Consumer Complaints Against Insurance Companies Increase;
HMO Complaints Decline in 2001

Springfield, IL -- Illinois consumers filed more complaints about their insurance companies, but fewer against their HMOs, according to the 2001 consumer complaint statistics released today by Director of Insurance Nat Shapo. The Illinois Department of Insurance investigated 12,269 written complaints against insurance companies in 2001 compared to 10,781 in 2000, an overall increase of 14 percent. Total complaints against health maintenance organizations dropped by 19 percent from 1,761 in 2000 to 1,430 in 2001.

Despite the decrease in HMO complaints, health insurance lines continued to receive the largest portion (42 percent) of all consumer grievances, in part because the Department's Office of Consumer Health Insurance has initiated community outreach programs that have increased public visibility about Department services and because more health care providers are filing complaints.

Property and casualty lines accounted for nearly one-third (32 percent) of total complaints, with homeowners insurance complaints escalating by an unprecedented 59 percent. Other significant complaint increases included: auto insurance, +11 percent; individual accident and health insurance, +21 percent; and group accident and health, +15 percent.

Director Shapo said he is not surprised by the growing number of homeowners and auto insurance complaints. "The Illinois property and casualty insurance industry has been hit hard on a number of fronts, including staggering losses from storm damage claims in 2000 and 2001; rising repair costs; declines in investment income; and to some extent, loss of reinsurance following the events of September 11. Those factors are now spilling over to policyholders, resulting in tighter underwriting standards, changes in coverage, and higher rates," he said. "Illinois is certainly not unique in that regard, but the good news for consumers is that, as these market cycles play out, our state continues to have one of the most competitive insurance markets in the nation."

Claim handling and underwriting were the top reasons for consumer complaints in 2001. "The average person pays the most attention to an insurance policy at the time of application for coverage and later, if there's a need to file a claim," Shapo said. "When questions or concerns arise, the Department stands as a resource to help consumers."

Illinois residents can contact the Department of Insurance through the following toll-free numbers: the Consumer Assistance Hotline at 866-445-5364 or the Office of Consumer Health Insurance at 877-527-9431.

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.

Composite of Insurance Complaints

Total Complaints Investigated in Year 2001

Complaints by Line of Coverage

Major Reasons for Complaints

Distribution of Complaints by Zip Code

Comparison of Complaints by Coverage & Reason 2000-2001