In the area of home insurance, the Advocate’s focus will be on setting tough new standards for good service. When the homeowner files a legitimate claim for damage from a burst frozen pipe, or a fire, or a tree that fell on the roof, or whatever the case may be, the claim should be processed fairly and efficiently so that the Consumer is not “re-traumatized” by the insurance company’s conduct during the claims process.

Thousands of complaints are filed annually with the state regarding sub-standard service by insurers, such as:

• Slow pay
  
• Disputes over the value of the loss, i.e. public adjuster who may “lowball” the re-imbursement cost before even looking at the property
  
• Lack of responsiveness regarding replacement of damaged contents
• Arbitrary denial of claim
• Arbitrary policy cancellation
• Pre-approved contractor refusing to pay above a fixed amount
• Unreasonably withholding claims money “not in dispute”

Again, the insurance companies are well aware that many Consumers will not take the fight this far. Insurers have the resources to litigate the dispute, while frustrated Consumers often settle for much less than the true worth of the loss, simply to avoid the hassle of fighting. They just want to get their home life back to normal as soon as possible.

The injustices that pile up in these situations are a parade of horrors: (1) the Consumer is re-traumatized, (2) the Consumer settles for sub-standard repair, (3) the company gets a windfall by keeping more of the Consumer’s premium than truly earned, (4) out-of-pocket costs accrue to the Consumer (deductible, work loss, legal representation, etc.), and (5) to add insult to injury, in the end, the claim may be used to raise the Consumer’s rates or to cancel the policy.

The Advocate will conduct an examination of the complaints filed with the Consumer Services Division in the Office of Financial and Insurance Regulation to see what patterns of insurer misconduct, if any, emerge. Is certain conduct, such as claims denials, occurring more frequently? If so, is it industry-wide, or is it associated with particular insurers? Does this appear to be a deliberate strategy?

The answers to these questions will help to determine whether certain laws are triggered such as the Unfair Trade Practices Act or the Consumer Protection Act, or whether a de-certification of the company is warranted under OFIR regulations.

Further, the Advocate will examine consumer protection laws across the country to determine the most effective remedies available to aggrieved Consumers, and make recommendations to the Governor based on those findings.