Policyholders Testify in D.C. vs. Auto Insurance Companies


Consumers who say their car insurance providers duped them testified in Washington D.C. in a bid to support a proposed legislation making their insurers liable in court. The move comes as more people filed complains saying that their insurance claims were delayed, low-balled, or even denied by their insurers.

Policyholders Testify in D.C. vs. Auto Insurance CompaniesSeveral groups expressed their support for the legislation, which is being hailed as a milestone in consumer protection. Consumer Watchdog joined advocacy groups, policyholders, and attorneys in calling for the swift passage of the bill intended to protect consumers from unscrupulous and abusive insurance firms.

As part of the process, the Committee on Public Services and Consumer Affairs met face to face with victims of the alleged injustices committed by providers. Consumer groups said that they are hoping for the bill to be forwarded as quickly as possible to the full council.

At present, individual consumers have no right to challenge their insurers in court for failed insurance claims. This was cited by many advocates as a main reason why insurance providers in the District have provided significantly low settlement offers and even delay or deny legitimate insurance claims. District law requires companies to pay only the original value of the clients’ claims.

Carmen Balber, Washington D.C. director for Consumer Watchdog, a non-profit organization, says that consumers strive to pay their premiums on time and expect their insurance providers to fulfill their own responsibilities. She lamented the existing District law that she says gives these companies an unfair advantage and the de-facto freedom to offer ridiculously low offers. Aside from these, Balber points out those insurers often drag their feet when acting on insurance claims and even outright deny legitimate claims. By changing the law regulating insurance firms, Balber says that companies will give more focus to the policyholders, rather than profit.

In 2007, auto insurance rates in Washington D.C. were the highest in the nation. Companies also made substantial revenue in the District, which is the second most profitable area for car insurance providers. Only the state of Hawaii beat the District. Between 1997 and 2006, the companies’ average profit was 14.9 percent based on the 2008 study conducted by the Consumer Federation of America.

Balber testified during the committee hearings, saying that with companies making great profit for the past decade, they should be able to pay claims more fairly without having to resort to rate increases in premiums.