You Aren't Covered for That - Sorry

The Business Model for Insurance Companies

You walk out of your home one morning and discover a vandal has broken into your car, parked on the street, by smashing a window and breaking the side mirror. You call your insurance company and they ask you to send: a copy of your driver's licence, the original police report, a copy of the city permit allowing you to park on the street, your lease proving you live on the street, a copy of the ownership, photos before and after, and an affidavit that the damage to your car occurred on the street.

After you send all the information to your insurance company, a month goes by and they now ask for: the original of the city permit allowing you to park on the street and the negatives from the photos.

Another month goes by and a letter arrives: you need to provide proof you have paid the lease and provide something like a utility bill which proves you live under the lease agreement.

Two months go by and another letter arrives: please provide proof that the side view mirror was standard with the car when you purchased it, not an aftermarket upgrade.

A month later you receive another letter advising that "you are not covered for the damage because you have an underground parking spot in your apartment which you did not use. You failed to document the reasons for parking on the street. We would be happy to answer any questions you have. Please call us at 1-800-555-1212"

You call the insurance company's call center 18 times over the next month. 10 times the line is busy, 3 times you go into an endless loop of voicemail and no-one answers the phone, and 5 times you leave a message but never get a call back. On the 19th time you get a "customer service associate" in Mumbai who you cannot understand. He keeps asking you over and over, "did you pay the deductible, did you pay the deductible." It seems that the script on his computer is stuck.

When the same insurance company - AIG, is taken over by the government, a number of executives take $$millions in bonuses, without ever once making a written request and without documenting any of the payments. No deductible was applied to the payments. 11 of the executives agree to stay on to work the company out of its problems, but all resign on the day they receive their bonuses.

Oddly, the CEO of AIG doesn't think there is anything wrong with their business model. The next day, the CEO finds the hood of his car spray painted with AIG - Arrogance, Incompetence and Greed. Do you think he knows better than to call his insurance company?