Recently in Consumer Protection Category

February 7, 2014

Nationwide/Farmland Insurance Reaches Settlement with Missouri Department of Insurance of Mistreatment of Policyholders

The Missouri Department of Insurance recently announced a settlement they reached with Nationwide Insurance Company and Farmland Insurance Company for mistreatment of their policyholders. In market conduct examinations, the MODOI found that these companies didn't apply the same standards to all customers, improperly calculated Second Injury Fund rates and utilized base rates they hadn't filed with the MODOI as required. For more information about this settlement, which netted policyholders $250,000 collectively, read the press release here.

August 12, 2013

Review Insurance Policies Before Kids Head to College

The Missouri Department of Insurance is encouraging families to review their insurance policies to see what is covered while students are away at college.

"It's important that students and parents discuss their insurance coverage now" said John M. Huff, director of the Department of Insurance. "You don't want to wait until you need to file a claim to find out whether you have insurance coverage."

The director of Missouri Department of Insurance advises that insurance needs and coverage may change when a student leaves for college. Here are some tips for families to assist them and make sure that their college-bound students are properly covered:

  • Auto insurance: If your child is taking a car to college, check with your insurance agent. The price and coverage of your policy may change based on the city and state where your child will live. Additionally, see if your insurance company offers a discount for a student's good grades.
  • Homeowners and renters insurance: Ask your agent if your child's possessions will be covered under your homeowners policy. Some policies cover a student's possessions if they live on campus. For students living off campus, consider renters insurance, which is quite reasonable.
  • Health insurance: Most young adults can stay on their parents' health insurance up to age 26, regardless of marital status, financial dependency, residence or enrollment in school. Students should take copies of their insurance cards and check their parents' health insurance plans to know which physicians and hospitals are in their network while away at school.
The department also encourages college students and all consumers to complete a home inventory, which is an itemized checklist of all possessions. A home inventory can make the process of filing a claim much more efficient in the event of fire, storm damage or theft.

To read more on this topic, as well as find some educational videos and useful checklists, please check out the Missouri Department of Insurance Website.

May 15, 2013

New Guide Makes it Easier to Understand Auto Insurance

The Missouri Department of Insurance is premiering its new auto insurance guide. This guide is aimed at first-time auto insurance buyers, and provides information to help better understand details of buying car insurance.

"Missouri has a very competitive insurance market with nearly 200 companies offering auto insurance," said John M. Huff, director of the Department of Insurance. "Consumers should take advantage of this market by understanding how auto insurance works. This guide provides detailed information that can help consumers make an informed decision when they are looking to insure their vehicle."

The guide outlines minimum auto coverage required by state law and optional coverage, and also provides tips to lower your insurance premiums. It comes with a worksheet to help you find the best coverage and rates. The guide also includes helpful questions to ask an insurance agent during the shopping process.

Other topics covered include:
•What to do if you are involved in an accident.
•Easy-to-scan QR codes to download the NAIC's WreckCheck mobile app (for your iPhone or Android smartphone).
•Who is covered by your auto policy.
•What is not covered in your policy.
•How to file a claim.
•How to read a declarations page.

You may download the guide here.

Read more here.

May 7, 2013

Over $6 Million Returned to Consumers by Department of Insurance

The Missouri Department of Insurance announced recently that consumers who filed complaints against their insurance companies received an additional $6.2 million in claim payments in the first quarter of 2013.

"Consumers should not assume that they've run out of options if their claims have been denied by their insurance company or they feel that their settlement is unfair," said John M. Huff, director of the Missouri Department of Insurance. "Our department is here to protect Missourians and provide them help when they've reached an impasse with their insurance company."

Health insurance had the most complaints in the first quarter of 2013 with 309 formal complaints. This was followed by auto and homeowners insurance. The top reason for complaints in the first quarter was claim denial. Delay of claim processing and unsatisfactory offer were also top complaints.

Read more here.

February 15, 2013

Insurers Hit a Nerve Regarding Replacement Parts

Across the country, auto repair shops, customers, and regulators are questioning some insurers on their insistence on using salvaged parts or copies made by independent manufacturers. This practice commonly reduces the cost of fixing vehicles damaged in accidents or storms. The negative to this practice is that using such parts may result in substandard fixes, and they may not be covered under the vehicle's original warranties.

