Every year in Tallahassee the insurance company lobbyists push for Tort Reform. The story is always the same. The poor insurance companies are losing millions of dollars, and if something isn’t done soon, then all the insurance companies are going to leave the state. Really?
Ask yourself this, if you were in a business that lost money on every sale you made, would you spend money advertising for even more sales? The answer is No. Rest assured Insurance companies wouldn’t spend billions of dollars per year on advertising if they were losing money.
The advertising leader is GEICO. In 2013 GEICO spent a whopping $935 million on advertising. I don’t think it was a coincidence that in 2013 GEICO dramatically changed their claims handling tactics and case evaluations. Advertising works. Because of its advertising budget GEICO grew its personal lines in 2013 by 11.2%. As they grew their business, they stopped paying claims. Almost every case with GEICO in our office is in litigation. They rarely if ever fairly evaluate claims.
The second biggest advertiser was Allstate Corp., who had a budget of $654.8 million-Again, they care a lot more about selling new policies then they do about taking care of existing policy holders.
The figure below illustrates the top 10 advertisers in 2013:
The advertising disparity between the top 4 and the remaining 6 is enormous. The claims handling among the top 3 carriers is deplorable. The business plan is, sell as many policies as possible, and hold on to that cash until the bitter end. When interest rates were high, the insurance company would put their money in the bank, and earn a nice rate of return. Since rates have been historically low, the insurance carriers figured they would get a better return by spending money on advertising, and that is exactly what they have done. In either scenario, they’re making money. Did I mention that GEICO was owned by Berkshire Hathaway-Warren Buffet’s company. I think he knows a good investment when he sees it.
Fortunately we still have Bad Faith Insurance Law in the state of Florida, and that policy doesn’t always work out so well.
If you have been involved in a car accident call an experienced car accident attorney. Remember, most insurance companies will not do the right thing on their own. Despite the cute commercials, they are not your friend.
Mark Kaire has been practicing law in Miami for nearly 30 years. He is dedicated to helping the injured people of Miami receive compensation. Mr. Kaire has been blogging on Miami’s legal issues for many years.