Why Do Insurance Companies Have Bad Reputations?

Insurance is an essential part of modern life, giving you a safety net in the event of an unexpected loss, malpractice or injury. And yet, despite its importance, insurance companies as a group tend to have a bad reputation in public opinion. It’s not uncommon for people to think insurance companies are untrustworthy, greedy, and only interested in making a profit.

But why do insurance companies get such a bad rap, and is it justified? In this article, we will explore the reasons why insurance companies have a bad reputation and discuss how to find an insurance provider you feel you can really trust.

Is insurance a scam?

The question of whether or not insurance is a scam is a hot topic for debate, with many people believing that insurance companies are engaging in bad faith practices to avoid paying claims.

However, this is far from the truth, at least for reputable insurers. After all, the whole business of insurance was set up to protect people and give them peace of mind in the event of unexpected misfortunes.

While we can’t deny that there have been instances of bad faith practices in the insurance industry, this is not a reflection of the sector as a whole. Many reputable insurance companies work diligently to fulfil their obligations to their policyholders, providing excellent customer service and handling claims in a timely and fair manner.

In fact, insurance companies are highly regulated and required to adhere to strict guidelines and standards set by regulatory bodies (at least in many developed countries). These regulations help to ensure that insurance companies act in good faith and fulfil their side of the bargain when it comes to their insurance promise. If a customer is dissatisfied with their insurer, they have many avenues to appeal, including raising their case with the regulators.

Moreover, insurance companies invest heavily in research and development to provide their customers with innovative and comprehensive coverage options. They work closely with experts in various fields to create policies that meet the specific needs of their policyholders – this includes specialist policies like international health insurance for expats.

Why do insurance companies have a bad reputation?

Okay, but if insurance companies have such good intentions, why is it that they have such a bad public perception?

There are a number of reasons that people find it hard to trust in their insurer, many of which come down to not understanding how insurance works in practice. In fact, according to a 2018 study by the University of Nottingham, a huge 90% of people don’t understand their insurance policy, with policy comprehension ranging from between 32% and 66%.

Here are some of the most common reasons why insurance companies have a bad reputation:

1/ Profit-driven business model

One of the primary reasons that insurance companies have a bad reputation is that they are often seen as profit-driven businesses that care more about their bottom line than their customers.

Insurance companies are businesses, and like any other business, they need to make a profit. However, some people believe that insurance companies prioritise profits over the needs of their customers.

This perception is fuelled by stories of insurance companies denying claims or offering low settlements, even when the policy clearly covers the loss. Many people believe that insurance companies will do everything they can to avoid paying out claims or will try to find ways to minimise the amount they pay, falling back on ambiguous contracts to explain why they couldn’t settle.

(No wonder filmmakers in the late 90s and early 2000s found so much inspiration to create stories about dodgy insurance agents. If you’ve ever seen The Rainmaker or Memento, you’ll understand why people may have a negative view of insurers!)

While we can’t speak for other insurance companies, we can say that at William Russell, our priorities are with our members. We’re a family-owned business who have been providing expat insurance for over 30 years, and many of our staff are expats themselves. We understand how important it is to take care of our members – it’s not just about giving you health insurance, it’s about giving you and your family total peace of mind as you settle into life overseas.

(We also understand that the expat world is smaller than people think – and how word travels fast! So we’re always conscious of protecting our reputation, too.)

2/ Complicated and confusing policies

Another reason for the bad reputation of insurance companies is that insurance can feel complicated and confusing. Policies are often filled with legal jargon and fine print, making it difficult for customers to understand what they are buying.

It’s often not intentional – it’s just that insurance underwriters, despite their name, don’t always make the best writers.

In any case, this lack of understanding can lead to frustration if customers realise they are not covered for a loss they thought was covered. It can also make it difficult for customers to make informed decisions about their insurance cover, which can lead them to be underinsured or over-insured.

Here at William Russell we have a team of award-winning insurance experts on hand to help you with your policy. We also regularly revisit our policies, spending time improving and clarifying our wording to ensure it’s always up-to-date. And, we provide plenty of online resources to help you make sense of everything there is to know about insurance.

Why do we do this? Because we believe it’s important to find an insurer who is happy to explain the fine print, so you know exactly what you’re covered for, and what you’re not.

