Insurers taking risk out of the equation

Insurance is a risky business -- no one disputes that. But that's always been the case.

These days, it seems like insurers are doing everything they can to minimize risk by increasing premiums or lowballing claims. Or they're cherry-picking customers to avoid those who pose the greatest threat to their bottom lines.

"The private insurance business is a business, first and foremost," said Fernando Torres-Gil, acting dean of the UCLA School of Public Affairs. "As a business, the goal is to minimize payouts and maximize profits."

Yet the insurance industry always has been predicated on risk. Why are things different now?

"There's less regard for consumers and more emphasis on profits," Torres-Gil replied.

Robert Hartwig, president of the industry-backed Insurance Information Institute, said this was an unfair characterization of insurers.

"I don't know where that idea comes from," he said. "The insurance industry honors every claim under its contracts."

Hartwig said premiums were dropping in California and policyholders were being fully compensated for their losses.

"There's absolutely no substance to the argument that there's less bang for the buck."

As long as it's not your home, or kidney, that's on the line.

Consumer Confidential runs Wednesdays and Sundays and frequently in between. Send your tips or feedback to david.lazarus@latimes.com.

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