Texans Highly Satisfied with Insurers, Filed Few Complaints

Last month marked the end of a wild year of weather in Texas that didn’t dampen consumer attitudes about insurers there, with a recent industry survey showing that policyholders were highly satisfied with how companies handled, settled and responded to claims.

The survey, released Wednesday by the Insurance Council of Texas (ICT), posed questions to a little more than 800 Texans about how they viewed the state’s insurers and found that “consumers have confidence in their insurance companies,” Mark Hanna, ICT spokesman, said in a statement.

According to the survey’s findings on claims:
— 93 percent of respondents agreed that their insurer was responsive.
— 87 percent agreed that they were treated fairly.
— 84 percent agreed that they got a fair claim settlement.
— 83 percent agreed that were no major problems with their insurer.

Few Complaints Filed During Year of Severe Hail

Texas was battered with several hailstorms in 2012, including a June hailstorm that struck Dallas with basball-sized hail and caused at least $400 million in damage and an even more expensive hailstorm that began in Plano, Texas, that same month.

The high costs and frequency of hailstorms spurred regulators to host the state’s first “War on Hail” symposium in November, gathering insurance, safety and state officials to discuss what National Weather Service’s Mark Fox said can often be an unpredictable weather event.

Even radar and a “perfect forecast” of hail can’t prevent the oft-costly damage that accompanies it, Fox said during one of the symposium presentations.

According to the Texas Department of Insurance (TDI), hail damage racked up the highest weather-related figures in insured losses between 1999 and 2011, outpacing loss figures from both hurricane and tornado damage combined.

Yet the response from the insurance industry to auto policyholders suffering from such weather was strong in 2012, according to complaint figures recently released by regulators that showed 988 auto-related complaints that year. The figure was a record-low since the TDI began recording complaint numbers in 1994.

With about 14.7 million auto coverage policies in 2012, the numbers signified about 1 complaint for every 15,000 policies confirmed by the TDI’s Consumer Protection Division last year.

In fact, the number of confirmed complaints has been shrinking continually since 2002, when the regulators saw a record-high 5,626 complaints. In 1994, there was about 1 complaint for every 1,820 Texas auto policies.

Hanna said that the complaint figures “are backing up what we discovered” in the ICT’s survey about high consumer satisfaction.

TDI spokesman Jerry Hagins said the department could not offer an explanation for its falling complaint figures because it had “not analyzed the reasons for those trends.”

“Some years have different things going on than others and, for instance, hurricane years might bring more complaints,” he said in an interview with Online Auto Insurance News. “It’s a good sign to see that the numbers are low, but we want to hear from everyone and try to work on issues behind complaints.”

Hagins said that consumers are encouraged to call the department at 1-800-252-3439 with their insurance-related inquires and complaints.

He also said that regulators returned $29.8 million to consumers in the form of “additional claims payments or refunds” in 2012, higher than the nearly $25 million that was recouped in 2011.

Recommendations from Regulators Include Stricter Refund Deadlines

Last month, the TDI submitted a report of recommendations on insurance law reform it issues to lawmakers every two years.

Included in this year’s report was a recommendation that state insurance laws be amended to set a clear deadline for refunds to consumers who cancel their policies.

Currently, the Texas Insurance Code requires that companies “promptly refund” premiums they owe policyholders after cancellation but doesn’t “specify time limits for insurers to refund” those amounts, according to the report, which added that problems with such premium refunds produced 438 complaints in 2010, 461 in 2011 and 445 in 2012 from both auto and homeowners policyholders.

Regulators recommended that laws be amended so that “unearned premiums” are refunded within 15 business days from the cancellation date.

Regulators also continued efforts to restrict county mutual insurers from “steering,” a practice where an insurer funnels consumers in need of claims-related vehicle repairs to its own network of body shops.
Current insurance codes prevent auto insurers from engaging in such a practice. However, the state’s county mutual insurers, which have about 42 percent of the personal auto coverage market in the state, are exempt from that prohibition, according to the report.

Regulators said the law should be amended because “all consumers in Texas need to receive the same benefits and protections.”

The history of county mutual insurers stretches back to the ’30s, when the state authorized another classification of insurers to write building and vehicle coverage for rural uses while being exempt from many typical insurance laws.

County mutual insurers were allowed to write other lines of coverage over the following decades. Now the grouping has a strong standing in the auto coverage market, which has been the source of “primary growth for county mutual insurers,” according to Jack Cleaveland, who wrote a piece on the topic for Dallas-based law firm Thompson, Coe, Cousins & Irons, LLP.

Regulators said in their report that expanding the law’s steering prohibition to cover county mutual insurers was essential in “leveling the playing field.”

“Since county mutual insurers cover almost half of the Texas personal auto market … a large number of consumers in Texas may not be able to choose their own repair facilities and are not afforded the same protections as their counterparts across the state,” the report stated.

The TDI had cautioned insurers against steering in 2011, issuing a bulletin warning them that regulators had been receiving complaints about the practice. Regulators issued the same steering-related recommendation to lawmakers about county mutual insurers in 2010, when they made up about 45 percent of the auto coverage market.

Hagins said that the state Legislature began meeting last week and that regulators’ recommendations “had not been acted on yet.”

“Our recommendations are submitted to legislators who can decide to take up any of those issues,” he said. “We’re available as a resource but it’s still early in the legislative process.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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