Health Insurance Complaints Up; Auto & Homeowners Down in '99

Springfield, IL -- Consumer complaints to the Illinois Department of Insurance increased by nearly 8 percent in 1999 according to complaint information released today by Director Nathaniel S. Shapo. The Department investigated 14,867 cases in 1999, up from 13,812 in 1998. Of that total, 5,466 were health insurance complaints -- an increase of 23 percent from the previous year. Property and casualty complaints decreased 15 percent, with auto insurance grievances down by 18 percent and homeowners by 1 percent. Claim handling remained the most common cause of complaints.

Among the health insurance lines, complaints against health maintenance organizations (HMOs) increased by 35 percent (from 1126 to 1521); group accident and health complaints by 23.5 percent (from 2271 to 2806); and individual accident and health complaints by 7 percent (from 1061 to 1139).

Shapo cautioned that HMO complaint numbers were skewed by the problems of the now defunct American Health Care Providers (AHCP). Complaints against the HMO, which was placed in liquidation on May 11, 2000, were nearly five times higher than in 1998, and accounted for nearly one-fourth of all HMO complaints in 1999. "If AHCP's complaints were subtracted from the mix, total HMO complaints increased by only 2.6 percent from 1998," Shapo said. He also noted that commercial enrollment in HMOs increased by 1.5 percent in 1999.

The Managed Care Reform and Patient Rights Act signed into law by Governor George Ryan in August may also have had some impact on health insurance complaints in 1999 by raising consumer awareness. "Although, the reform measures did not take effect until January 1, 2000, publicity about the new law, including a provision calling for the Department of Insurance to establish an Office of Consumer Health Insurance, seems to have encouraged more consumers to file formal complaints," Shapo remarked. He also credited the Department's website with improving consumer awareness, noting that 439 complaints were filed electronically. Consumers can contact the Office of Consumer Health Insurance toll free at 877-527-9431 or file an electronic complaint at www.ins.state.il.us.

Shapo said the decline in auto insurance complaints speaks well for Illinois' competitive marketplace and underscores the importance of looking at a company's claims settlement and policyholder service records when comparison shopping. "Price alone is not an indicator of consumer satisfaction," he said.

The Department of Insurance calculates complaint ratios for all licensed HMOs regardless of the number of complaints and for auto, homeowners, life and accident and health insurance companies that receive ten or more complaints in a calendar year. Ratios measure the number of written grievances in relation to Illinois premium volume, policies or certificates in force or membership. A rank of 1 is the lowest ratio of all companies listed for a line of coverage.  

*Includes 365 complaints against American Health Care Providers. Excluding those complaints, the total HMO complaints for 1999 drops to 1156, a change of +2.6 percent.