The first point to realize about the insurance industry is that settling claims is not in their best interest. Based on industry statistics, only a limited proportion of insurance customers file a claim, paying out on these claims hurts their profits.
Car insurance companies rely on the risk that consumers will not wreck an insured vehicle, the car is not stolen, and they do not harm occupants within the coverage period. Any of these outcomes could force the company to settle an expensive claim.
The insurance industry generates earnings and they have several sources for profits.
Underwriting revenue comes from insurance premium income that remains after business expenses and they deduct settlements, Expenses may be reduced, but delaying or denying claims keep these underwriting profits higher.
Insurance companies also put their money to work by investing it in stocks. Car insurance portfolios use short-term assets, while life companies lean toward long-term investments with decade-long maturities. Stock investments tie up resources, but help offer financial stability for the companies’ future.
Slowing a settlement also assists the company by allowing it to keep the premiums in interest-bearing accounts. The longer they hold on to these funds, the more interest they gain.
One way to hinder claims is to make filing a claim as complicated as possible. Insurance companies insist these complicated systems protect them from frivolous and fraudulent claims. However, these complex procedures allow them to delay settlements and keep their premiums as long as possible.
Delays also encourage the claimant to accept lowball offers because of the pressure from loss of employment, injuries, and a lack of income. Claimants may become frustrated by the process and unaware of the settlement value they are due.
The delays also run out the clock on the statute of limitations to file a claim. In Texas, two years is the limit to file. For example, contacting an Austin car accident lawyer as soon as possible is important to begin the claim process.
Another tactic is to blame the claimant for causing the accident or being involved with the theft of their vehicle. This goes back to demoralizing the claimant and allowing time for the adjuster to investigate, thus postponing the settlement process longer.
Contending contributory negligence can also allow the company to deny a settlement since they claim the claimant also was at fault.
The insurance adjuster will also request a recorded statement about the auto incident, and the claimant might feel this is an important and helpful step. This is not the case. The adjuster is hoping to secure evidence that the claimant was at fault through a misstatement. The sooner they record the statement, the better for the company, as the extent of injuries may be too soon to tell.
A claimant must educate themselves on their rights and the delaying tactics of insurance companies. Their adjusters are not a claimant’s friend and don’t have their best interest in mind. The adjuster’s loyalty is to their company and their bottom line, not the aggrieved party.