Theoretically, buying insurance should provide financial protection against a specified loss. On one side of the contract, the customer pays a premium to the insurance company over time in exchange for financial coverage in case of an accident, illness, or other contingencies. On the other side of the contract, the insurance company is supposed to pay up when an incident happens. However, it is not always that simple.
Insurance functions like a big pot of emergency funds. Most customers put money into the pot but will never have to use it. These customers make the company money. The customers that file an insurance claim to take money out of the pot often need significantly more money than they put in. These customers cost the insurer money, and it is in the company’s financial interest to avoid paying.
Simply put, insurance companies don’t make money by paying out claims. Getting a legitimate claim paid can sometimes be a lengthy battle that is filled with paperwork, phone calls, and delays. For those already dealing with the consequences of an accident, robbery, or natural disaster, having to fight to be justly compensated can be exhausting. (Also check out America’s most hated companies.)
To identify the most hated insurance companies, 24/7 Wall St. reviewed the American Customer Satisfaction Index’s Insurance and Health Care Study 2021-2022, which surveyed 12,841 people between October 2021 and September 2022 on their satisfaction with different insurance companies that offer property and casualty insurance. Company profits and revenues come from the most recent financial statements.
The ACSI surveyed customers on different aspects of their experience with their insurance companies. The categories with the lowest rate of customer satisfaction were availability and range of policy discounts and rewards, ease of understanding billing statements, speed of most recent claim processing and completion, and courtesy and helpfulness of representatives and agents. For these categories, around 75% to 78% of customers were satisfied.Â
Customers were most satisfied with the quality of their insurers’ mobile apps, the reliability of the mobile apps, and company websites, with around 83% of customers satisfied in these categories.
The most hated insurance companies range in size, but all bring in over $8 billion a year in revenue and are Fortune 500 companies. Over the years, many have had controversial policies and stances, or they have taken controversial actions. Others have had legal troubles for negotiating in bad faith or failing to pay out claims. (Oldest companies in the Fortune 500)
Click here to see the most hated insurance companies in America.
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9. State Farm
> Customer satisfaction 2022: 80%
> Customer satisfaction 2021: 79%
The largest insurance company on this list in terms of revenue, State Farm is a group of mutual insurance companies – insurance companies owned entirely by their policyholders, and any earnings are returned to policy holders either through dividends or rebates. State Farm has been involved in many scandals and lawsuits regarding insurance settlements, discrimination, and more. Perhaps most famously, the company agreed on a $250 million settlement just ahead of a civil racketeering trial, where customers claimed the company tried to rig the Illinois justice system. The company always denied the charges.
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Source: Courtesy of American Family Insurance via Facebook
8. American Family
> Customer satisfaction 2022: 79%
> Customer satisfaction 2021: 77%
Like State Farm, AmFam is also a mutual insurance company. It focuses primarily on insurance for property, casualty, and automobiles, but also issues insurance in a variety of other fields like life, health and more.
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7. Liberty Mutual
> Customer satisfaction 2022: 79%
> Customer satisfaction 2021: 77%
Liberty Mutual is the sixth-largest property and casualty insurer globally. The company is based in Boston, and in 2012 and 2013, the Boston Globe published a series of articles on the insurer, exposing excessive executive compensation and weekend trips using long-range corporate jets.
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6. Allstate
> Customer satisfaction 2022: 78%
> Customer satisfaction 2021: 77%
Originally part of Sears, Roebuck and Co., Allstate has used the slogan “Are you in good hands?” since 1950. In 2020, Allstate came under fire for use of a secret algorithm that identified customers who likely would not shop around for a better deal and therefore could be charged excessive rates.
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5. Travelers
> Customer satisfaction 2022: 78%
> Customer satisfaction 2021: 75%
Incorporated in Minnesota, but now headquartered in New York City, Travelers is a publicly traded insurance company. In 2007, the firm settled a class action lawsuit for $6 million that alleged it engaged in anticompetitive practices designed to mislead clients.
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4. Geico
> Customer satisfaction 2022: 77%
> Customer satisfaction 2021: 79%
GEICO or the Government Employees Insurance Company is an insurance company that is a subsidiary of Berkshire Hathaway. Despite the name, it has never been affiliated with the government but was originally founded to sell auto insurance to federal government employees. In 2019, the company was ordered to pay $1 million for acting in bad faith.
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3. Nationwide
> Customer satisfaction 2022: 76%
> Customer satisfaction 2021: 77%
Nationwide Mutual Insurance Company is a group of insurance and financial service companies. In 2014, Nationwide was forced to pay $18 million in punitive damages for not negotiating in good faith.
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2. Progressive
> Customer satisfaction 2022: 76%
> Customer satisfaction 2021: 76%
Founded in 1937, The Progressive Corporation is the nation’s largest commercial auto insurer. In 2012, the company faced public criticism for its attempt to avoid paying a claim after one of its customers was killed in an auto accident.
1. Farmers
> Customer satisfaction 2022: 75%
> Customer satisfaction 2021: 75%
Farmers Insurance Group takes the top spot as the most hated insurance company. The group was founded in 1928 and now provides insurance and financial services. Since 2005, the group has settled at least five lawsuits that range from discrimination to acting in bad faith.
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