State Insurance Regulators Recover Tens of Millions for Consumers

Several states reported recovering tens of millions of dollars last year from claim disputes and fines against insurers that regulators found were violating insurance regulations.

Regulatory departments exist in each state across the U.S. and serve many advocacy roles for consumers. Policyholders who believe their insurers violated state regulations when settling their claims, erred in calculating the cost of car insurance for their policy and/or wrongly canceled their policy all can seek help from their state regulators.

Regulators further review and investigate such complaints and inquires brought by consumers, which may result in additional payments for those consumers if warranted.

Connecticut

The Connecticut Insurance Department (CID) announced that $8.7 million was recouped for consumers last year, and just over 4.5 percent of that recovered money was auto-related.

Of the seven categories of funds, the $407,000 in auto-related recoveries was the fourth-largest recovery type. Recouped auto funds trailed the other categories of accident and health, fire and commercial and homeowners and farmers.

More than half of the total amount recovered came from the CID’s Market Conduct Division (MCD), which collected $4.6 million in fines against insurers for violations including “untimely claims payments to improper licensing,” according to the department.

Fines are levied after MCD examinations, such as a one closed late last year involving the Hartford and subsidiary companies. In that review of the insurer, auditors fined the insurance carrier for cases of noncompliance in how some auto policyholders were rated. Other violations included nonrenewals and cancellations that were noncompliant with state statutes.

The rest of the recovered $8.7 million came from the Consumer Affairs Unit (CAU), which handles policyholders who have complaints and questions; the CAU saw more than 6,100 of those inquiries last year.

“Household budgets are under enormous stress and every dollar matters,” commissioner Thomas Leonardi said in a statement. “Carriers must adhere to state insurance law, and when they don’t the department can and does step in to help.”

Illinois

Regulators in Illinois more than doubled the amount of recoveries between 2011 and 2012, with much of the $10.3 million in funds recouped for consumers in 2012 coming from multi-state examinations of insurers like American International Group (AIG), MetLife and Prudential.

In fact, the recoveries in 2012 are larger than all of the 2009-2011 recoveries combined.

Most of the fines collected in 2012 were the result of a settlement from the multi-state investigation of AIG, which regulators found underreported premiums.

Louisiana

Louisiana regulators collected $6.4 million for consumers last year, topping the $5.3 million in recoveries in 2011.

Just over half of those recouped funds in 2012 came from property/casualty insurers, which also saw the most inquires and complaints by far. Complaints and inquires related to property/casualty insurance providers accounted for more than 71 percent, while health-related and life and annuity-related insurers saw about 20 percent and 8.5 percent, respectively.

Maine

Maine also upped its recovery figures in 2012 compared with 2011, recouping $3 million last year compared to $2.5 million the year before it.

Regulators saw nearly 10,000 complaints and inquires last year, with most of those related to property/casualty insurers.

However, the total amount of property/casualty-related recoveries was smaller than the total recovered from health insurers.

Missouri

Missouri returned almost $11 million to consumers in 2012 from complaints and inquiries from consumers and audits by regulators.

The amount of auto-related complaints accounted for the second-largest coverage type behind health-related complaints.

The Missouri Department of Insurance (MDI) received tens of thousands of complaints and inquires from consumers last year. Claim denials generated the most complaints, followed by claim delays and unsatisfactory settlements.

One such claim-related complaint came from Franklin County, where an auto policyholder came to regulators after taking in his car to a “service contract provider” for engine service but still was without the vehicle after five months, according to the MDI.

Regulators settled the dispute and the company agreed to pay $3,000 and repair the policyholders’ vehicle.

North Carolina

Regulators in North Carolina got back $26 million in “recoveries and savings” for consumers in the state in 2012. The North Carolina Department of Insurance’s Consumer Services Division (CSD), which fielded questions and complaints from consumers about “homeowners, auto, life and other insurance-related issues,” recouped $10.4 million for consumers last year.

The CSD fielded 65,000 calls and 7,500 written complaints, according to regulators.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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