The Facts About Insurance Policy Cancellations

                 

Politicians have demonized insurance companies for dropping policies, much as they demeans other industries from time to time.

                     

I was a senior banking and insurance analyst in the past and keep in touch with the business. I wish politicians were as informed.

                     

A policyholder can have his or her policy dropped for a number of valid reasons:

                     

One: Material lying about pre-existing 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 insurance companies independently studied, only 0.1% of policies or 20,000 cancellations were made. It sounds like a lot when politicians talk, but it’s a study from millions of policies over a 5 year period.

                     

On the other hand, our government does not tell you that it cancels about 7% of Medicare claims. Think of that the next time you consider truth in political advertising, especially when you hear about government health care. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)