Friday, March 15, 2019

Insurance... what a scam!

Insurance is a scam. Period. Medical, home, auto - it's all a rip off by insurance companies, companies that are making a fortune off of normal people, and raking those people - who are providing their fortunes - over the coals. (Medical billing is also a scam, FYI.) Let me give some examples.

Recently, my USAA insurance premiums have increased, both home and auto. Now, I love the service that USAA provides in terms of insurance (especially auto), and the rates were initially (and may still be - I have not yet started investigating alternatives) very, very good. But those rates have increased significantly this year, well beyond the rate of inflation. The annual rate of inflation in the US for 2019 is currently at 1.5% (as you can see here or here, for example); it has bee around 2% or less since 2016.

When my auto policy renews in April, the premiums are increasing 7.6%, or about 5 times the rate of inflation. Now, I get it, insurance rates aren't directly tied to inflation - there are other factors. But those increases seem rather high for yearly increases. Especially since, for the auto portion, the vehicles are all older and thus the values have dropped (I know that they claim "repair costs increase" - but I disagree relative to the premium increase; if anything, they would increase at the rate of inflation, but since the vehicle value has decreased, the total loss value is also lower, so comprehensive and collision should at least remain static, at most increase at some value less than inflation, relative only to the repair/replacement cost of the vehicle). I also understand, as I said, there are other factors - risk of loss may have increased. But that's an average, and my direct (at fault) loss over the last year is zero (we did have a loss in December, but that was determined to be the fault of the other driver, and their insurance accepted full responsibility for that accident). If anything, you'd think that member loyalty would factor in somewhere along the way - that an existing customer might get breaks on rates, not increases.

When my homeowner policy renewed at the end of 2018, it increased 25%, or more than 13 times the rate of inflation. The real kicker here is that, yes, storm related losses may have driven some of the overall industry increases, but USAA doesn't cover wind storm damage in Alabama. So, while the losses from hurricanes and tornadoes may have increased, the coverage provided by USAA shouldn't have correspondingly increased. Wind coverage in Alabama is by the Alabama Insurance Underwriters Association (AIUA), which would have borne out the increase in cost (other insurers, which do provide wind coverage, would be potentially justified in a significant increase). AIUA, however, only increased 2.2% from 2018 to 2019 renewal. Why did USAA increase by 25%? I guess they were "just keeping up" with other insurers, although they don't pay out the same losses that drove those insurers to increase their premiums. Thus, USAA is just piggybacking and increasing their premiums for no reason.

I started using USAA in 2016 after "the summer of loss" where we had three liability only vehicles totaled in two at-fault (not mine, directly, but a driver on my policy) accidents in a one-month period, and none covered by my own insurance (literally total loss from my bank account). Looking back at my coverage by Cincinnati Insurance at the time, they cited this as the reason for non-renewal, forcing me to find new insurance:
  • 10/10/13  Glass     $251
  • 3/31/14    Glass     $447
  • 10/30/14  AF         $2640
  • 7/16/16    AF         $9791
  • 8/24/16    AF         $388 ($22K reserved)
Sounds bad, right? But if you add the explicit amounts, it's around $13.5k (not counting the reserved amount on that last accident). I don't know the final total on that last accident, but even if it hit the reserved amount (unlikely; there was not significant damage outside of our vehicle), that's still hitting under $36k. I looked back at my premiums with Cincinnati over the six years we were with them, and based on an estimate, we had paid more than $36k in auto insurance premiums. And they paid out (at the time of deciding to non-renew) just over a third of our premiums in coverage (yes, there would be more to come on the last accident, but unlikely to hit the $22k mark - probably less than the next-to-last accident, as the apparent damage to the other involved vehicles was significantly less). But, on top of that, we'd been paying them homeowner premiums - with zero claims - over that period as well.

The moral, so far is that insurance companies only want you as long as you're a major profit to their system; the moment you start to actually use the service you're paying for, in any significant capacity, they don't want you anymore. And they increase their premiums at will, well beyond the inflation rate and in opposition to what you'd expect (that as your cars get older, the rates will decrease).

Now, what about health insurance? I'm paying significant premiums to my health insurance, and have been for years. But when we go to the doctor? They don't cover anything - it's all out of pocket (unless we have a major catastrophe). Case in point: my wife had tubes put in her ears. Total bill approaching $4k. How much did insurance cover? Because we went with "in network" providers, 80% of $250, or $200. Of $4k. Despite us paying more than twice that annually in premiums. Prior to this year, we paid all those premiums and didn't even use the insurance for anything major (they covered one annual visit - well, a part of one annual visit; the doctors would "talk about" other things than what's covered on the annual visit, and then suddenly it's more than just an annual visit, and we get charged for that extra conversation as well). They take our (significant) premiums, and have for years, but don't really pay out a cent in coverage. And because I have "coverage that meets requirements" available from work, if I were to try to buy coverage from the marketplace, I'd be looking at even worse options: BCBSAL, the only open-market option in Alabama, would charge somewhere between $12k and $24k in premiums - and still have an annual deductible of about $13k.

Dental: they cover "two annual exams" - but if you have a "limited, problem focused exam" because of pain in a tooth, that lesser cost usurps one of your comprehensive annual exams, so then your six-month exam is no longer covered by insurance (honestly: I don't know why we're paying dental insurance, anyway; with the annual max, our premiums end up cancelling out with what the insurance pays, and then we're stuck with the remainder; probably should just focus on the basic plan instead of the advanced plan and just have the annual cleanings covered, and handle the rest separately).

So, there you have it: insurance - health, home, auto, whatever - it's all a scam. A rip off industry designed to give executives large bonuses right out of my pocket. And I haven't even started on the medical industry, where they just bill you whatever they want according to some guidelines and won't even tell you what you're paying for ($2,700 of that $4k of bills for the surgical insertion of tubes was at a surgical center, which charged two facilities charges for the one visit because "it was two procedures" - like if you had your oil and air filter changed at Jiffy Lube and they charged you twice for the garage and lift usage because they did two things while your car was in there - but they won't tell me what that actually covers: it's just a charge for a code by the national ear, nose, and throat governing body).

Everything is a scam! Take the money and run...

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