At Bottaro Injury Lawyers, we represent everyday people in our Rhode Island and Massachusetts communities. While we have decades of combined experience practicing local personal injury law, we educate ourselves on top practices and recent trends in the industry. That is why when I read Business Insider’s newly-released article that discusses the “devious new ways” insurance companies, like your health and car insurance providers, “rip you off,” I wanted to share it with you. In fact, I have boiled it down to 3 ways car insurance companies take advantage of us, how it applies to your car accident case, and why you need a skilled personal injury attorney to help you win your case.
Unfortunately, the Business Insider’s article’s contents come as no surprise to our entire firm. We have seen and combatted, first-hand, the tactics insurance companies use to give you the lowest payout possible. That is why today, I want to make sure our readers know about insurance companies’ actions and processes that are detrimental to consumers like you. Read on to review the top 3 questions and takeaways from Business Insider’s article on how insurance companies take advantage of their customers.
1. Why Do Consumers See the Insurance Industry as a “Necessary Evil”?
The first thing that this article recognizes is that people are unhappy with insurance companies. In fact, many people are even foregoing home insurance altogether. As far as car insurance goes, in 2019, roughly 3.5% of drivers in Massachusetts were uninsured. In Rhode Island, the situation in 2019 was even worse – roughly 16.5% of drivers drove uninsured. The article points out that insurance is costly, and that car insurance costs have risen roughly 17% in the last year alone.
At a high level, how does insurance work? Essentially, “insurance” is a large pool of people who pay a premium to remain in the pool. In exchange, if you or another person in the pool ends up with a major expense (car accident, house fire, cancer treatment, etc.), the group’s premium payments help to cover it. In essence, insurance should feel like a safety net, but to most, it does not. According to the article, consumers generally recognize that insurance is a rich industry wherein majority shareholders are the only ones who reap any benefits.
Why do people like you feel this way? The article says that it is insurance companies’ relentless quest to deny claims and exclude people, all the while raising premiums and cancelling services on people altogether. Of course, costs without insurance would be much worse, hence we accept insurance coverage as a “necessary evil.”
At Bottaro Injury Lawyers, we urge you to follow the law and maintain a car insurance policy. However, if someone causes and accident and injures you, call us so we can work with the insurance companies to get you the highest payout possible.
2. What are “Optimization” Tactics and How Do Insurance Companies Use Them to Help Their Bottom Line?
The bold, new way insurance companies take advantage of its customers is by using data-driven analysis to make choices about treating consumers in discriminatory ways. This practice is generally known as “optimization” or “price optimization.”
Insurance companies generally recognize that to maintain fairness, people should pay based on the risk they pose. However, insurance companies factor in more than just risk. Instead, they charge consumers based on their risk and how much they are “willing” to pay.
How do insurance companies do this? Well, the article points out that insurance companies used to use general demographic data points, like gender and age, to determine costs. But now, in the age of artificial intelligence (AI) and data collection, insurance companies can track things like where you shop, what you eat, where you drive, along with your credit score, zip code, and social media posts, among other data points.
Insurance companies take this data and guess, with AI technology, what you will be willing to pay. They will even factor in your Customer Lifetime Value, or the amount of money they will make off of you over your lifetime. They may be able to determine how likely you are to complain and base their premium deal or claim payout on that. Another example the article mentions is insurance companies can now target those with lower credit scores with lower payouts because those individuals are likely in need of immediate payouts.
3. How Do Insurance Companies Use Price Optimization and AI to Discriminate?
The last main point the Business Insider article made is that insurance companies use invasive data points to make discriminatory decisions and defend themselves by blaming the machine, or AI. To illustrate this, the author states:
“Instead of drawing redlines around risky populations and deciding to charge them more and pay out less, insurers use automated systems to find patterns in data and optimize parameters for profitable risk management — which often has the same discriminatory results.”
As many of us know or have experienced, insurance companies keep their practices quiet. We only see the “tip of the iceberg — the rejected claims, the raised costs, the revoked coverage.” Now, insurance companies use our data against us to make decisions about our cost of coverage and payout. In fact, the article even mentions the terms, “poverty penalty” and “poor penalty” to demonstrate the practical realities of insurance companies using our data against us.
And the worst of it all, as this article points out, is that insurance companies can hide behind bad decision-making in the name of AI. “If the machine is making the decisions, is anyone really at fault?”
I hope that this overview was helpful to you. Luckily, we at Bottaro Injury Lawyers know insurance companies’ games and how to manage them. We have calculated the value of many Rhode Island and Massachusetts claims, and we fight tirelessly for what they are worth. If you have any questions about insurance company practices, or if you or a loved are injured, call us!
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At Bottaro Injury Lawyers, we care for people. Attorney Mike Bottaro and his award-winning legal team handle all types of personal injury cases throughout Rhode Island and Massachusetts. We can even help on cases in other states as well. We pride ourselves on our honesty, integrity, and results. Contact us 24/7 in any method you prefer for a fast, free, and confidential consultation about your case. Feel free to text or call us at 401-777-7777 or fill out our free and confidential online form. We are here to serve and help you!