Car Insurance Firms Rated on Complaints
For the first time, the California Department of Insurance has publicly released a list showing which automobile insurance companies doing business in the state have the best and worst records of justified consumer complaints, as investigated by the department.
The issuance of the list comes at a time when the department has been under increasing pressure by consumer groups to make more information available to the public on insurance company conduct and pricing in California. In years past, the department had issued its report on complaint ratios only to the insurance companies.
Worst Record Noted
The complaint figures for the latest available year, 1984, show that among the five biggest sellers of personal auto insurance in the state, Farmers Insurance Exchange, with a ratio of .206 justified complaints per $1 million of premiums, had the worst record.
Department investigators found that 135 complaints against the company, which collected $656.2 million in such premiums, were valid.
Each of the five biggest companies do more than $500 million a year in business. The best insurer among the top five, with a .074 ratio per $1 million in premiums, was the Northern California-based California State Auto Assn.
Second-Best Record
State Farm, with a ratio of .090, had the second-best record; the Automobile Club of Southern California, with a ratio of .158, was third, and Allstate Insurance, with a ratio of .187, was fourth.
The Department of Insurance defines justified complaints as those that involve improper denial of a claim, claim handling delay or an unsatisfactory offer of a claim settlement. Insurance Department spokesman Jorge Sandoval said Wednesday that the most frequent complaint ruled justified involved delays in handling claims.
In the department’s prepared statement, Insurance Commissioner Bruce Bunner cautioned that complaint ratios are only one measure of company performance. He said consumers should also consider an insurer’s pricing structure and marketing methods in conjunction with complaint statistics.
Department officials said Wednesday that they will release direct price comparisons between companies in the next few months.
Comparing complaint ratios, many other companies doing less than $500 million in premium business in 1984 had considerably worse records than the “big five.”
Worst Record Cited
The sixth-leading insurer in terms of sales, 20th Century, had a ratio of .452, and the worst record of all 97 companies listed belonged to Reliance Insurance Co., headquartered in Philadelphia, which collected only $84,000 in such premiums in California in 1984, but had five justified complaints for a ratio of 59.524.
A spokesman for 20th Century, Rick Dinon, challenged the validity of the ratios as a fair measure of his company. He said 20th Century insures mainly better, so-called preferred drivers and charges less than other companies. Thus, he said, it has more customers per $1 million of premiums than other insurers.
A spokesman for Reliance, Bud Obermeyer, said that company’s complaint troubles arose from a single agent selling rental car insurance and that it has canceled that service and has not provided it since 1984.
He said Reliance does its private auto insurance business in California through its subsidiary, United Pacific, which had a reported complaint ratio of .363.
Most Ratios Low
Insurance company spokesmen often commented Wednesday that most of the complaint ratios were very low. But Insurance Department officials pointed out that many people probably do not know they can complain, and that the department will investigate. Sandoval and Everett Brookhart, chief of the department’s consumer affairs division, said they could not release the numbers of total complaints received, justified and not, because there was too much confusion between bureaus within the department as to when a consumer query actually became a complaint. They said the procedure for receiving and categorizing such submissions has only recently become standardized.
Two consumer advocates cautiously lauded the Insurance Department for releasing the statistics.
A policy analyst in the West Coast office of the Consumers Union, Judith Bell, called it “certainly a good first step” and said she hoped that the department “will make these kinds of disclosures a regular business item.”
‘Certainly Positive’
The executive director for California Common Cause, Walter Zelman, said the department’s action “is certainly positive, better than what they’ve been doing in the past.”
But he added that he would still like to see how many complaints have been filed against each company and what percentage of the complaints against each company had been found valid. This, he said, might be a better statistical measure.
Company comments varied.
Speaking for Farmers Insurance Exchange, the “big five” seller with the worst record, Jerald G. Clemants said: “We will have no comment other than to say we make every effort to deal with any complaints as we receive them.”
Best Record
But Tom Rohner, speaking for the ‘big five’ seller with the best record, California State Auto Assn., said the .074 ratio for his company proved it is accomplishing its goal of “really trying to serve our insureds.”
A State Farm regional vice president, Don Raker, called the .090 complaint ratio for his firm “a reflection of the fine work our agents and claims staff have done.”
The vice president and manager of the Automobile Club of Southern California, Larry Baker, said of the .158 ratio reported for his company: “I’m pleased that we have a relatively low complaint ratio. I would prefer it be the best, but it’s sometimes difficult to maintain a lower ratio in Southern California”
The underwriting manager for Allstate, Richard Doran, said of the company’s .187 ratio: “The numbers are pretty small for everybody in terms of complaints.” He said he wanted to see the full report before commenting further.
Of the companies doing between $20 million and $500 million in personal auto insurance business in the state, the worst record belonged to Financial Indemnity Co., which had a ratio of .748, or 28 justified complaints for its $37.4 million in 1984 business.
One company spokesman, Fred Tisovic, vice president in charge of claims, challenged the statistical validity of any survey with such low numbers of complaints reported and noted that his company in particular services a number of high-risk drivers.
COMPLAINTS ABOUT INSURERS
For the first time, the state Department of Insurance has made public this listing of justified complaints against personal lines auto insurance companies. Commercial coverage is not included. These 1984 figures are listed in order of the ratio of justified complaints to the amount of business. Companies highest on each list had the fewest justified complaints for the insurance premiums sold.
