A recent investigation by the Consumer Federation of America (CFA) has shed light on the substantial compensation received by the CEOs of the nation’s 10 largest personal insurance companies.
At a time when rising insurance rates are putting a financial strain on policyholders across the United States, the CEOs of major insurance companies have earned substantial salaries, bonuses and additional payments.
According to a press release, the Consumer Price Index for August highlighted a 19% increase in the cost of car insurance compared to 2022. Meanwhile, the CEOs of six major insurance companies will each receive more than $12 million in compensation in 2022. In total, these top 10 insurance executives were paid more than $130 million in the same year, with a combined two-year income of $253,493,931.
The compensation figures for insurance executives in 2021 and 2022 were obtained from the Nebraska Department of Insurance, which requires insurance companies to disclose information on salaries, bonuses and other compensation for their top officials. However, CFA also noted that these reported figures may underestimate the actual earnings of executives because they may exclude compensation from affiliated companies.
The CFA also noted that this excessive compensation for insurance executives coincided with the burden placed on customers and employees by the high fees charged by these companies. The association cited these examples:
- Farmers’ CEO Jeff Dailey received a nearly $2 million raise in 2022, while the company raised homeowners insurance premiums by more than $575 million in 42 states, limited availability in California, stopped renewing nearly a third of its homeowners policies in Florida, and laid off 11% of its workforce.
- Liberty Mutual paid its CEO, David Long, over $15 million in 2022 and recently raised homeowners insurance rates by $729.8 million.
- State Farm paid its CEO, Michael Tipsord, over $24 million while raising car insurance rates four times in one year in its home state of Illinois, raising car insurance rates in Louisiana by 17% and raising homeowners insurance rates in California by 28.1%, as well as halting new homeowners insurance applications in California.
“CEOs are living high on the hog while raising insurance premiums for people living paycheck to paycheck,” said Michael DeLong, research and advocacy associate at CFA. “Insurers are telling regulators that ordinary consumers will have to pay much more for auto and home insurance because companies are struggling with inflation and climate change, but they are quietly handing out huge bonuses to CEOs. Drivers have to buy car insurance and homeowners have to buy cover to meet their mortgage requirements, so there needs to be more scrutiny of the rate hikes companies are demanding and the huge CEO paydays funded by customer premiums.”
