WASHINGTON &

U.S. insurance companies systematically overcharge customers and underpay consumers' home and auto claims to pad their already-fat bottom lines, a consumer group said Thursday.




The Consumer Federation of America's insurance director, J. Robert Hunter, said insurance companies have enjoyed robust profits and contained losses largely by "methodically overcharging consumers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurers should cover."




Hunter's comments came with the release of a study by Consumer Federation and several other consumer organizations that said the industry's overcharges reached an average $870 per U.S. household over the last four years.




The loss ratio for property-casualty insurance companies, or the percentage of premiums paid out to policyholders as benefits, was 54.6 percent last year, according to the study, up from 53.3 percent in 2006 but far below the 75 percent level of the late 1980s.




The study &

based on insurance industry data and companies' financial reports &

estimates that the insurance industry's net income after taxes in 2007 will be $65 billion, down from the record $67.6 billion set in 2006 but above 2005's $48.8 billion.




The industry has reaped those profits at the same time that consumers are receiving less money after filing claims, the consumer group said. A study released a year ago by the organization put forward similar conclusions.




Consumer Federation urged state regulators to require insurance companies to offer a homeowners policy that covers all risks, prohibit insurers from restricting certain policies by geography and review policy forms for hidden exclusions.




The insurance industry's biggest trade group defended the performance of its members.




"The absence of any major storm or earthquake has allowed insurers to post two modestly profitable years. But it wasn't long ago, 2004 and 2005, when our industry suffered record natural-catastrophe losses," Marc Racicot, president of the American Insurance Association, said in a statement.




"Our industry is highly competitive, and property-casualty insurance policyholders have more layers of consumer protection than virtually any other segment of the financial services industry," he said. "The rates consumers pay in each state must directly reflect the actual and expected loss experience within that one state, without exception."




For the first nine months of 2007, Allstate Corp.'s loss ratio was 51.6 percent, compared with 43.5 percent in the same period of 2006, according to the study.




From January to September of 2007, American International Group Inc.'s loss ratio was 53.8 percent, compared with 50.9 percent; St. Paul Travelers Companies Inc.'s was 45.5 percent, compared with 46.8 percent; Progressive Insurance Group's was 58.2 percent, compared with 53.1 percent; Berkshire Hathaway's was 58.6 percent, compared with 56.1 percent and Hartford Insurance Group's was 55.8 percent, compared with 53.2 percent.