COMPANIES DOING MORE THAN $500 MILLION IN BUSINESS
Complaints Premiums No. of Per Million Sold/Yr. Justified Premium Company (in thous.) Complaints Dollars Cal. State Auto Assn. $512,344 38 .074 State Farm Mutual 888,669 80 .090 Inter-Ins. Exchange 601,028 95 .158 (Auto Club of So. Cal.) Allstate Insurance 550,019 103 .187 Farmers Insurance Exchange 656,238 135 .206
COMPANIES DOING $20 MILLION-$500 MILLION IN BUSINESS
Complaints Premiums No. of Per Million Sold/Yr. Justified Premium Company (in thous.) Complaints Dollars United Service Auto Assn. $132,086 9 .068 National Surety Corp. 38,666 3 .078 West American Insurance 58,049 5 .086 Mid-Century Insurance 154,538 16 .104 Transamerica Insurance 21,797 3 .138 SAFECO Insurance of America 86,751 12 .138 Cal-Farm Insurance Co. 40,737 8 .196 Prudential Property and Casualty 20,003 4 .200 USAA Casualty Insurance Co. 22,158 5 .226 State Farm Fire & Casualty 46,892 11 .235 Nationwide Mutual Insurance 20,563 5 .243 Civil Service Employees 28,356 8 .282 Calif. Casualty Insurance Co. 33,885 11 .325 Century National Insurance Co. 28,852 10 .347 J.C. Penney Casualty Ins. Co. 30,873 11 .356 United Pacific Insurance Co. 27,553 10 .363 Aetna Casualty & Surety Co. 31,623 12 .379 Govt. Employees Insurance Co. 67,399 26 .386 Continental Insurance Co. 44,650 18 .403 20th Century Ins. Co. 194,815 88 .452 Transamerica Premier Ins. Co. 23,433 12 .512 Dairyland Insurance Co. 28,790 15 .521 Colonial Penn Insurance 23,010 12 .522 Mercury Casualty Co. 63,377 36 .568 Progressive Casualty Ins. Co. 29,836 17 .570 Financial Indemnity Co. 37,455 28 .748
COMPANIES DOING UNDER $20 MILLION IN BUSINESS
Complaints Premiums No. of Per Million Sold/Yr. Justified Premium Company (in thous.) Complaints Dollars Phoenix Insurance Co. $19,931 3 .151 Teachers Insurance Co. 18,269 3 .164 Hartford Casualty Insurance 17,988 4 .222 Foremost Insurance Co. of Mich. 17,717 5 .282 Insurance Co. of North America 12,996 4 .308 Pennsylvania Gen. Insurance Co. 16,768 6 .358 Carlisle Insurance Co. 10,809 4 .370 Mercury Insurance Co. 10,805 4 .370 Sequoia Insurance Co. 7,843 3 .383 AIU Insurance Company 6,807 3 .441 Consolidated Amer. Insurance Co. 12,967 6 .463 Pacific National Insurance Co. 12,223 6 .491 Amer. Bankers Ins. Co. of Fla. 5,983 3 .501 Lumbermens Mutual Casualty Co. 9,960 5 .502 Metro. Prop. & Liability Ins. Co. 11,676 6 .514 Progressive Specialty Ins. Co. 5,743 3 .522 Travelers Indemnity Co. 12,376 7 .566 AID Insurance Co. (Mutual) 6,949 4 .576 Hartford Accid. & Indem. Co. 6,596 4 .606 Canadian Indemnity Co. 5,952 4 .672 Forum Insurance Company 4,133 3 .726 Reliable Insurance Co. 6,875 5 .727 Amer. National Fire Insurance Co. 4,082 3 .735 Interstate Indemnity Co. 3,816 3 .786 Motors Insurance Corp. 5,017 4 .797 Gen. Accidental Ins. Co. of Amer. 5,014 4 .798 National Union Fire Insurance Co. 6,240 5 .801 of Pittsburgh, Pa. Workmen’s Auto Insurance Co. 13,683 11 .804 Anvil Insurance Company 6,065 5 .824 New Hampshire Insurance Co. 3,566 3 .841 Chicago Insurance Company 5,730 5 .873 National Auto Casualty 18,534 17 .917 Transit Casualty Company 5,331 5 .938 Covenant Insurance Co. 15,505 15 .967 Balboa Insurance Company 4,114 4 .972 Leader Nat’l. Insurance Co. 13,238 14 1.058 Sutter Insurance Company 5,644 6 1.063 Michigan Millers Mutual Ins. Co. 4,321 5 1.157 National American Insurance Co. 2,139 3 1.403 Omaha Indemnity Company 5,903 10 1.694 Southern Insurance Company 4,688 8 1.706 Classified Insurance Corp. 19,577 36 1.839 Fidelity & Casualty Co. of N.Y. 1,579 3 1.900 Comco Insurance Company 2,039 4 1.962 Amer. Continental Insurance Co. 5,494 11 2.002 Hanover Insurance Company 1,370 3 2.190 American Star Insurance Co. 1,277 3 2.349 Comstock Insurance Company 1,240 3 2.419 Puritan Insurance Company 1,633 4 2.449 Sterling Casualty Insurance Co. 1,208 3 2.483 Empire Fire & Marine Ins. Co. 4,408 11 2.495 S & H Insurance Company 3,173 8 2.521 Fireman’s Fund Insurance Co. 8,084 22 2.721 Blue Ridge Insurance Co. 1,404 4 2.849 Home Insurance Company 14,082 44 3.125 Newport Insurance Company 1,869 6 3.210 Commercial Union Insurance Co. 687 3 4.367 Criterion Insurance Co. 856 4 4.673 Nat’l. Fire Insurance of Hartford 561 3 5.348 National Indemnity Company 460 3 6.522 Industrial Indemnity Co. 3,181 30 9.434 Great Global Assurance Co. 1,261 14 11.102 Liberty Mutual Insurance Co. 652 11 17.742 Great American Insurance Co. 364 9 24.725 Reliance Insurance Company 84 5 59.524
