Insurance companies are horribly cheap

Now, that's a catchy title, huh? Would you believe that an insurance agent wrote it?

A friend of ours, Kevin Hill, is a well-respected commercial insurance agent with Brown & Brown. He read the article posted on January 6, written by J.Sewell Perkins, in which she vividly explained how her house caught fire, her reaction to it, and the resulting experience with her insurance adjuster.

Her story prompted Kevin to address the issue, which he did in his blog titled "Insurance companies are horribly cheap". Here's Kevin...

Erik Deckers' Laughing Stalk Blog referenced the blog post to which my last post referred. In it he spoke to the incredulous actions of the adjuster and made the very small leap that insurance companies are cheap.

I agree. They are cheap. Remember that nearly 60% of their operating expenses are claims dollars. If they want to reduce those costs, they get stingy on claims. This can be done a couple ways. 1) They pay claims after proof they are valid, and then only to the letter of the law as the insurance policy dictates. 2) They nickel and dime legitimate claims in the hopes of shaving a couple percentage points off each and every claim.

Since most [policy holders] experience claims, especially property claims, very infrequently, it is hard for them to know which companies have a reputation for the latter behavior. A large insurance agency however does have frequent experience with claims.

It may be prudent for a business to make their decision on insurance agents based on their ability to direct them to reputable companies who have fair claims payment histories.

On the other hand, they can just keep taking the cheapest up front price and hope it doesn't happen to them.