Consumer Federation of America says states ignore the insurance crisis
of ConsumerAffairsCEOs of Americas largest auto and home insurance companies collected massive salaries, bonuses, and other payments in 2023, amounting to over $119 million for the CEOs at ten of the largest insurers, according to the Consumer Federation of America.
Theswollen paydays came as millions of Americans struggled to afford auto and homeowners insurance premiums after three straight years of spiking rates, the organization said, calling on state lawmakers and regulators to take action to address the insurance affordability crisis.
According to the Bureau of Labor Statistics, auto insurance costs were 19.5% higher in June 2024 compared to June 2023. The Wall Street Journal reports that homeowners insurance premiums are up 45% since 2019, CFA noted.
Even though 2023 executive compensation appears to have been slightly lower compared with the historic levels paid out in 2022, insurance regulators and lawmakers must do more to scrutinize insurance company rates and the way companies spend policyholder premiums, it said.
As Americans are facing unbearably high insurance premiums, insurance CEOs are raking in the dough, said Michael DeLong, a Research and Advocacy Associate with Consumer Federation of America. The companies claim that they have to hike rates, hollow out policies, and pull out of certain communities to shore up their profits, even as they are lavishing their CEOs with enormous paydays.
"We are in the midst of an insurance crisis around the country and regulators and lawmakers should be putting up more of a fight to protect consumers from this kind of greed, DeLong said.
Executives' salaries revealed
The table below summarizes the publicly reported insurance executive compensation paid for both 2022 and 2023. The data come from filings made to the Nebraska Department of Insurance; Nebraska law requires insurance companies operating in the state to provide information about the salaries, bonuses, and additional compensation of their CEOs and other top officials.
Since the data reported to the department may exclude compensation paid to the executives by affiliated insurers, it is likely that the compensation figures below underrepresent what the executives actually earned.
| Insurance Company | Executive | 2022 Compensation | 2023 Compensation |
| Allstate | Thomas J. Wilson | $18,902,127.00 | $16,516,626.00 |
| American Family | William Westrate | $6,772,864.00 | $3,832,995.00 |
| Berkshire Hathaway (GEICO) | Todd A. Combs | $13,600,000.00 | $10,000,000.00 |
| Farmers | Raul Vargas | $7,980,763.00* | $3,352,972.00 |
| Liberty Mutual | Timothy M. Sweeney | $15,399,763.00** | $10,346,284.00 |
| Nationwide | Kirt A. Walker | $10,964,625.00 | $11,418,123.00 |
| Progressive | Susan Patricia Griffith*** | $14,462,961.00 | $15,636,618.00 |
| State Farm | Michael L. Tipsord | $24,410,986.38 | $17,612,056.33 |
| Travelers | Alan D. Schnitzer | $20,772,397.00 | $22,572,740.00 |
| USAA | Steven Wayne Peacock | $4,820,530.00 | $8,118,816.00 |
| Total Compensation | $138,087,016.38 | $119,407,230.33 |
Skyrocketing premiums and golden packages
These enormous compensation packages for insurance company executives come as companies are imposing massive rate increases on their policyholders and employees. For example:
- In August 2024 Allstate won Californias approval fora 34% increase in homeowners insurance rates, the largest rate increase in California of any major insurance company over the past three years.
- In New Jersey,numerous auto insurance companies have been granted double digit rate increases. Liberty Mutual received rate hikes of 12.5%, Allstate received rate hikes of 16.8% on average, and GEICO received rate hikes of 18.9% on average.
- And in 2023,auto insurance costs rose so much that the average 12 month auto insurance premiums was $1,280and since then they have increased even more.
It is appalling for consumers to be paying skyrocketing insurance premiums while CEOs are given golden packages,said DeLong.Every Insurance Department should be asking these companies tough questions. If times are so tight that they really need to raise rates and squeeze consumers, why are they paying their executives so much?
Notes:
*Raul Vargas is the new CEO of Farmers who assumed his position at the beginning of 2023, and it is likely that his insurance compensation is incomplete and limited to companies operating in Nebraska. The previous CEO was Jeffrey J. Dailey and his 2022 compensation$7,980,763.00is listed here. The Nebraska filings do not contain any salary income these executives may have earned in their position as CEO of the Farmers-affiliated Farmers Group, Inc.
**Timothy Sweeney is the new CEO of Liberty Mutual; the previous CEO was David Long and his 2022 compensation$15,399,763.00is listed here.
*** Information on Susan Patricia Griffiths compensation comes from filings with the Securities and Exchange Commission.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-12-19 20:51:57