Last December, Boston insurance giant Liberty Mutual was ordered by a West Virginia court to stop using parts salvaged from junkyards to fix newer cars. Additionally, California regulators tightened their rules for using reproduction parts in January of this year. Repair shops in other states are considering lobbying state regulators to require insurers to pay for new parts for vehicles that are still under warranty (or with less than 36,000 miles).

Automakers such as Ford and General Motors warn customers against using salvaged parts or generic copies. Additionally, some repair shop owners and consumer advocates agree that alternative parts don't always fit correctly or match the performance of new licensed parts.

Regulations in many states require insurance companies to tell customers what type of parts are being used in repairs. Critics say the information is sometimes buried in stacks of paperwork.

According to the Property Casualty Insurers Association of America, approximately a third of the parts used to repair vehicles at auto body shops across the country involve used parts, reproductions by independent vendors, or re-manufactured parts. Used, reproduction and copies usually cost 20 to 60 percent less than new parts, which helps to reduce the cost of repairs. The insurers association estimates US insurance companies could potentially spend an additional $2.4 billion a year if in fact they had to rely exclusively on new parts. This practice would force them to increase premiums for the consumer by about 3 percent.

A Liberty Mutual spokesman said the company is still considering its legal options regarding this issue, but has stopped requiring the use of old parts in West Virginia. The spokesman said his company requires all parts be in good condition and offers its own warranty on those parts for the life of the car.

Read more at the Boston Globe.


December 27, 2012

Financial Resolutions for 2013: Compare Insurance

Household incomes have definitely decreased over the last three years. Consumers who are willing to do some research and make some changes may be able to stretch those limited dollars.

One financial resolution we can make is to compare insurance among several different companies. Call some competing companies and ask for a quote. Always make sure you are comparing the same kind of coverage you currently have with the coverage you are considering replacing it with.

When it comes to auto and homeowners insurance, the amount of the deductible influences the rate. The higher the deductible -- the lower the premium. By assuming more of the risk yourself, you can reduce those insurance payments. Just make sure you can afford to pay the higher deductible in the event you must make a claim.

The beginning of a new year is a perfect time to do that. You can read more money-saving tips for 2013 here.


September 28, 2012

Aetna to Pay Largest Insurance Fine in Missouri History

State of Missouri insurance regulators report one of the nation's largest health insurance companies has for years been violating Missouri law in health plans it offers to employers. The insurance director has announced a settlement with Aetna Life Insurance Company. This settlement is related to its coverage of health benefits required by Missouri law, including autism, contraception and elective abortion.

In the settlement, Aetna admits to several violations of Missouri law, including issuing health insurance policies that excluded coverage for autism spectrum disorders, in violation of Missouri's landmark autism insurance law signed by Gov. Nixon in 2010. Other violations include issuing health insurance policies that routinely provided coverage for elective abortions and contraceptives.

"This settlement should be a reminder to all health benefit plans covering Missourians, that state law has stringent requirements honoring the religious and moral beliefs of insurance customers," said the Director of Insurance. "We will be enforcing Missouri's decade-old contraception coverage law, as well as the new law on the subject, anywhere we see violations."

Under the settlement, Aetna will stop issuing health insurance policies that violate Missouri law. Additionally, Aetna will pay a $1.5 million penalty, the largest in Missouri history for insurance law violations. They will follow up and notify customers that they were entitled to autism treatment coverage, and accept autism treatment claims since the law went into effect. Aetna will pay said autism treatment claims with nine percent interest. Additionally, Aetna will donate $250,000 to a Missouri nonprofit organization specializing in the care and treatment of autism spectrum disorders.

Aetna is Missouri's sixth largest health insurance company, with premium sales of $340 million in 2011.

To read more on this insurance news article, please go here.

September 7, 2012

Missouri Insurance Regulators Reach Settlement with Allianz

An agreement with Allianz Life Insurance Company of North America has been made to resolve consumer complaints about improper sales of annuities. The Missouri Department of Insurance and regulators in Iowa, Minnesota and Florida led a nationwide investigation into Allianz.

