 million) over last year’s profits in the same period. Also in November, FPIC’s stock climbed to the highest it had been since the summer of 1999.
The nation’s HMOs nearly doubled their net profits in 2003, earning $10.2 billion in 2003, up from $5.5 billion in 2002 (an 86 percent increase), according to Weiss Ratings (4) Some examples of managed care companies’ profits are:
Blue Cross Blue Shield plans – 63% increase in profit
Kaiser Foundation Health Plan – $995.5 million profit
Physicians Service – $314.2 million profit
Group Health Cooperative – $187.8 million profit
Aetna Health – $129.8 million profit