Today as more and more insurance is purchased online and by mail, many people are concerned about the potential of being ripped off. There are several things that you can do to avoid an insurance scam. Most of these suggestions apply both online and off.
- Make sure your insurance company is approved by the insurance department of your state.
- Make sure that the number of complaints is consistent with the size for the insurance company.
- Write your checks to your insurance company, not your broker.
Work with Approved Insurance Companies when You Can
Many insurance rip offs come from companies that aren’t actually insurance companies. Be suspicious of companies that don’t even use the word “insurance” in their name. Of course certain well-known companies like Blue Cross Blue Shield are exceptions, but with other companies, this should raise a red flag.
An insurance company should be approved by the insurance department of the state you live in if your insurance department approves other companies that offer that line of insurance. For example the Connecticut Insurance Department lists several health insurance companies, but no international travel insurance companies. Therefore a travel insurance company that isn’t listed isn’t necessarily a bad company. I’ve put together a list Insurance Departments and their phone numbers for your convenience.
A very important factor that is harder to research is the percentage of premium dollars that a given insurance company spends each year to pay for claims. These numbers should be compared with their competitors in the same state. However, as a general rule, 80% is a good number for health insurance. Anything below 70% should cause you concern with a medical insurance company. You may be able to get this information from your insurance department’s website or the company’s annual report.
Insurance Company Complaints
If an insurance company has no complaints, it probably isn’t doing any business. However, the number of complaints should be consistent with the size of the company. There are going to be a sizeable number of complaints about Anthem Blue Cross Blue shield simply because of the size of the company and the number of people it serves. But the number of complaints for Mega Health and Life being a smaller company, should be a fraction of the number of complaints for Humana, for example.
Insurance Referrals – consider the source
Whether you are listening to a complaint or a compliment regarding an insurance company, consider the source. A consumer who hasn’t had a major medical expense yet, may use the wrong criteria and recommend a lousy insurance company. U.S. News and World Report reviews group health insurance companies each year. There are other similarly informed and unbiased sources that will review various aspects of the insurance industry.
Another good source of information may be your physician. Ask your family doctor about the insurance companies he or she deals with. He or she will probably know which companies pay poorly and leave their patients holding the bag.
Paying for Insurance
Make sure that the payee on any checks you write is your insurance company and that your checks are mailed directly to your insurance company. Avoid making your check out to your insurance broker or agency.
When paying online or entering personal information, make sure that you are on a secure page of website. Secure pages have URLs that start with “https” instead of “http.” Also in most web browsers you will find a closed padlock on the bottom right if you are on a secure page.
Unfortunately there are may scams ruining the reputation of the insurance industry. Being careful, not only helps you, but also your neighbor. Your vigilance reduces the profit from these scams and will hopefully reduce the number of people preying on consumers.
By the way, this website is a member of the Better Business Bureau and there are no complaints against this agency or it’s agents that have been filed with the Connecticut Insurance Department. (I’ve been licensed since 1985.)