It’s Report Card Time for Insurance Companies : Regulation: California Commissioner Garamendi releases his second annual ranking based on consumer complaints.
The good were still good, for the most part, and the ugly still ugly in the state’s second annual consumer complaint survey of California’s largest health and disability and life insurance companies.
The survey, which Insurance Commissioner John Garamendi dubs “The Good, the Bad and the Ugly,” ranks the 50 largest insurance sellers in each line, based on the number of justified consumer complaints against them in 1991.
As they did last year, some companies found fault with Garamendi’s methodology, but consumer advocates hailed the survey as a useful tool. Garamendi plans to issue a second survey today ranking auto, homeowner and workers compensation insurers.
In releasing the survey Wednesday, Garamendi also issued a statement praising the top performers and bashing the laggards, sometimes sarcastically.
Seven of the 10 worst in each line were also on last year’s 10-worst list, while six of the 10 best health and disability insurers and five of the 10 best life insurers were repeaters from a year ago.
For the second straight year, Chicago-based United Insurance of America had the worst complaint record among the life insurers. Its ratio of 0.64 justified complaints per $1 million of premiums written was eight times the average.
Said Garamendi: “To this company that claims they are ‘there when you need us,’ I say, ‘Not!’ ”
United did not respond to a request for comment.
Three of 10 largest life insurers, based on California premium volume, were also among the 10 worst in the service ranking: Massachusetts Indemnity & Life, Prudential Insurance of America and Jackson National Life. But seven other firms were praised for having zero justified complaints in 1991.
Newark, N.J.-based Prudential and its Phoenix-based subsidiary, Pruco Life, ranked eighth and fifth worst, respectively, on the life insurance list.
Prudential spokesman Joe Vecchione said: “The California statistical approach is skewed in favor of companies in the upper-income market and does not give a fair picture of our performance.” A company such as Prudential, which writes a large number of small policies, deals with far more customers relative to premium volume than does a company that writes a small number of big-ticket policies, Vecchione said.
“The more customers you have,” he said, “the greater chance for error.”
Massachusetts Indemnity & Life made a similar argument, stating that it sells only term insurance policies, which “cost five to 10 times less than a cash value policy for a comparable face amount.” Again, it issues more policies for a given volume of premium than most companies.
On the health and disability side, none of the 20 largest sellers made the 10 worst list.
American Service Life of Ft. Worth had by far the worst complaint ratio, with 3.44 complaints per $1 million of premiums written, as compared to an average of only 0.18. Said Garamendi: “They frequently failed to make payments until the Department of Insurance intervened and pressured the company to resolve the consumer’s valid claims.”
Company Vice President Mariem Harris acknowledged American Service’s poor record but said it stems mainly from its conversion to an automated claims-processing system. Data-entry errors and computer glitches bedeviled the firm, she said, but most problems have been solved and service is improving.
“The bad news continues,” Garamendi said, “when we look at runner-up Pioneer Life of Illinois, which had the worst record last year. They are known to fight paying claims for so long that the bills are sent to collections while the worried policyholders are still trying to regain their health.
“And Transport Life Insurance Co., third-place finisher this year and last year’s second-place worst company, continues to force its customers to turn to the Department of Insurance for help,” Garamendi’s statement continued.
Pioneer did not respond to a request for comment.
A spokeswoman for Ft. Worth-based Transport said that most of its complaints stemmed from a line of hospitalization insurance that was subject to frequent rate increases--a line the company stopped writing in February, 1991.
Nettie Hoge, staff attorney for Consumer’s Union in San Francisco, said the survey is “essential” for comparison shopping.
How Health Insurers Rank
Below are the California health and disability insurers ranked by their “complaint ratio”--that is, the number of justified complaints against them per $1 million worth of premiums--in 1991, according to the state Department of Insurance. The department defines a justified complaint as one involving a violation of insurance laws or one in which the consumer could not get a response from the company.
Top five (Justified complaints per $1 million in written premium)
Unum Life of America: 0.01
PM Group Life: 0.02
Northwestern National Life: 0.02
Guardian Life of America: 0.03
Standard Insurance: 0.04
Bottom five (Justified complaints per $1 million in written premium)
American Service Life: 3.44
Pioneer Life of Illinois: 1.80
Transport Life: 1.33
American Western Life: 0.84
Congress Life: 0.50
Source: Statistical Analysis Bureau, California Dept. of Insurance
California Insurance Complaints
Insurance Commissioner John Garamendi released this survey of health and disability and life insurers doing business in California in 1991. The “10 best” and “10 worst” charts rank insurers by their complaint ratio--the number of justified consumer complaints against each firm, divided by its premium volume. The “10 largest” charts rank companies by premium volume. The full survey is available free of charge from the Department of Insurance’s toll-free consumer protection hotline at 1-800-927-HELP.
Health insurers with the best records
Complaints Justified per $1 million Company complaints in premiums Unum Life of America 1 0.01 PM Group Life 2 0.02 Northwestern National Life 1 0.02 Guardian Life of America 5 0.03 Standard Insurance 4 0.04 Hartford Life & Accident 3 0.05 United of Omaha Life 3 0.05 Union Labor Life 4 0.06 Amex Life Assurance 3 0.06 Life Ins. of North America 4 0.06
Health insurers with the worst records
Complaints Justified per $1 million Company complaints in premiums American Service Life 130 3.44 Pioneer Life of Illinois 150 1.80 Transport Life 58 1.33 American Western Life 33 0.84 Congress Life 22 0.50 Mutual of Omaha Insurance 28 0.43 Bankers United Life Assur. 15 0.42 Pacific Mutual Life 29 0.38 PFL Life Insurance 19 0.31 General American Life 10 0.26
Records of the largest health insurers
Complaints Justified per $1 million Company complaints in premiums Blue Cross of California 332 0.14 Prudential Ins. of America 37 0.06 Principal Mutual Life 28 0.06 Aetna Life Insurance 64 0.15 Provident Life & Accident 20 0.09 Connecticut General Life 37 0.18 Travelers Insurance 42 0.24 Employers Health Insurance 16 0.10 Massachusetts Mutual Life 14 0.09 John Alden Life 26 0.16
Life insurers with the best records
Complaints Justified per $1 million Company complaints in premiums Aid Assn. for Lutherans 0 0.00 Sun Life Assurance of Canada 0 0.00 Lutheran Brotherhood 0 0.00 Standard Insurance 0 0.00 Provident Life & Accident 0 0.00 Phoenix Mutual Life 0 0.00 Chubb Sovereign Life 0 0.00 Connecticut Gen. Life (Aetna) 1 0.01 State Farm Life 2 0.01 Connecticut Mutual Life 1 0.01
Life insurers with the worst records
Complaints Justified per $1 million Company complaints in premiums United Insurance of America 23 0.64 Mass. Indemnity & Life 41 0.26 American National Insurance 11 0.24 John Hancock Mutual Life 20 0.21 Pruco Life 11 0.19 Mutual Life of New York 9 0.15 Jackson National Life 21 0.15 Prudential Ins. of America 72 0.15 Independ.Order of Foresters 7 0.14 North American Life & Health 4 0.12
Records of the largest life insurers
Complaints Justified per $1 million Company complaints in premiums Prudential Ins. of America 72 0.15 New York Life 32 0.07 Metropolitan Life 24 0.07 Pacific Mutual Life 3 0.01 Manufacturers Life 5 0.02 Transamerica Occidental Life 15 0.07 Northwestern Mutual Life 5 0.03 Mass. Indemnity & Life 41 0.26 State Farm Life 2 0.01 Jackson National Life 21 0.15
