The Obama Administration has demonized insurance companies for dropping policies. I am not here to defend the insurance industry but to get at facts.
I was a senior banking and insurance analyst and know something about insurance and feel I can give some independent comments on the subject.
A policyholder can have his or her policy dropped for a number of good moral and valid reasons:
One: Material lying about preexisting conditions. No one should be allowed to buy fire insurance while a fire is in progress.
Two: Fraud. Material misrepresentation which is so basic that the company would otherwise not have accepted the risk
In one of the companies independently studied, only 0.1% of policies or 20,000 cancellations were made. It sounds like a lot when politicians talk their point, but it’s a study from millions of policies over a 5 year period.
On the other hand, our government does not tell you it cancels 6.8% of Medicare claims. Think of that the next time you consider truth in advertising, especially when you hear about government health care.
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