Annuities are investment products sold by insurance companies. Consumers buy annuities as way to generate interest on their savings, generate income, or both. The consumer pays a lump sum or makes periodic payments to the insurance company offering the annuity. In exchange, the annuity accumulates value or provides periodic payments to the consumer.

The settlement requires the company to review complaints from consumers who believe policies were misrepresented to them or unsuitable for them. Consumers who have not yet filed complaints with Allianz can file until March 31, 2013.

"Of all the insurance policies available to Missouri consumers, annuities can be the most complex and confusing," said John M. Huff, director of the Missouri Department of Insurance. "Allianz customers can now have their cases reviewed to ensure they've been treated fairly."

Allianz in 2011 sold more than $206 million in annuities in Missouri, making it the state's eight-largest seller of annuities. As required by the settlement, Allianz has paid a fine of $257,000, to the Missouri state school fund.

In market conduct exams and investigations, the Department of Insurance reviews insurance company practices regarding the treatment of policyholders. This includes the way premium rates are charged, the way insurers handle claims and other responsibilities under state law. These reviews sometimes result in refunds for consumers, fines and corrections in business practices, as well as other remedies. Since the beginning of 2009, Market Conduct enforcement actions have generated $9.8 million in payments from insurance companies. The money goes toward refunds for consumers, General Revenue and the Missouri State School Fund.

For more information on the Allianz settlement, please go to this Missouri Department of Insurance news release.

August 10, 2012

Homeowners Insurance Buying Guide

Homeowners buy insurance to protect against disaster. However, when disaster strikes, your insurer might not meet your expectations, especially if you have a large claim. This is according to a Consumer Reports survey of 11,250 subscribers who filed claims in the last few years.

The greater the damages, the more likely it is that home insurers paid less than expected. Nearly 10 percent of respondents reported disagreements with their insurer over the amount of a claim payment. The percentage increased when damage was $25,000 or more -- 19 percent disagreed with their insurer's amount of what was due.

Insurers have transferred the risk of damage from severe weather events to policyholders through higher deductibles. This includes claims stemming from hurricanes, wind, and hail. So, instead of the typical $250 - $1,000 deductible under standard coverage, a homeowner may have to pay 1 to 5 percent of the home's insured value (this can be up to 10 percent in Florida). For example, if the home is insured for $200,000 and the policy has a 3 percent deductible for hurricanes, the homeowner has to pay $6,000 out-of-pocket for a storm-related claim. Additionally, many insurers have abandoned hurricane-prone areas.

Insurers are also using contract language to avoid paying claims. For example, you may think you have hail coverage and everything will be paid for in the event of a hail storm. However, if your roof is more than 10 or 15 years old, hail damage could be excluded.

Add to this set of complications the fact that premiums have increased by 5 to 10 percent annually in recent years (depending on the region). Hikes of up to 12 percent are predicted soon.

An average homeowner files a claim only once every 6 years. Many policyholders do not read disclosures, renewal contracts, and updates that insurers send them. Therefore, many homeowners are facing unpleasant surprises should they file a claim.

Consumer Reports has advice for the homeowner who is shopping for insurance. You can read more about this here.

November 28, 2011

Joplin Homeowners Need More Time to Rebuild, Says Missouri State Regulators

The Missouri Department of Insurance states some insurance companies are setting unreasonable timelines for Joplin homeowners attempting to rebuild after the May 22nd tornado. The department issued a bulletin to the industry stating many home and business owners can't be expected to rebuild within the time limits required by some insurance policies.

In the bulletin, John M. Huff, director of the Department of Insurance, states the unprecedented scale of the Joplin tornado prevented many consumers from access to their property and led to a temporary building cessation. He also says the widespread devastation has left the entire area with a shortage of contractors and materials. This has clearly made it impossible for many property owners to rebuild within six months. Six months is the time frame that insurance policies require before paying full benefits.

The bulletin says insurance companies attempting to enforce deadlines of less than one year may face legal action by the department.

