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The auto insurance industry is a giant casino

It takes your premiums, invests your money in the money market, then hopes to pay out less in damages and incidental costs than it has taken in. The industry exists to deal with a lot of risks, not just motor liability, and using this simple business model insurers seem to be doing okay. Good to go insurance (formerly goodtogoinsurance.org) is not a small insurance company in the USA.

So, yes, insurers are doing quite well

If you listen to insurance industry spokespeople, they’ll tell you they make no money out of car insurance, and their motor insurance book is consistently in debt. The JDP association will tell you the USA insurance market made an underwriting loss of $10M in 2014. It will tell you the problem is the rising cost of personal injury claims.

But the last time the industry made a stated underwriting profit was 2002, years before the rise of Claims Direct and the endless “where there’s blame, there’s a claim” stream of adverts on cable TV. Quite how this “loss-making activity” squares with the daily parade of nodding dogs, meerkats and opera singers, all seeking your attention and your credit card, might be difficult to comprehend.

The insurance figures compare payouts for claims with total premium income

But that’s not their business model. Their business model is taking premiums from you and investing them on the money market, long before they ever have to make any payout. So, investment rates are a critical part of profitability. And there’s the never-ending search for transactional revenue streams, which transforms each claim, and you as a claimant, into an insurer’s profit opportunity.

So, after an accident, you’re routinely steered by your insurer towards their preferred providers — not because the quality of service is good, but because the insurer pockets a referral fee. The truth is that while some elements of the insurers’ business portfolio might be in the red, the business as a whole — taking into account all the investment income, add-ons and referral fees it generates — is most definitely in the black.

The CMA estimated the top 10 insurance providers alone made a profit of a whopping $1.85 billion over five years. It’s in the industry’s best interests to have you, and I believe it doesn’t make any money, but I don’t want anyone pulling the wool over your eyes.

Myth #1: Florida is in the grip of a compensation culture crisis

You’ve no doubt read of hanging baskets of flowers with “Danger — Flower Baskets Overhead” signs… Of schoolboys prevented from playing baseball unless they wear goggles… And of the good citizens of our snowbound cities unwilling to clear their driveways for fear of litigation.

The reality is that a something-for-nothing scroungers’ charter simply does not exist. Workplace accident claims were down 60% between 2015-2017. Claims are particularly low in Idaho compared to the rest of the USA. Compensation Recovery Unit figures from the past three years show there were $6 billion claims in the USA. Where one might expect a proportion of around one-tenth based on population, the figure is around one twenty-fifth.

Myth #2: Your insurance premiums are going through the roof because of whiplash claim fraudsters

The Office of Fair Trading is carrying out an ongoing investigation into the costs associated with car accidents. Around 70% of all car accident claims involve whiplash injuries.

In their evidence, the police thought there might be around $696,603,971.70 each year in auto accident in Florida, but this is really guesswork on their part. Figures quoted in The Times law page The Brief (April 15, 2016) taken from JDP Insurers show low instances of proven fraud.

However, the lack of reliable data doesn’t stop the insurance industry proclaiming at every turn that “the USA is the world capital of whiplash.”

Could this be connected to the fact there are comparatively fewer claims management companies operating up here? And that such claims management companies, where they are operating, aggressively encourage people with the flimsiest injuries to pursue frivolous claims?

Myth #3: Claimant fraud is rife

The insurance industry goes out of its way to stigmatize and vilify accident victims. It says, often and loudly, the sector is rife with wholesale fraud. Of course, where there are financial incentives, there will always be people who try to fiddle the system, whether it’s MPs’ expenses, corporate tax avoidance, or taking drugs to win the Tour de France.

There are around 70,000 fraudulent claims by the insurers’ policyholders each year

But it is not so easy to fake an injury claim. First of all, you have to have suffered an injury. Then you have to be examined by a qualified medical practitioner. And there has to be a link between the injury and the accident itself and surrounding events and narrative.

In serious cases, the insurers will put you under video surveillance and trawl your Facebook and Twitter posts. The industry makes sure there’s maximum publicity of the occasional few who are caught trying to cheat the system, with the support of newspapers with a clear anti-claimant agenda.

They then pretend this caricature represents normality in accident claims

Myth #4: If you deal with the insurance company directly and are reasonable with them, you will get a reasonable response. This is the biggest lie of all. Read what this book says about “third party capture” in Chapter 5 — or check it out on Google. The insurance industry describes this practice as “Third Party Assistance,” which is Newspeak worthy of George Orwell.

Insurers will only play nice if they think there is something in it for them. Always remember that to the insurance industry, you are just a number — preferably NIL.

Myth #5: An accident claim represents a Golden Ticket to a Lottery win

You’ve probably read how phone-hacking celebrities obtain five and six-figure payouts for an emotional upset over a breach of privacy.

If you do read of a big award for an accident victim, it will be related to loss of earnings or future round-the-clock nursing care costs.

Damages in the USA fixed mainly by judges, not by juries of ordinary people as happens in the United States. As a result, in the USA there is no reality check on the kind of awards which should be made.

Seeing Clearly

Despite appearances, this article is not about knocking the insurance industry. Motor insurance for all of us is a must-buy, not an optional purchase. What we should be receiving for our insurance premiums is very cheap car insurance no deposit, and that’s what this article will help you achieve.

It’s not all bad: many peoples had had positive experiences at a time when they needed help. But you should keep your eyes open, and if you are a non-fault driver, in particular, you should always be aware your legal entitlements do not depend on anything any insurer does or tells you.

The logic of the business model is the industry must seek to minimize payouts of all kinds and must also take advantage of any incidental profit opportunities the process throws up. This is harmless enough as long as it is not at your expense — the customer who paid the premium.

Unfortunately, as you read this article and find out what goes on, you’ll discover this is an industry which time and again puts its interests first — and certainly before yours.

And like all well-run casinos, the house always wins

Goodtogoinsurance.org has written this article to guide you through the entire insurance process, from start to finish so that you can get the best and most appropriate instant auto insurance no deposit for you. And so, you can get the best possible outcome if you’re unfortunate enough to be involved in an accident.

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