Insurance is a lifesaver when it works the way it should -- like
when a health plan covers vital cancer treatment or a home
insurance policy pays to rebuild a house that has burned down.
We love insurance at times like these. But the industry has
plenty of bad days, too. Here are seven things that insurers don't
1. Keeping young customers happy
The auto insurance industry's youngest customers also happen to
be the least satisfied and most likely to shop for a new company
when they feel slighted, according to a 2010 study by J.D. Power
Generation Yers (born between 1977 and 1994) want email updates
about their claims and answers to their basic questions. Um, don't
they know insurers aren't big on email? A quarter of Generation Y
customers prefer being contacted by e-mails, yet only 13 percent
reported getting e-mail updates about their claims.
Also, 16 percent said they didn't get their basic questions
answered when they reported their car insurance claims, twice the
percentage of baby boomers who reported unanswered questions,
according to J.D. Power.
Looking for an auto insurance company you can love?
See who ranks highest
in the most recent J.D. Power study.
2. Using social media effectively
Insurance companies want you to "like" them on Facebook and
follow them on Twitter, but many
haven't quite figured out how to tell their stories
, much less make you a fan.
Among 50 social-media savvy industries, insurance came in at 42,
according to a fall 2010 ranking by NetProspex, a New York-based
firm that helps companies find business-to-business sales
prospects. The company mined its database of contacts and analyzed
employees' use of social networks, such as Twitter, LinkedIn and
It could have been worse. Funeral homes ranked No. 50 and some
industries, such as health care, didn't even make the list
3. Finding deceased life insurance customers -- they don't even
Life insurance companies are under fire from state insurance
regulators for not trying hard to enough find beneficiaries. Here's
your life insurer doesn't care if you're dead
The insurers routinely use a Social Security Administration
database called "Death Master" to identify annuity owners who died
-- so they can stop making annuity payments. But when it comes to
finding life insurance policyholders who died, insurers tend to
turn a blind eye. Florida and California insurance regulators have
launched investigations, and the
New York insurance department recently told life
insurers to start finding beneficiaries right away
4. Paying health insurance claims and getting them right
The largest health insurance companies in California are putting
the "Denied" stamp on more than 25 percent of claims, according to
a report released in February by the California Nurses
Association/National Nurses United. The denial rates were based on
data from the California Department of Managed Care for the first
three quarters of 2010.
Nationwide, health insurance companies have a whopping 19.3
percent error rate in processing claims, according to the American
Medical Association's fourth annual National Health Insurer Report
Card. Eliminating the mistakes would save $17 billion in
administrative costs, the AMA says.
5. Revealing exactly how they calculate your auto insurance
It's no secret your ZIP code, gender, credit history, type of
car you drive, marital status and claims history all influence your
car insurance premium.
What you never will know is how much weight insurers place on
6. Figuring out which claims are fraudulent
Insurance fraud is a $30 billion a year problem, according to
the Insurance Information Institute. That's how much property
insurers pay out on fraudulent and exaggerated claims. Just as new
laws and procedures are implemented to combat fraud, crooks figure
out new ways to game the system.
7. Getting people to understand what insurers are talking
Consumers think insurance is among the most complicated
industries. No argument here.
Rather than appreciating the safety net insurance offers,
consumers find products confusing and full of complicated
A survey by Siegel + Gale, a New York-based branding firm,
confirmed our worst suspicions: Insurance policies are written in
gibberish. Insurance companies ranked near or at the bottom of its
Brand Simplicity Index.