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Insurance market conduct: Claims handling is biggest problem

Sat Sep 29th, 2012 on     Homeowners Insurance,    

Insurance is a highly regulated industry, and state insurance departments keep track of how well companies are complying with all those regulations. Every insurance company operating in the state of Florida is subject to a full market conduct review. The Office of Insurance Regulation determines how often the reviews are conducted, but state law dictates what the OIR reviews.

Generally, states look at claims and complaint handling, rate filings, financial transactions and underwriting practices. A recent review of market conduct exams throughout the United States reveals some interesting but not surprising trends among property and casualty insurance companies. The researchers developed a “top 10” list.

  1. Claims topped the list. Insurance departments found compliance issues with acknowledging claims, paying claims and denying claims within the allotted timeframe.
  2. Less visible to consumers would be the failure of companies to comply with regulations regarding state approval of application forms and insurance rates. Companies were often cited for misapplying rating factors, as well.
  3. State laws are very specific about how an insurer can cancel or non-renew policies. Apparently, many insurance companies are not as diligent as they should be.
  4. Underwriting is the process insurers use to determine the risk associated with insuring a home, for example. The location and age of a home, the materials used in construction — all can affect the premium the homeowner will have to pay. According to this review, insurance companies are often cited for not making required disclosures about underwriting decisions.
  5. The fifth item is one that consumers could have personal experience with: failure to process total loss claims properly.

We’ll finish up the list and, perhaps, touch on some life and health insurance compliance issues in our next post.

Source: Insurance News Net, “Consumer Criticism No. 1: Failure To Pay Claims Properly,” Sept. 27, 2012

Our firm works with clients who have had experiences with insurance companies similar to the ones discussed in this post. To learn more about our practice, please visit our Miami homeowners insurance claims page.

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