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Shareholders or policyholders.  Who matters most?  Take this quiz:

The Board of Directors of my insurance company has a lawful duty to protect:

a.  the financial interests of the policyholders.

b. the financial interest of the stockholders.

c.  both of the above.

d.  none of the above.

The answer is (b).  The Board of Directors of an insurance company’s first (or fiduciary) duty is to the shareholders that elected them. 

This means that the financial interests of the shareholders come before those of the insured policyholder when that corporation is an insurance provider.  Profits come to a business from paying out less than what they take in.  Shareholders demand this in return for their investment.  Insurance companies comply.   Know this as you shop. 

The National Law Review has published a list of the “eleven worst insurance companies” and I encourage you to read it.  Before you take too much comfort in finding that your home insurance provider did not make the list, you should consider that many that made the list are providers of health insurance.  The factors that were used for the home and business insurers that made the list, however, are not unique to them but are commonly shared among smaller companies that would have at least made “dishonorable mention” if the list did not include other types of insurers.

     What this list should teach those of us who buy insurance is the need for us to carefully select an insurance provider based on something other than cute or funny television commercials.  Sweet talking lizards that collect your insurance premium can quickly become vicious and vexatious crocodiles defending the company against your valid claim.  If you can learn this before you become vulnerable as a result of catastrophic loss, the better off you will be.     

The Missouri Department of Insurance publishes a complaint index to help Missouri consumers determine how likely they may find displeasure with an insurance company’s claim handling process.  Considering how few unsatisfied policyholders will actually go through the red tape to file a complaint with the State government , when an insurance company exceeds the normal rate of complaints under such circumstances – it really says something.

Caveat emptor.