Insurance: Avoid companies that collect premiums quickly but are slow to pay claims

Frankly, the refusal/inability of companies to meet financial obligations is not a problem unique to insurance companies. All organizations rightly focus more on monetization, but some become reluctant when asked to keep promises to their customers that involve financial expenditure.

I recently conducted an experiment with my cell phone provider. As my contract was about to expire after a two year period, I contacted them and as usual followed the steps as directed by the automatic answering machine. Amazingly it got disconnected after waiting 20 minutes to talk to a staff. This happened twice, so when I called a third time, I went for the option that linked me to staff in the sales unit and was immediately connected to a member of staff. When it became clear to the staff that I was not looking for a new contract, I was of course transferred to the cancellation team and kept waiting.

Without exception, all countries where insurance companies operate will have some unscrupulous operators who are no better than the common street scammer and use dishonest methods to trick people into handing over money. While I praised insurance companies in previous posts, the feedback I’ve received along with a few personal experiences have led me to accept that there are insurance companies operating these days that authorities should be watching closely.

Even the so-called hub of insurance – London has its share of insurance companies that use specially trained staff backed by fancy TV advertising and publications to convince unsuspecting members of the public to hand over money in exchange for poorly worded insurance contracts.

How to spot crooked insurance companies

Premium

We are all hungry for bargains and most rush to comparison sites for quotes. These sites unfortunately rank quotes from insurance companies based on prices with the cheapest at the top. As with most goods and services, the cheapest is not always the best. This is especially true in insurance, as it involves pooling of funds where each insured is expected to contribute to the pool, with the premium being proportionate to the risk involved.

So if the price (premium) seems too good to be true, avoid it. When an insurance company undercuts competition by offering ridiculously low premiums, it follows that in the event of a claim, that company may not have sufficient funds to meet its obligation after provisioning for overheads.

Reviews

A major advantage of the Internet is that people can post reviews of goods and services describing their experiences. Reviews are also available online to businesses with the company’s customer review services. Most of us have already read reviews for most goods and services before purchasing and should therefore expand on this practice.

I usually scour the web for as many customer reviews of a company as possible, as some of these companies, with the help of their IT staff, try to counter the negative reviews by posting fake reviews.

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Referrals

Similar to points highlighted about reviews above. The old-fashioned way to decide whether to patronize a company that offers a service is usually to ask the opinions of friends and family. We often extend the research to professionals we have dealt with and trust/value their advice.

Annual report of the company

For those familiar with numbers, the traditional method of assessing a company’s position is its annual report, which is a comprehensive account of the company’s activities in the previous year.

With a few clicks, these reports could be accessed on the Internet and provided access to useful information such as the company’s balance sheet, income statement, and statement of cash flows, as well as useful notes for understanding the financial statements.

Choose legal cover

This is especially helpful when you need to pursue an uninsured loss. Insurers are more likely to honor a claim that falls within the scope of their policy if they are brought through an attorney, as prolonging such claims will cost them much more legal fees if they ultimately lose the case.

However, if you find yourself unable to cope with the power of insurance companies, but still need to invest in insurance, you can take the help of an insurance broker.