Are Insurance Companies Looking Out for Consumers?

LONDON - NOVEMBER 01:  Pensioner Mary Devlin uses a laptop computer at home on November 1, 2007 in London, England. A social networking site for the over 50s has been launched by the SAGA group. 13,000 people have already signed up to the new site called Saga Zone - which has many forums covering topics as diverse as relationships and gardening tips.  (Photo by Peter Macdiarmid/Getty Images)

Many consumers who have settled insurance claims are perplexed when they hear of other claimants receiving more in settlements for property damage or pain and suffering for their injuries that they did for very similar claims. While not every accident or claim is the same and you can always point out differences in the nature and extent of injuries or property damage, there are additional factors to consider in determining if you are getting the most for the premiums you are paying.

In looking for auto insurance, most consumers are primarily concerned about the cost of monthly premiums. Insurance rates are based on a number of factors such as where you live, your age, type of vehicle, your claims history and any moving violations. However, perhaps consumers should be more concerned about which insurers pay more in claims than others since this can cost you thousands of dollars in a major accident. Data on this can be hard to find since it is not so readily accessible.

Insurance Companies Insight

A data analytics company, ValChoice, recently published its findings on auto insurance companies that sheds light on which insurers are more structured for looking out for consumers than others. The company looked at more than 300 insurers over the past 5 years and examined their claims history.

What Insurance is better for Car Accidents?

There are two kinds of auto insurance companies–publicly traded companies and mutual insurance companies. The former is structured so that it must satisfy public shareholders and its policy holders, two parties that have mutually exclusive interests. Of course, shareholders seek to invest in companies that give them greater returns while policy holders expect at least reasonable but also more generous payouts on their claims.

Mutual companies serve only one master–the policy holders who own the company and who may be paid premiums. These companies provide the best value to consumers. But even among mutual companies, there are two models. One pays premiums to policy holders while the other puts them back into the company. Mutual companies that pay premiums to policy holders constitute 42.3% of the market. USAA is the most prominent of these companies. Others examples are the Auto Club of Southern California, NJM Insurance and Amica Mutual.  Liberty Mutual, in Massachsuetts, is a mutual company that does not pay premiums to its policy holders.

ValChoice also looked at the data on a metric called pay-loss ratio. Those companies that had the highest pay-loss ratio paid out higher on consumer claims. If you are in an accident, you are more likely to receive a more generous payout with these companies. Publicly traded companies paid out the least in claims, or just under 63% of premiums. The companies with the highest pay-loss ratio paid out 72.6% of the premiums earned.

Personal Injury Damages and Insurance

You may be paying lower monthly premiums for your auto insurance, but if it is a publicly traded company such as Allstate, Progressive and Geico with low pay-loss ratios, you are likely paying for less coverage. You will also experience less generous payments on your losses and have a longer and more difficult time receiving payments or reimbursements.

You can research your own company by going to and choosing car insurance rating reports and see if your insurer meets your expectations. Of course, the cost of monthly premiums is always a concern but try to keep the big picture in mind. You certainly want a company that gives you the coverage you need and will not shortchange you when it comes to paying on a claim.

If you’ve been involved in a car accident and are fighting either your insurance or the person who hit your vehicle’s insurance company call accident lawyer Neil Burns: 617-227-7423.