Complaints Against Ill. Insurers Decline Slightly

Illinois consumers filed fewer complaints about their insurance companies and HMOs according to the 2002 consumer complaint statistics released today by Director of Insurance J. Anthony Clark. A major exception to this trend, however, was an increase in complaints against homeowner insurers.

The Illinois Department of Insurance investigated 12,019 written complaints against insurance companies in 2002 compared to 12,269 in 2001, an overall decrease of 2 percent . Total complaints against health maintenance organizations dropped by 9 percent from 1,430 in 2001 to 1,299 in 2002.

In 2002, homeowner insurance complaints increased by 16 percent, from 1,257 in 2001 to 1,462 in 2002. The bulk of this increase occurred in complaints against companies’ underwriting practices, which increased from 389 complaints in 2001 to 678 complaints in 2002, a 74 percent increase. Director Clark said, while he understands this trend, he is concerned by it.

“Homeowner insurance companies have suffered tremendous losses over the past decade due to catastrophes, storm-related losses, and other factors. This has resulted in a change to the approach companies take to underwriting, pricing and marketing homeowner insurance,” he said.

“In addition, most insurance companies use credit scores as a factor in their underwriting practices. Consumers are still learning that the cost and availability of their insurance are now also based on their credit record and not simply their claims history. This is producing more questions and complaints.”

Director Clark also believes there is another trend affecting the increase in homeowner complaints to the Department. “Many insurance companies are requiring individuals to purchase their homeowner and automobile coverages from the same company. Companies may non-renew homeowner coverage if consumers do not move their auto coverage to their homeowner insurance company,” he said.

Illinois residents can contact the Department of Insurance through the following toll-free numbers: the Consumer Assistance Hotline at 866-445-5364 or the Office of Consumer Health Insurance at 877-527-9431.