3/ Difficult claims process

With some insurance providers, the claims process can feel long and frustrating. Many people feel that insurance companies make the process intentionally difficult to discourage people from making claims, with extensive documentation, multiple phone calls, and long wait times for a claim to be processed some of the pain-points customers often experience. This can lead to a lack of trust in insurance companies and can make customers feel like they are not being treated fairly.

While making an insurance claim can sometimes require a bit of paperwork, your insurer should always be on your side and willing to help you at every step of your claim. At William Russell, we try to make claims as easy as possible to navigate with our intuitive online claim form, and a 24/7 emergency medical helpline to offer round-the-clock support.

4/ Discrimination

Another issue that contributes to the bad reputation of insurance companies is the perception that they discriminate against certain groups of people, including raising premiums based on race or gender.

However, this sort of discrimination is forbidden by law in many countries, particularly in the UK and EU. Therefore, it’s quite rare to find insurers who could be accused in earnest of this sort of discrimination.

That’s not to say there aren’t a number of other factors relating to your body that might affect your insurance premium. Understanding how your insurance premiums are calculated is essential to helping you gain trust in your insurer, though you can rest assured there are many regulations in place to help protect you against unfair discrimination.

Is the bad reputation justified?

While there are certainly instances of bad behaviour by insurance companies, it is important to remember that insurance is a complex industry with many moving parts.

Insurance companies must meet the needs of their customers while also fulfilling their own financial obligations, which can be a tricky balance to strike. However, the best insurers will do this behind the scenes, so you always feel confident in your cover.

How to find an insurance company you can trust

Not all insurance companies are created equal, and finding an insurer you can trust can be a daunting task. Here are some tips to help you find an insurance company you can trust.

1/ Find out who the insurer is

Many insurance companies act as brokerages, with policies underwritten by a separate (and sometimes much larger) insurance firm. That’s why it’s important to vet your insurer, to find out who is really behind your policy. You’ll want to be sure this company is stable, mature, and based in a country with strong financial regulations. In our case, the insurer behind our plans is a company in the Allianz group – it doesn’t get more ‘household name’ than that.

2/ Check the company’s reputation

Before choosing an insurance company, take the time to research its reputation. Look for reviews and ratings from reputable sources such as Feefo and Trustpilot, where you can read about the real, unbiased experiences of their customers to help you make your decision. The company should also provide customer testimonials on its website.

3/ Ask for referrals

Ask friends, family members, or colleagues for referrals to insurance companies they trust. They may have had positive experiences with a particular insurer and can provide valuable insight into the company’s strengths and weaknesses.

4/ Evaluate customer service

Customer service is a crucial factor when choosing an insurance company. Consider how the company treats its customers, including how easy it is to contact them, the responsiveness of their agents, and how well they handle claims. You can evaluate customer service by checking online reviews, calling the company’s customer service line, or reading their testimonials.

5/ Compare options and pricing

When choosing an insurance company, it’s essential to compare coverage and pricing. Diligent customers will look at the cover offered, deductibles, and premiums, making sure they understand the terms of the policy, including any exclusions or limitations. Don’t be swayed by the cheapest policy; instead, focus on finding the best value for your money.

6/ Review policy documents carefully

Before signing up with an insurance company, review their policy documents carefully. Make sure you understand the terms of the policy, including coverage, deductibles, and limitations. If there’s anything you don’t understand, don’t hesitate to ask the agent or customer service representative for clarification.

7/ Look for customisable policies

Everyone’s insurance needs are unique, so look for insurance companies that offer customisable policies. This allows you to tailor your coverage to fit your specific needs and budget.

8/ Consider the company’s technology

In today’s digital age, it’s important to consider the technology an insurance company offers. Look for companies that offer convenient online services such as policy management, claims filing and customer service.

9/ Trust your gut

Finally, trust your instincts when choosing an insurance company. If something doesn’t feel right, don’t ignore it. It’s essential to choose a company you feel comfortable with and can trust to provide reliable coverage.

We’re a healthcare partner, not just an insurance provider

There’s a reason why we’re the insurance partner of choice for expats living and working abroad. With 30 years’ experience providing cover for expats and digital nomads living overseas, our members are at the heart of everything we do.

Our policies are comprehensive and easily personalised to give you the right level of cover you need to suit your individual circumstances, lifestyle, budget and the region you’re planning to move to. William Russell offers international health insurance that can cover you for everything from minor injuries to long hospital stays, and we even offer medical evacuations to patients who require emergency life or limb-saving treatment where it’s not available locally.