NAIC Cites Top Insurance Complaints for 2007

NAIC Cites Top Insurance Complaints for 2007

KANSAS CITY, Mo. (Jan. 30, 2008) — Recent statistics reflect a continuing decrease in consumers’ insurance complaints for the fourth consecutive year, although the grounds for those complaints remain relatively unchanged.

According to data released by the National Association of Insurance Commissioners (NAIC), the top three reasons consumers filed formal complaints against their insurance companies in 2007 were delays, denials of claims and unsatisfactory settlement offers. Policy cancellations and premium/insurance rating issues completed the top five.

The NAIC collected the data through its 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. First established in 1990, the CDS was significantly expanded in 1998 and now houses data on more than 2 million complaints.

A total of 222,814 consumer complaints were reported to the CDS in the 2007 calendar year. This represents a 3.6 percent decrease from the number of consumer complaints reported during the 2006 calendar year, according to data released in March of last year. This information is based on the submission of data to the NAIC from the state insurance departments. The CDS is continually updated, as new information is received from the states on an ongoing basis. The NAIC does not collect all complaint data from all states.

Aggregate data compiled from the CDS can be accessed on the NAIC’s Web site through the Consumer Information Source. By accessing this program, 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.

Below is a chart detailing the top five types of complaints and the top five complained about types of insurance coverage for 2007. The chart includes the total number of complaints (for complaint type and line of coverage), followed by the percentage of overall complaints each type represents. (For example, “denial of claim” comprised 14.7 percent of all complaints received by the NAIC in 2007.)