Bloomberg journalist Gary Cohn writes an eye opening story about AARP’s influence in Washington and how the company collects hundreds of millions of dollars from insurers who pay for AARP’s endorsement of their policies. Over the years, AARP has built a brand behind the belief that it offers its members discounts and services to a wide range of services, but it’s not always the case.
AARP’s Stealth Fees Often Sting Seniors With Costlier Insurance details one AARP members experience purchasing his car insurance through AARP and found he was paying twice the average quote he received from other providers. Part of the reason the premium was so high was because AARP was taking a cut out of his premium before sending the money to Hartford Financial Service Group, the provider of the coverage.
The insurance companies build the cost of these so-called royalties and fees, which amounted to $497.6 million in 2007, into the premiums they charge AARP members. AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud — as well as for paying down the $200 million bond debt that funded the association’s marble and brass-studded Washington headquarters. To read more about the story click the link below.