Regulation Report: Auto Coverage is No. 2 Complaint-Getter

Image showing amounts recovered by insurance regulators in select states in 2010

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A report recently released by the National Association of Insurance Commissioners (NAIC) shows that, over the past three years, about 1 in 3 closed consumer complaints filed with state insurance regulators were against automobile coverage providers.

Car coverage came in second to accident and health policies, which were combined into one category.

According to data voluntarily submitted by state regulators to the NAIC database, about 40 percent of total grievances closed between 2008 and 2010 were filed against accident and health insurers, while about 36 percent were against car coverage providers.

The report highlights an important role of state regulators: acting as an objective mediator between policyholders and policy providers.

When consumers believe they have been wrongly denied coverage or have had their policies wrongfully canceled, they can turn to state regulators to help resolved the dispute if inquiries to coverage providers prove futile. Regulators in even small states end up recovering millions of dollars for consumers every year through resolution of these disputes.

One individual case was recounted by the Missouri Department of Insurance when it announced the publication of its latest report on consumer complaints.

According to the department, a policyholder had contacted regulators after having a claim denied by her insurer. The provider said the woman’s coverage had been revoked in the days preceding the accident due to a failure to pay her premiums, which the policyholder disputed. After the department investigated her claim, it was found that the premium payment had been made, but the funds had been misapplied. In the end, the insurer paid for the $9,000 claim and covered rental fees incurred by the driver.

The NAIC report showed that, for all types of coverages, the most frequently filed complaint had to do with delays in claims handling. Between one-fifth and one-quarter of complaints in the past three years have been about delays.

Following delays were claims denials and unsatisfactory settlement sizes, which each constituted about 15 percent of total complaints.

Individual state departments often compile their complaint data into company-specific, consumer-complaint ratio reports. These reports weigh the number of justified complaints filed against individual companies with the total number of policies that those companies had in place. The logic is that the lower a company’s complaint ratio, the more likely that company is to have superior customer service. Some regulators advise that consumers try to choose from only the best rated auto insurance companies.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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