Per Huff: "The insurance industry has done a commendable job responding to the tornado, having paid more than a billion dollars in claims so far. At the same time, Missouri law requires insurers to provide prompt, fair and equitable settlements to their policyholders, and rigid deadlines may violate that law."

Huff expects the dollar figure for claims paid in homeowners, auto and commercial property to approach $2 billion by the time all claims are settled. Policyholders have filed nearly 18,000 insurance claims.

Read more here.

October 14, 2011

Missouri Department of Insurance Recovers Almost $10 Million for Consumers in First Three Quarters of 2011

Consumers who filed complaints with Missouri Department of Insurance have recovered almost $10 million in added claims payments from insurance companies. $2.3 million of those recoveries have been for claims related to the St. Louis, Joplin and Sedalia tornadoes.

Consumers contacted the department with 988 complaints and inquiries about Joplin tornado claims. Insurance companies serving the Joplin area have paid more than $1 billion in claims, according to data the companies have sent to the Department of Insurance.

Additionally, the department held a Recovery Roundup in Joplin on Sept. 24 to help consumers who still had outstanding claims 120 days after the tornado.

Per John M. Huff, director of the Missouri Department of Insurance: "Our recoveries are up $3.4 million over this time last year, which is a reflection of the numerous severe storms of 2011. $10 million in nine months is a reminder to consumers that they can have success by contacting our department when they reach an impasse with their insurance companies."

The department received 9,500 written inquiries and complaints. This number is compared to 5,800 at this time last year. The department also assisted more than 15,000 consumers by phone.

Read more here .

October 13, 2011

Two New Laws Enacted to Protect Missourians Affected by Damaging Storms

Last month, Governor Nixon signed two new laws into effect bringing additional insurance protections to consumers affected by damaging storms. The new laws provide consumers with better access to insurers and assign new rules for repair companies to avoid unscrupulous business practices.

Recently, some repair companies have begun calling themselves "insurance claims specialists" in hopes of gaining more business after a damaging storm. These repair companies offer to pay homeowner's deductibles and negotiate with the insurance companies on their behalf. The newly enacted Senate Bill 101 prohibits repair businesses from claiming insurance specialties, paying deductibles and negotiating with insurance companies.

The second new law, Senate Bill 132, guarantees insurance companies' ability to set up a mobile customer service center in storm damaged areas to help consumers get their claims filed faster. Earlier this year, insurance companies seeking to set up temporary centers were required by many cities, counties, and incorporated subdivisions and to purchase business licenses or special permits to set up their mobile centers. Thanks to the new law, Missouri insurance companies can now move quickly to set up mobile service centers wherever they're needed without bureaucratic hindrances.

For more information on these new laws, visit the Missouri Department of Insurance website.

June 9, 2011

Tips for Handling Your Insurance Claims From Storm Damage

Many Missourians have experienced devastating losses as a result of the storms that have ravaged the southern portion of the state in recent weeks. Thousands of people will be filing insurance claims and we want to help make sure those claims are handled properly by explaining a few situations that could happen with your insurance claims. Here are just a few things to take into consideration:

1. Many insurance companies use a property damage estimating software program called Xactimate. Prices in the program are updated on a quarterly basis. When a large storm strikes it is not uncommon for labor and materials prices in the area of the storm to increase, sometimes rapidly. As a result the prices in the Xactimate program may be outdated at the time of the storm because of the sudden increase in prices. Check with your insurer who uses this or similar programs to determine if they have updated their prices to reflect the increase in the prices immediately following the storm. If not, ask that they do so; otherwise your repair estimate may not accurately reflect the exact cost of repairs.

