That, and we must never forget that as much as we may applaud the insurance company in this particular story for calling out poor practices, the primary purpose of a modern insurance company is to take your money and give you nothing in return. Everybody needs to be very aware of that, and be untrusting in all your dealings with anyone in the insurance business.
As in all industries, there are the good and the bad. I would posit that you are speaking about "bad" insurance companies, not good ones. Not every insurance company dreams of giving you "nothing in return" for your premium dollars. Quite the contrary, if insurance companies never paid any claims, there would be no need for them, and their premiums would dry up immediately. The primary purpose of an insurance is to transfer risk... in effect, pooling it and transferring the risk from one entity to several/many. Believe it or not, this enables many things. Even things like the Ansari X-Prize. The organization awarding the prize didn't have the money to pay the prize, they only had about half of it. They used that to buy an insurance policy, which paid the claim when the prize was won. Regardless, most insurance companies invest in their claim handling capabilities as it is a competitive advantage to have good claim paying history. Doubt it? Compare "The General" auto insurance claims paying vs. USAA or Amica. The latter pride themselves on claim paying. Personally, I have a policy for my house, that recently paid a claim and paid on items I never expected them to reimburse me for. Their claim handler went out of her way to make sure I got far more money than I had anticipated. The bottom line is that its easy to pick on insurance companies, but if you do your research and buy policies from reputable companies, you'll likely have a great experience with them when you have to file a claim. If you go for the cut rate, "The General" type companies, well you got what you paid for.
"Show business is just like high school, except you get paid." - Martin Mull