Why do insurance companies commit bad faith?

The insurance industry is highly lucrative and competitive. Essentially, insurance companies gamble that their policy holders will not get in an accident or otherwise have to collect on their policies. On average, that gamble pays off. But every time an insurance company has to pay out benefits, it takes a bite out of the company’s bottom line. Insurance companies that act in bad faith are maximizing their profits by paying out as few benefits as possible.