The Homeowners Insurance Claims Quality Summary provides current, helpful statistics with which consumers can compare companies as to how promptly and fairly they pay claims.
Quality is an important attribute of any product, including insurance. A key measure of quality for homeowners insurance is an insurance companies’ record of paying claims promptly and fairly—of keeping its promises. But consumers have too little information about how well insurance companies pay claims.
If regulators adopt the Homeowners Insurance Claims Quality Summary, consumers would have reliable data on claims quality.
Insurance companies currently report claims statistics to regulators on the National Association of Insurance Commissioners’ Market Conduct Annual Statement.
The statistics reported each year include, among others:
- Number of claims opened, closed with payment to policyholders or other claimants, and closed without payment
- Median days to final payment
- Number of claims closed with and without payment within 0-30 days, 31-60 days, and so on
- Number of suits by policyholders opened and closed
The MCAS also uses Scorecard Ratio Formulas, including:
- Number of claims closed without payment compared to the total number of claims closed
- Percentage of claims paid beyond 60 days
- Lawsuits filed against the company during the period to claims closed without payment
The NAIC website states, “The MCAS is a collaboration of regulators, the insurance industry and consumers who recognize the benefits of monitoring, benchmarking, analyzing and regulating the market conduct of insurance companies.” But consumers have little access to the information reported.
State insurance departments should create online tools that use these statistics to facilitate comparison of different companies. The Claims Quality Summary provides a format for doing so.
Insurance departments also routinely publish information on how many consumers file complaints against insurance companies and what action the department has taken on the complaints. The Claims Quality Summary also includes statistics on complaints.
Homeowners Insurance Claims Quality Summary
The Summary compares an individual company’s claims payment quality to the 10 (or 20) largest companies in the state and to all companies. The measures compared are:
- How frequently does the company deny claims?
- How frequently does the company fail to pay a claim within 60 days of filing?
- What is the median number of days to final payment on claims?
- How frequently does the company get sued for failing to pay a claim?
- How frequently does the company lose lawsuits filed by consumers?
- How frequently do consumers file complaints with the insurance department against the company?
The definitions of the measures in the Summary are:
- How frequently does the company deny claims?
- Ratio of number of claims closed without payment to the consumer compared to the total number of claims closed
- How frequently does the company fail to pay a claim within 60 days of filing?
- Percentage of claims paid more than 60 days from filing
- What is the median number of days to final payment on claims?
- Median days to final payment
- How frequently does the company get sued for failing to pay a claim?
- Ratio of lawsuits filed against the company during the period compared to claims closed without payment
- How frequently does the company lose lawsuits filed by consumers?
- Ratio of number of lawsuits closed with payment to the consumer compared to number of lawsuits closed during the period
- How frequently do consumers file complaints with the insurance department against the company?
- Ratio of number of consumer complaints filed compared to policies in force
For more, including the Summary’s template, read the full report