Does the dark side of insurance relate to insurance or human nature?
Insurance companies today are regulated and required by law to comply with strict codes of ethics and good practice on many levels.
Whichever way you look at it insurance practices have a dark side that members of the public don’t see.
Take for example typical car insurance. Prior to your final quote for annual cover, you the person and the item or car that you’re insuring is determined on many factors relating personally to you, the item and its risk to them the insurer.
How much of a risk are you to the insurance company in making a claim for financial payout?
Sophisticated calculations, psychometrics using algorithms are carried out on you and the item being insured to determine the level of risk or probability of you ever making a claim in that one year cover period.
What is the probability and the expected benefits to the insurance company?
Insurance companies appear to be just dull and boring when in fact they’re highly sophisticated moneymaking business systems that are no different from gambling businesses. They are gambling on the outcome of your behaviour, driving skills, past actions, stability, maturity, experience and or previous actions and claims.
There are many factors that determine your final quote which includes the accuracy or the inaccuracy of the information that YOU alone have provided in order to obtain that quote and final prepared policy for cover.
All insurance companies pre-warn you of the consequences of providing false or inaccurate information in order to obtain your policy cover and this is usually on the front page of your documentation.
Additionally this will also be stated to you verbally over the phone prior to accepting the quote.
You have been warned and the insurance companies are covered legally in many ways to ensure that they have brought to your attention the importance of accurate information on your part in the preparation of that policy which is based on what you tell them.
Obtaining insurance cover is one thing and actually making a final claim in the event of an accident, collision or theft is another.
There are hundreds of thousands of people all over the world and especially in the UK whose claims for financial payouts are declined due to false or inaccurate information that was provided at the time the policy was taken out.
Included within the psychometrics and algorithms that determine your risk of a claim is behavioural psychology or simply human behaviour, human tendencies which insurance companies know about and some may say thrive or reply on.
It’s in people’s nature to slightly distort or tell fibs and provide false information simply for the purposes of keeping the cost of the policy down when making the application for cover.
Most people do it and they see it as harmless or they may be in denial and completely ignorant of the consequences of not providing accurate and spot on information when taking out a policy. The question that has to be asked is would the insurance companies be successful and survive in business if it weren’t for the inaccuracies or deception that we applicants make?
Hundreds of thousands of claims are made yearly which are declined based on inaccurate or false information which are financially beneficial to the insurance Company. If you tell lies and provide inaccurate or false information in order to obtain a lower cost policy then all you are doing is sending your money down a one-way path to the insurance company’s bank account.
The fact that people provide inaccurate information even unintentionally without any attempt at deception actually supports and benefits all insurance companies.
If you make a claim and they discover this inaccurate information your policy will be invalidated or void immediately.
Insurance companies use skilled and trained insurance assessors who have eyes like eagles and will look for faults in your policy, they will go to great lengths to discover anything that could invalidate the policy.
They will do anything they can to stop your claim in a legal way of course if they find inaccuracy and they will do very little to help you with that payout if they can.
Ask anyone who works directly with insurance companies and they will tell you they are a nightmare to deal with passing people from pillar to post with fob offs and stalling for time or pushing the blame elsewhere.
An example of this would be insuring your home against fire. You personally may install a set of pre-wired fancy down lights for say your bathroom or kitchen and you’re not a qualified electrician nor did you employ a qualified electrician.
The DIY shop from which you bought them had presented you with an attractive off-the-shelf package which tempts you to buy them based on the simplicity of the installation giving you the impression that it’s easy and simple for any DIYer to install themselves, which it is and the product will also have a disclaimer on the package that ensures that they must be installed in small print by a qualified and reputable electrician.
Do you read the small print? The answer is no we all don’t!
Additionally it will state within your home protection policy that all electrical items must be installed by a qualified electrician and that you must hold all the necessary paperwork for such installations. And that any installations which have been carried out on your property relating to electricity in any form will lead to the policy becoming invalidated if you don’t hold an authentic certificate of installation unless you pre-warn them when taking out a policy which will result in you not being insured or your costs of the premium to soar higher.
This information will be included in your policy as standard buried deep into the pages of text. If in the unlikely event your home is caught up in a fire, the assessor who inspects your property prior to your payout will discover the installation of the down lights or ANY electrical modifications and will ask you for that required certificate which you will be unable to supply therefore your claim will be declined and you may face legal consequences for an attempt at fraud.
Insurance companies know that when a claim is being made for a house fire one of the main things they will be looking out for its electrical accessories fitted to the home and unless you pre-warned them or notified them up front, the policy is worthless.
Additionally if you obtain car insurance for a lower premium by stating that your car is held in a garage overnight thus lowering the risk of theft and you actually have no garage on your property you will also be declined for a financial payout in the event of a claim.
Depending on the amount of money being claimed from the insurance company, the insurance assessor, that’s the investigator would be able to determine through online checks if your house actually has a garage and they may even personally visit it discreetly to physically observe it themselves and again invalidate your claim.
These are just two examples of the insurance companies knowing what people do even before you take the policy out. They know there is a high probability that you will tell some naughty fibs!
It’s in our nature to lie or distort the truth and even the most intelligent people do this! Saving Money helps our survival, especially if we’re struggling!
In fact insurance companies know of hundreds if not thousands of things that people will do in a deceptive way. Time and time again their systems will show the amount of claims that are made were based on certain inaccuracies or deceptions therefore it would be true to say insurance companies indirectly rely on your dishonesty or inaccuracy when taking out an insurance policy for them to be successful in what they do as a business.
Insurance assessors who determine the authenticity of your claim after their investigations are carried out know what to look for and they will be ticking off the boxes as they go to find inaccuracies.
If you were a fly on the wall and could listen in to insurance companies internal chats, you would hear how staggered they are at the ongoing stupidity, ignorance, inaccuracies and deceptive attempts that are made by people who take out insurance policies to keep their costs down.
They are not going to teach you or tell you this any more than they have to do outside of their own legal requirement to do so, the rest is just in human nature and it is this human nature which makes the insurance companies successful businesses in what they do. To what extent in part at least, we will never know but this definitely plays a big part in their business model.
Therefore when taking out an insurance policy, honesty really is the best policy!
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