April 13, 2011

Missouri Department of Insurance returns over $2 million to consumers in first quarter of 2011

Health insurance continues to drive consumer complaints

Jefferson City, Mo. - The Missouri Department of Insurance continues to report more issues with health insurance than any other type. Consumers who filed complaints with the department have received $2.4 million from their insurance companies so far in 2011. The insurers returned the money to consumers after the department mediated complaints, many of which were based on the way claims were handled.

Questions and complaints about health insurance, including rates, doubled in the second half of 2010. That category continues to generate the most complaints, followed by auto and homeowners insurance. The most common reasons for complaints were denial of claims, claim delays, and unsatisfactory offers.

Some notable accomplishments from the first quarter:

  • A consumer filed a complaint after being treated for severe burns. His insurance plan refused to pay his medical claim because he had lost his job and his coverage. But the department pointed out that he had a right to COBRA, which allows employees to keep their health coverage after leaving a job. The insurance plan agreed to pay his medical bill of $56,000.
  • The department was able to secure a claim payment of $237,000 for a homeowner with fire damage. After receiving the homeowner's initial claim, the insurance company denied it based on lack of proper paperwork. The department worked with the consumer to submit the appropriate documentation. The insurance company promptly paid $1,282 in living expenses and $235,900 for the damage to the house.
  • The department recovered $22,000 for an 89-year-old widow who had put the money in an unsuitable annuity. The annuity paid $197 monthly, but this did not cover the woman's expenses, and the purchase nearly depleted her assets. After the department's involvement, the insurer canceled the annuity and repaid the purchase amount, minus payments the woman had already received.

"When an insurance company denies a claim, consumers should not assume that's the end of the story," said Missouri Insurance Director John M. Huff. "Most of the money we return to consumers who file complaints is a result of insurance companies incorrectly denying or underpaying claims."

In the first quarter of 2011, the department fielded more than 1,060 formal complaints and assisted 1,603 consumers in writing and another 4,715 over the telephone. The number of written inquiries and complaints is up about 30 percent from a year ago.

The top categories of complaints were as follows:

By reason

By line of insurance

Denial of claim (209 complaints)

Health (203)

Delay of claim processing (187)

Auto (170)

Unsatisfactory offer (100)

Homeowners (122)

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