Are Insurance Companies Overcharging You? New Study Says Yes — By $150 Billion a Year
If you’ve ever felt like your insurance company takes more than it gives back, a new analysis confirms what personal injury attorneys have been saying for years: insurers are collecting far more in premiums than they pay out in claims — and you may be footing the bill.
A recent study by the Vanderbilt Policy Accelerator estimates that American households and businesses are being overcharged by roughly $150 billion every year to insure their homes, vehicles, and businesses. The findings raise serious questions about how insurance companies treat the very people they’re supposed to protect — including accident victims who depend on prompt, fair claim payments to recover.
Insurers Are Paying Out Less — A Lot Less
According to the analysis, for every $1 insurance companies collected in premiums in 2024, they reimbursed only 62 cents in claims. Compare that to the 1980s and 1990s, when insurers paid out an average of 80 cents on the dollar. That gap represents billions of dollars that stayed in insurance company coffers instead of going to policyholders and injury victims.
“The fact that the loss ratios are so low means that the insurance industry is charging too much,” said Brian Shearer, director of competition and regulatory policy at the Vanderbilt University think tank and a former senior adviser at the Consumer Financial Protection Bureau.
For anyone who has ever filed a claim after a car accident, a slip and fall, or a property loss, this comes as no surprise. Insurance adjusters routinely undervalue claims, deny legitimate damages, and pressure injured people into accepting lowball settlements before they understand the full extent of their injuries.
What This Means for Accident Victims
When insurers pay out less, real people pay the price. Injured workers, accident victims, and grieving families often discover that the policies they paid into for years suddenly don’t seem to cover what they were promised.
Independent research by economists Benjamin Keys and Philip Mulder shows that home insurance premiums alone rose an inflation-adjusted 28% between 2017 and 2024, climbing to an average of $2,750 per year. Auto insurance has followed a similar path. Yet the share of those premium dollars actually returning to consumers as claim payments continues to shrink.
The Vanderbilt report goes further, alleging that insurers are using premium dollars to fund “corporate perks, corporate jets, stock buy-backs, excessive executive compensation, excessive dividends, excessive advertising, and excessive agent commissions” — rather than paying claims fairly.
“Companies are competing against each other, not based on price but just based on brand awareness,” Shearer said.
The Industry’s Response
The American Property Casualty Insurance Association pushed back on the findings. Don Griffin, the group’s vice president for policy and research, said current loss ratios “reflect the impact of enormous financial losses over the last several years” and reflect steps insurers have taken to remain solvent and prepared for future claims. Griffin also opposed federal regulation, arguing that government caps on premiums would shrink the market and limit consumer choice.
But for the millions of Americans navigating rising premiums alongside rising costs for groceries, gas, and housing, those explanations offer little relief.
How a Personal Injury Lawyer Can Help
If you’ve been injured in an accident, the gap between what insurers collect and what they actually pay can hit you hardest. Insurance companies are businesses — and as this study makes clear, their priority is protecting their bottom line, not yours.
That’s where we come in. Our firm has decades of experience standing up to insurance companies that delay, deny, or underpay legitimate claims. We know the tactics adjusters use, and we know how to push back. Whether you’re dealing with a denied medical bill, an unfair settlement offer, or a stalled claim, you don’t have to face the insurance industry alone.
If you’ve been injured in an accident, contact our office today for a free consultation. You pay nothing unless we win your case — and we’ll fight to make sure you receive every dollar you’re owed.