Are The Insurance Companies Getting Ready to Play Chicken Little?

It seems like we hear about an insurance crisis every 5 to 10 years. It's a great way for the companies to taint juries and rile up business owners against lawyers. Because everyone knows that if we killed all the lawyers the world would be so much better.

Fellow Injuryboard blogger , Lindsay Rakers, looked at the issue recently:

Study: How the Insurance Industry Manufacturers Crises and Harms America, Lindsay Rakers | December 15, 2011 7:01 PM

The issue is a study from the Center for Justice & Democracy, through its project Americans for Insurance Reform (AIR). The PopTort is calling this study a must read.

Such crisis work great for insurance companies because they :

• Give them a reason to raise rates.
• Add to concerns that jurors have about people making claims.
• Scare people from making claims.
• Will sell more insurance as people have concerns about protection.

It is like a Christmas present that keeps on giving. Further, as the report points out, there were questionable numbers that were used in the past:

According to recent data, insurers' efforts to move toward higher rates may have already paid off. MarketScout, an insurance underwriting and distribution company, reported that the insurance industry entered a hard market in November. That month, property and casualty premiums increased by an average of 1 percent — the first composite premium rate jump since February 2005.

The report also has some solutions which include:

• Meaningful insurance data disclosure to state authorities, allowing officials examine the financial health of the industry and the civil justice system.

• States to enact stronger regulation and oversight of the industry and to repeal anti-competitive laws.

• Congress to repeal the federal anti-trust exemption and at a minimum, the new Federal Insurance Office (FIO) to review the impact of the McCarran-Ferguson Act on consumers.

I remember learning a long time ago that the basis for insurance was that they were supposed to adjust their premiums based upon what was paid out. That the profit was made upon being able to use the money in the mean time and invest it. The premium was never meant to be the profit. It is important that people be reminded of the benefits that these bank like institutions have in our world. Chicken Little complaints aren't part of that role.