January 27, 2011

Missouri Department of Insurance returns over $10 million to consumers in 2010

Average consumer refund: $7,000; 30 percent of complaints on health insurance

Jefferson City, Mo. - Enforcement by the Missouri Department of Insurance resulted in consumers receiving $10.5 million from their insurance companies in 2010. The money was returned through the department's mediation efforts on behalf of consumers who had filed complaints, as well as through the department's market conduct examinations.

Mediation of consumer complaints resulted in nearly $9.5 million in recoveries. The most common reasons for complaints to the department included denial of claims, claims delays, and unsatisfactory offers. The department recorded the most complaints in health insurance, followed by auto and homeowners. Some notable accomplishments from the past three months:

  • A health insurer originally denied a claim for knee-replacement surgery, saying it was part of a pre-existing condition. After the consumer filed a complaint with the department, the insurance company reopened and reprocessed the file, paying a claim of $35,000.
  • A couple purchased a cancer policy in May. The husband was diagnosed with lung cancer that August. The company denied the claim twice: first for insufficient proof of loss and later for the diagnosis being made within the first 30 days of coverage. However, after the department began working the consumer complaint, the company issued a letter of apology stating that the couple's policy does not contain a 30-day waiting period and paid all claims totaling $11,000.
  • An elderly couple in Springfield complained that an investment broker claiming to be with the Senior Division of the state of Missouri put nearly 50,000 into an annuity. The department investigated the case and the investment adviser, and the insurance company agreed to return the full $48,600 to the couple, along with interest for the time it was invested.

"Protection of Missouri consumers is our top priority," said John M. Huff, director of the Department of Insurance. "The average consumer recovery was $7,000, which shows that when policyholders are not satisfied with their insurance company, they shouldn't give up - they should file a complaint."

For the year, the department fielded more than 4,200 formal complaints and assisted more than 3,400 consumers in writing and another 20,000 over the telephone.

The top categories of complaints were as follows: 

By reason

By line of insurance

Claim denial (1,077 complaints)

Health (1,294)

Claim processing delay (816)

Auto (956)

Unsatisfactory settlement offer (462)

Homeowners (633)

The department's Market Conduct Section completed 23 examinations in 2010, and returned nearly $1 million to consumers who had not been paid enough for claims or whose premiums had risen too high. The Market Conduct Section also collected more than $900,000 in fines from insurance companies.

In a market conduct exam, the department reviews thousands of insurance company documents detailing the treatment of policyholders, from the rates the companies charge to the way they handle claims to other responsibilities under state law. Exams can result in refunds for consumers, fines, changes in business practices or other remedies.

Consumers with complaints or questions about their insurance claim or policy provisions can call the Insurance Consumer Hotline at 1-800-726-7390 or file a complaint at insurance.mo.gov.