96 Insurance Consumer Complaint Ratios Released

Springfield, IL -- Illinois Director of Insurance Mark Boozell today released the 1996 statistical summary and consumer complaint ratios for personal lines insurance coverages. "This year marks the 20th anniversary of Illinois' publication of auto insurance complaint ratios," Boozell noted. "A look back shows dramatic improvement not only in company performance, but in our own consumer protection initiatives. For example, in 1976, 93 insurers registered ten or more complaints; in 1996, that number dropped to 39. In 1976, 18 companies had ratios above 10.00, ranging from 10.02 to as high as 43.85; in 1996, one company had a ratio of 11.97, the only one higher than 10.00.

"Regulatory strides over the past twenty years include a statutory requirement that insurance companies establish a consumer affairs department with a toll-free number to respond to policyholder inquiries and complaints; a statutory requirement that insurers provide policyholders with written notice of how to contact the Department of Insurance for assistance; a requirement that companies furnish annual claims information to the Department; and extensive consumer outreach initiatives, including statewide insurance counseling programs for Medicare beneficiaries and one of the most comprehensive homeowners insurance education programs in the country.

"The Illinois Department of Insurance also has a very progressive web site (www.ins.state.il.us) where consumers can compare sample rates for auto, homeowners and Medicare supplement insurance, file a complaint and e-mail my office," Boozell said. "With the addition of the 1996 complaint ratios, consumers can also select a particular company and see the actual reasons for complaints."

During 1996, the Department of Insurance closed 13,081 complaints 12,362 against insurance companies and 719 against health maintenance organizations. An analysis of this complaint data reveals the following:

Total Complaints by Line of Coverage

6,207 (47 percent) auto insurance
1,970 (15 percent) group accident and health insurance
1,129 (9 percent) homeowners insurance
995 (8 percent) individual life insurance
967 (7 percent) individual accident and health
719 (6 percent) HMOs
143 (1 percent) group credit accident and health
951 (7 percent) all other coverages.

Major Reasons for Complaints

Claims handling insurance companies, 72 percent; HMOs, 92 percent
Underwriting insurance companies, 13 percent; HMOs, 5 percent
Policyholder Service insurance companies, 9 percent; HMOs, 2 percent
Marketing and Sales insurance companies, 6 percent and HMOs, 1 percent.

Geographical Distribution of Complaints

Chicago/Metropolitan Cook County areas insurance companies, 69 percent;
HMOs, 80 percent

Downstate insurance companies, 26 percent; HMOs, 16 percent
Remaining complaints, outside Illinois.

The Department of Insurance calculates a complaint ratio and rank for all licensed HMOs, but limits the insurance company listings to those charged with ten or more complaints per line of coverage. A complaint is defined as a written expression of grievance. A rank of 1 reflects the lowest complaint ratio in the group.