Chubb Is Still Working On It

What are they up to now?

The insurance industry works from this principle: Collect premiums quick and pay claims slow—unless claims can be denied. It is no surprise when insurers drag their feet about paying. But when collecting premiums bogs down, consumers need to pay attention. There may be a business reason.

Chubb has been pushing policyholders into electronic payments. Its new system is just six months old. It has glitches explained away by Chubb people as part of being new. One glitch is a standout: The choice between making either one annual payment or paying on an installment plan. The system makes it harder to pay one time, but easier to choose the extended plan. If a glitch, it is profitable: It makes extra money for Chubb from a “service fee” for each payment in the extended plan.

Has Chubb “rigged” the system with “hidden fees” to slide consumers into payments with highly profitable fees for Chubb? A characteristic of hidden fees is the sly way they are embedded to avoid “transparency,” a business term that makes insurance companies uneasy because it could lead to more fully informed consumers.

Chubbies told me that Chubb “is still working on it” and hopes to fix it soon. Chubb only admits the glitch if pressed. It does not use its electronic system to alert consumers to system problems that may result in having to spend more time—and pay fees–to make a payment than in the ancient Pre-Internet Era of write-and-mail checks.

The insurance industry spends a ton of money to lobby against government regulation of how the industry conducts business, especially use of the Internet. Lobbying by the insurers is an investment that pays off for them: It protects them against rules on rigging, hidden fees, and the dizzying rise of insurance costs.

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