2. Standard homeowner policies provide that you are entitled to the full replacement cost for the repairs to your home. However, the insurer is only required to pay you the actual cash value of your repairs until you replace or repair your property, and then when that is done you can collect the difference between the replacement cost and the actual cash value. This difference is called the hold back. The hold back is determined by subtracting depreciation from the replacement cost estimate for your repairs. Therefore, if your repairs are estimated at $10,000 for replacement cost value, and the insurer determines that $1,000 depreciation should be subtracted from the replacement cost repair estimate, the insurer will then pay you initially only $9,000 (less your deductible). The $9,000 payment is called the actual cash value payment. Depreciation is determined by considering several factors, such as the wear and tear, age and obsolescence of the item being repaired or replaced. Insurers use a variety of schedules to determine what should be depreciated and for how much. Ask your insurance adjuster how they arrived at the depreciation rate for each item depreciated and what the depreciation rate is based upon to make sure that the appropriate depreciation rate is being applied. Make sure the adjuster is aware of the age of items to be repaired or replaced so that the proper depreciation rate can be applied. For example, the expected age of interior paint may be ten years. If you painted the inside of your house only two years ago, then the depreciation rate that should be applied to the paint job should only be 20%. If the insurer charges a higher rate you should question their depreciation reduction. Also, several items should not be subject to depreciation, such as pure labor items (i.e., remove and replace light fixture to paint room, etc.) or other items (i.e., profit, overhead, and sales tax, etc.) because these items are not subject to wear, tear and obsolescence. Read the insurer's estimate carefully to make sure that such items are not being depreciated.

3. For large losses (anything over $10,000) always get your own estimate from a local licensed general contractor who will commit to doing the work for the amount of his estimate. It is preferable that your contractor prepare an estimate on the same kind of estimating program that the insurer uses so that the two estimates can be easily compared. If there are differences between the insurer's estimate and your contractor's estimate have your contractor meet with the insurer's representative at the house to discuss the differences and have the insurer's representative explain why there are differences. Regardless, once the insurer determines what the repairs are, the insurer must pay you that amount, even though there may still be a disagreement between you and the insurer over any additional amounts that can be owed.


4. If there is a dispute between you and the insurer over the amount of the repairs consider taking advantage of the appraisal provision in the policy which is there to resolve disputes over the amount of the loss. In appraisal, you select a qualified appraiser that you pay, the insurer selects their own appraiser, which they pay, and the two appraisers select an umpire, and you and the insurance company share the cost of the umpire. The appraisal panel then determines the amount of the loss which the insurer must pay. Appraisal has some advantages, in that it can be quicker and less expensive than litigation where there is a dispute over the amount of the loss. Nonetheless, you should be careful in selecting your appraiser, and you should consider getting advice from qualified and experienced attorney on your selection as well as to how best proceed with the appraisal.

May 5, 2011

What are you really agreeing to?

On Wednesday, April 27, 2011 the Supreme Court ruled that consumers can be bound by arbitration clauses in cellular phone and/or other contractual agreements even if state law permits class action law suits for claims arising out of such agreements. AT&T Mobility LLC v. Concepcion et ux. What the Supreme Court's ruling means for consumers is that if you agree to the terms of a contract, whether you read the contract or not, and that contract contains an arbitration clause stating that arbitration rather than the court system can decide the outcome of any grievance you have against the corporation with which you have contracted, you must use arbitration as your only means to obtain any compensation for damages suffered.

Arbitration is a way to resolve disputes without using the court system. During arbitration an arbitrator, a neutral third party, will decide the outcome of a case. The determination made by the arbitrator may based partially on law, but is usually based on the agreement and what the arbitrator determines is fair for all the parties. If you have agreed to an arbitration clause in a contract, the decision made by the arbitrator is then binding upon the parties and cannot be modified by the court system.

When entering into a contract for a cellular telephone or entering into a contract on-line be aware that arbitration clauses can and do exist in those contracts. Based upon this Supreme Court decision, should you sign a contract with an arbitration clause included, any dispute you may have against another party to the contract will be determined by arbitration which is binding and precludes you from seeking a remedy in a court of law.

January 17, 2011

Missouri's Medicaid Program to Recieve $1,781,042

Missouri, along with other states and the federal government, have reached an agreement with the Elan Corporation. The Elan Corporation's subsidiary, Elan Pharmaceuticals, INC.(EPI), marketed its anti- epileptic drug, Zonegran, for uses that were not approved by the FDA. EPI paid health care professionals to prescribe Zonegran for other uses such as obesity and headaches. EPI agreed to plead guilty to a federal misdemeanor and is to pay a criminal fine of $102 million dollars to the federal government. EPI will now be closely monitored because of a Corporate Integrity Agreement by the United States Department of Health and Human Services.