Kansas City, Mo. - The top three reasons consumers filed formal complaints against their insurance companies in 2005 were delays, denials and unsatisfactory settlement offers, according to data collected by the National Association of Insurance Commissioners (NAIC).Following these claims handling issues, consumers complained most about policy cancellations and premiums/insurance rating issues. That complaint pattern has remained relatively consistent during the past four years. A total of 199,639 complaints were filed by consumers in 2005, a 22.5% decrease from 2004.
The NAIC maintains a centralized electronic Complaint Database System (CDS), through which states voluntarily report 'closed' complaints. (A closed complaint is a complaint that has been investigated and resolved to the satisfaction of the state or jurisdiction in which it is filed.) The CDS, first established in 1990, was significantly expanded in 1998 and now houses 2.2 million complaints.
"Data on complaints can be extremely valuable to consumers who are in the midst of researching different insurance options," said Catherine Weatherford, NAIC Executive vice president and CEO. "Consumers can easily search this data right on our Web site or call their state insurance department. Giving them access to it is one way we are helping consumers get smart about insurance."
Aggregate data compiled from the CDS can be accessed by clicking on the Consumer Information Source link on the NAIC home page at www.naic.org. By accessing this link, consumers can obtain company-specific complaint ratios (the ratio of the company's market share of complaints compared to the company's market share of premiums for a specific policy type), as well as aggregate counts of complaints by state and by type of coverage for specific companies.
In 2005, auto insurance was the type of coverage that caused the most complaints, followed by accident and health, homeowners, life and annuity, and commercial multi-peril insurance.
The top five types of complaints in 2005:
Delays: 43,840 (21.96%)
Denial of claim: 7,346 (18.71%)
Unsatisfactory settlement/offer: 28,414 (14.23%)
Cancellation: 12,865 (6.44%)
Premium & rating: 12,259 (6.14%)
The top five complaints by type of coverage in 2005:
Auto: 80,867 (40.51%)
Accident and health: 67,992 (34.06%)
Homeowners: 23,446 (11.74%)
Life and annuity: 17,208 (8.62%)
Commercial multi-peril: 3,580 (1.79%)
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