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Dead
End Delays: More Consumers are Filing Complaints
with TDI About Auto Insurance Claims Delays, but
Will It Help Them?
Courtesy of Texas Watch Online
12/12/01
In
April an Austin area man and his pregnant wife were
injured in an auto accident caused by another
driver. After three weeks of rude treatment,
run-arounds and delays from the at-fault driver’s
insurance company, the couple filed a complaint with
the Texas Department of Insurance. With no action
after the complaint, they were forced to file with
their own insurance company to repair the car
damage. Seven months after the accident, they still
have not received payment for medical expenses or
lost wages and the Texas Department of Insurance has
closed their file on the complaint with no action.
When consumers face classic run-around, delay and
bullying tactics from Texas insurers, consumers have
few resources to which to turn for assistance.
Filing a report with the Texas Department of
Insurance (TDI) is often the last resort for
frustrated citizens who have been treated unfairly
by insurance companies, but just how effective is
TDI’s complaint system at helping to resolve claims?
Does TDI have the authority and ability to advocate
for consumers or hold irresponsible insurance
companies accountable? If not, what options do
consumers have?
In an effort to address these questions, Texas Watch
recently conducted a study of auto liability
insurance complaints filed at TDI between 1996 and
2000. The study analyzed TDI complaint statistics
and reviewed complaint files received through an
open records request. The study indicates a
significant rise in the number of complaints filed
by Texas drivers against auto insurers and the
ineffectiveness of the TDI complaint process to
resolve consumer complaints.
Trends in Auto Insurance
Complaints Made to TDI
Texas Watch examined trends in auto insurance
complaints from 1996 to 2000 based on TDI complaint
filing records. Delays in handling claims ranked as
the top complaint every year from 1996 to 2000.
Other frequent complaints included denial of claims
and unsatisfactory settlement offers.
-There were 14,082 complaints filed against Texas
auto insurers in 2000, up from 10,847 complaints
filed in 1996.
-Delays in claims handling accounted for 36% of all
auto insurance complaints filed in 2000 and 49% of
complaints filed by 3rd parties (drivers who were
not at fault).
-There was a 27% increase in the number of delayed
handling complaints from 1999 to 2000, while there
was a 9% decrease in number of total complaints. As fewer consumers found reasons to complain about
excessive rates and customer service between 1999
and 2000, more consumers were compelled to complain
about delays in claims handling. The data suggests
that while insurance companies may have practiced
better claims handling overall last year, they are
delaying substantially more claims.
A Close Look at How 3rd Party
Auto Complaints are Handled
Texas Watch also performed a detailed, case-by-case
review of 331 third-party (driver who is not at
fault) auto liability complaints filed in the second
quarter of 2001 involving delays in claims handling.
This in-depth study allowed for an evaluation of the
actions taken by TDI when complaints are filed and
provided insight into the specific causes of
complaints.
The TDI Complaint Process and
Its Effectiveness
Upon receipt of a complaint, TDI sends a written
acknowledgment to the complainant and notifies the
insurance company of the complaint. The insurance
company is given ten days to respond to TDI and that
response is then forwarded to the complainant with
any recommendations from TDI. TDI does not guarantee
that participating in this complaint process will
resolve the claim in question. Our study found that
this process was followed consistently. -Claims were fully resolved in only 34% of the cases
examined. Claims were partially resolved 13% of the
time and 53% of the cases were still unresolved when
TDI closed their file on the complaint.
-In 63% of studied cases TDI did not provide any
recommendation as to how to resolve the claim. In
19% of cases TDI recommended contacting an attorney
if the complainant wished to pursue the claim.
-TDI took some action on behalf of the complainant
only 15 times in the 331 cases examined. In 95% of
studied cases, TDI simply acted as a go-between for
correspondence.
What is Causing the Delays?
-22% of delays resulted from an insurance company’s
failure or inability to contact their policyholder.
In some cases, this caused delays for several
months.
-15% of delays resulted from clerical errors made by
the insurance agency, including sending the
settlement check to the wrong address, misplacing
files, and making a settlement check out to the
wrong name.
-13% of delays resulted from a dispute over who was
responsible for causing the accident.
-12% of delays resulted from an insurance company
offering a settlement that was deemed unfair or
incomplete by the complainant.
What Does This Mean for
Consumers?
Our research shows that every year more people turn
to TDI to look for help with their delayed claims.
With apparently limited authority to correct actions
or behavior, TDI seems to be ineffective at
achieving resolutions for complainants. This study
indicates that consumers need more tools with which
to advocate their case and a stronger authority to
which they can turn to hold insurance companies
accountable for paying legitimate claims.
In the face of classic delay tactics, consumers find
little recourse or remedy from TDI and have few
alternatives. Many of the individuals who have filed
complaints were forced to pay damages out of their
own pocket, turn to their own insurance companies or
forgo repairs altogether.
How Texas Watch is Helping
During the last two legislative sessions, Texas
Watch has supported bills designed to bring fairness
to the insurance claims process. Dozens of Texas
Watch members from across the state who have
experienced abusive insurance tactics first hand
came to the capitol to lobby and testify in favor of
these bills which called for:
-Requiring insurance companies to provide complete
and truthful information to consumers during the
claims process.
-Prohibiting insurance companies from distributing
misleading and deceptive communications.
-Creating a 30-day period following a claims
settlement in which Texans could opt out of a unfair
settlement if they were tricked or pressured into
it.
-Increasing access and availability to insurance for
Texas families.
-Controlling the rise in insurance costs.
How You Can Make a Difference
Texas Watch will continue to support legislation
designed to level the playing field between
insurance companies and Texas families by giving
consumers more tools, information and power. To help
reform the insurance industry, you can share your
story of insurance abuse, contact your legislators
before important votes or testify in favor of
beneficial legislation. You can find out how to
participate at www.texaswatch.org. To get involved,
you can also call Stacey toll-free at
1-888-738-4226.
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