Essential Protection for Policyholders. State Rankings of Homeowners Insurance Protections: Buying Insurance

Transcription

1 Essential Prtectin fr Plicyhlders State Rankings f Hmewners Insurance Prtectins: Buying Insurance A reprt frm the Rutgers Center fr Risk and Respnsibility at Rutgers Law Schl in cperatin with United Plicyhlders April 2017

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3 Essential Prtectin fr Plicyhlders State Rankings f Hmewners Insurance Prtectins: Buying Insurance Cnsumers need infrmatin abut three things when buying r renewing hmewners insurance plicies: Cverage, Quality, and Price. If cnsumers have full, understandable infrmatin abut insurance plicies and insurance cmpanies they are better able t make wise buying decisins, and that creates cmpetitin amng cmpanies that leads t better prducts and fairer prices. Insurance cmpanies typically nly prvide infrmatin abut price. Gvernment actin is needed t prvide cnsumers with mre and better infrmatin. This reprt measures hw well states prvide infrmatin themselves and require insurance cmpanies t prvide t insurance cnsumers. Every state regulates hmewners insurance and insurance cmpanies, but states differ dramatically in hw much and what kind f regulatin they prvide fr the benefit f cnsumers. The Essential Prtectins fr Plicyhlders prject recmmends a series f measures t give cnsumers the infrmatin they need: Abut cverage Insurance is the nly prduct fr which cnsumers dn t knw what they are buying befre they buy it. Insurance cmpanies almst never prvide cpies f plicy language r cmplete summaries f plicy terms t prspective plicyhlders. And what hmewners are buying can vary widely frm ne insurance cmpany t anther, with sme majr insurance cmpanies prviding cverage that ffers much less prtectin than cverage prvided in standard hmewners insurance plicies. Because plicies vary widely amng cmpanies in what they cver and what they dn t cver, cnsumers need ready access t plicy frms and cnvenient cmparisns f key terms t shp carefully fr insurance. Publicatin f plicy frms wuld encurage better shpping by cnsumers and the develpment f cncise ratings f different plicies by cnsumer grups and websites. Insurance departments shuld pst nline the hmewners insurance plicies f all insurance cmpanies ding business in the state, r at least thse cmpanies that have a significant market share, and a plicy cmparisn tl that enables cnsumers easily t cmpare key terms f insurance plicies.

4 Insurance plicies are cmplex legal dcuments. Fr a plicyhlder t evaluate a plicy being cnsidered fr purchase, t determine whether t file a claim, r t reslve a dispute with an insurance cmpany, the plicy must be clearly rganized and written in plain, nn-technical language. States shuld require insurance plicies t be clearly rganized and written in plain language. Even insurance plicies that are well-rganized and readable ften will nt be read r understd by cnsumers; plicies are necessarily lng and cmplex and cnsumers are likely t nt pay attentin t the details f their plicies until they have a ptential claim. Therefre, shppers and plicyhlders need t be prvided accessible summaries f the terms that are likely t be mst imprtant t them. Sme states require insurance cmpanies t prvide summaries after a plicy is issued, but that is t late. Cnsumers need the infrmatin at the times when the infrmatin is mst useful when they are shpping fr insurance r when they are cnsidering renewing their plicies. At the time f renewal, plicyhlders especially need t be infrmed abut changes in terms. States shuld require insurance cmpanies t prvide t cnsumers shpping fr insurance clear summaries f key plicy terms, and any new r altered plicy terms in advance f renewal. Abut quality Quality is an imprtant attribute f any prduct, including insurance. The tw measures f quality fr insurance are insurance cmpanies financial stability and their recrd f paying claims prmptly and fairly. States d a gd jb f mnitring cmpanies financial stability, and easy-t-understand financial ratings are widely available. Claim practices are less clsely regulated and the infrmatin n which cnsumers can cmpare cmpanies is nt publicly available. Cnsumers need t be able t cmpare cmpanies as t hw prmptly and fairly they pay claims. Statistics that wuld enable cnsumers t cmpare cmpanies include what prprtin f claims are denied, hw lng it takes t pay claims, and hw many plicyhlders need t sue t receive payment. States currently cllect this infrmatin and reprt it t the Natinal Assciatin f Insurance Cmmissiners, which aggregates the data and reprts it t state regulatrs and insurance cmpanies. Therefre, the nly peple denied access t this infrmatin are the nes wh need it mst cnsumers shpping fr insurance. Insurance departments shuld pst nline infrmatin abut insurance cmpanies practices in paying claims fr cnsumers t view and cmpare. As with infrmatin abut cverage, many cnsumers will nt clsely examine statistics abut claim payment practices, but cnsumer grups and websites can access the infrmatin t

