To be fair, the refusal/inability of companies to meet financial obligations is not a problem unique to insurance companies. All organizations rightly focus more on generating revenue, but some are reluctant when asked to keep promises to their customers that involve financial outlay.

I recently ran an experiment with my mobile provider. As my contract was coming to an end after a period of two years, I contacted them and, as usual, followed the steps indicated by the answering machine. Surprisingly, after waiting 20 minutes to speak to the staff, I was logged off. This happened twice, so when I called the third time, I opted for the option that linked me to the sales unit staff and was instantly connected to a member of staff. Of course, when it became clear to the staff that I wasn’t looking for a new contract, I was transferred to the cancellation team and kept waiting.

Without exception, every country where insurance companies operate will have some unscrupulous operators who are no better than the common scammer on the street who uses dishonest methods to trick people out of their money. Although I have praised insurance companies in previous posts, the feedback I have received coupled with some personal experiences has led me to accept that there are insurance companies operating today that need to be closely monitored by the authorities.

Even the so-called center of insurance, London, has its share of insurance companies using specially trained staff backed up by fancy TV ads and publications to persuade unsuspecting members of the public to hand over money in exchange for poorly drafted insurance contracts.

How to spot corrupt insurance companies

Premium

We’re all hungry for bargains and most rush to comparison sites to get quotes. Unfortunately, these sites rank insurance company quotes based on price, with the cheapest ranked highest. As with most goods and services, the cheapest is not always the best. This is especially true for insurance because it involves the pooling of funds in which each policyholder is expected to contribute to the reserve, with a premium proportional to the risk presented.

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

Reviews

A great advantage of the Internet is that people can post reviews of products and services detailing their experiences. Reviews are also available online for companies with the companies’ customer rating services. Most of us already read reviews of most products and services before buying them and therefore we should extend this practice.

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

References

Similar to the highlights on previous reviews. The traditional way of deciding whether to patronize a company that offers a service is usually to ask friends and family for their opinion. We often extend the consultation to professionals with whom we have had dealings and trust/value their advice.

Annual company report

For those comfortable with numbers, the traditional method of reviewing a company’s health is the annual report, which is a comprehensive report of the company’s activities over the previous year.

With just a few clicks, these reports could be accessed on the web providing access to useful information such as the company’s balance sheet, its profit and loss statement and cash flow, as well as useful notes to help understand the financial statements.

Opt for legal coverage extras

This is particularly useful when you need to chase down an uninsured loss. Insurers are more likely to accept a claim that is within the scope of their policy if it is brought through an attorney because prolonging such claims costs them much more in legal fees if they ultimately lose the case.

However, if you find that you are no match for the power of insurance companies but must invest in insurance anyway, you may want to seek the services of an insurance broker.