5 develp easily understandable ratings f insurance cmpanies that cnsumers can use in shpping. Sme states d pst infrmatin abut cmplaints that plicyhlders file with state insurance departments against their insurance cmpanies, but cmplaint infrmatin is nt a reliable indicatr f quality. Only a small prprtin f plicyhlders file cmplaints against their insurance cmpanies even if they have a prblem, and many f the cmplaints are nt abut issues arising ut f claims. Abut price The Essential Prtectins d nt include a standard fr prviding infrmatin abut price. Cnsumers already tend t place mre emphasis n price than n cverage and quality when buying insurance, and mre infrmatin abut price is available t them. But it is still helpful fr states t prvide tls by which cnsumers can easily cmpare prices amng insurance cmpanies, as abut half the states d. Readily available price infrmatin encurages cnsumers t cmpare cmpanies and ask abut terms; if better infrmatin abut cverage and quality was available, thse factrs wuld be mre likely t influence cnsumers as well Abut the rankings: The rankings in this reprt are based n hw well states prvide infrmatin abut cverage, quality, and price thrugh their insurance department websites, the mst accessible frm f infrmatin fr cnsumers, and hw well states require insurance cmpanies t prvide infrmatin t cnsumers. The elements f the rankings include whether states prvide: actual insurance plicies psted nline data abut insurance cmpanies practices in paying claims summaries f key plicy terms a tl cnsumers can use t cmpare plicy terms general infrmatin abut hmewners insurance plicies cmparisns f premiums. Fr mre details n these issues, including recmmended statutry language and a survey f current law, refer t the Essential Prtectins fr Plicyhlders website:

6 Key findings: N states received a five-star ranking because: N state makes claims payment infrmatin available t cnsumers. N state requires insurance cmpanies t prvide clear summaries f key plicy terms t cnsumers shpping fr insurance. Only five states make hmewners insurance plicy frms available nline. Abut a dzen states prvide sme tl that cnsumers can use t cmpare plicy terms. Twenty-fur states prvide premium cmparisns nline.

7 Essential Prtectins fr Plicyhlders State Rankings Buying Insurance [Nne] Maine Missuri Nevada Oklahma Texas Alabama Alaska Arizna Arkansas Califrnia Clrad Delaware District f Clumbia Flrida Gergia Hawaii Kansas Kentucky Luisiana Maryland Mntana New Hampshire New Mexic Suth Carlina Utah Virginia Cnnecticut Idah Illinis Indiana Iwa Massachusetts Michigan Minnesta Mississippi Nebraska New Jersey New Yrk Nrth Carlina Nrth Dakta Ohi Oregn Pennsylvania Rhde Island Suth Dakta Tennessee Vermnt Washingtn West Virginia Wiscnsin Wyming

8 Essential Prtectins fr Plicyhlders is a prject f the Rutgers Center fr Risk and Respnsibility in cperatin with United Plicyhlders. Cntact: Prfessr Jay Feinman Rutgers Law Schl C-Directr, Rutgers Center fr Risk and Respnsibility feinman@law.rutgers.edu Rutgers, The State University f New Jersey 217 N. 5th Street Camden, NJ Amy Bach Executive Directr United Plicyhlders amy.bach@uphelp.rg ext Bush St., 8th Flr San Francisc, CA Rutgers Center fr Risk and Respnsibility Rutgers, The State University f New Jersey 217 Nrth Fifth Street Camden, New Jersey 08102