Understanding the Consumer Complaint Ratio Database

Revised: 09/07/2012

CONSUMER COMPLAINT RATIO

The ratio measures the total number of justified complaints that were filed with and reviewed by the Kentucky Department of Insurance against every $1 million of premiums sold in Kentucky by an insurance company during a calendar year. For example, if a company has a ratio of 1.25, it means that the company had 1.25 justified complaints for every $1 million premium sold. If a company has a ratio of 0, then no justified complaints were filed with this Department against that company.

On rare occasions, a company may have justified complaints but is not currently doing business in Kentucky. In this case, a company will have an asterisk (*) in the ratio column.

Here are some possible reasons:

• A Kentucky resident is involved in an accident with a driver from another state. The other driver is insured by a company that is authorized to do business in Kentucky but isn’t currently selling new policies in the state. If a complaint is filed against that company and is found to be justified, the company’s listing would show a complaint although the company is not writing policies in Kentucky. 

• A complaint might have been opened near the end of a year when a company was doing business in the state. By the time the complaint was investigated, found to be justified, and closed in the following year, the company could have left the Kentucky insurance market.

These ratios are only one tool when shopping for insurance

The ratio gives you a number to compare from insurer to insurer when shopping for home, auto or other insurance. Consumers should not base their final decision on this ratio alone.

CAUTION: A company might have limited sales in Kentucky. Even one justified complaint could create a high complaint ratio in those situations. This could be artificial and the consumer should use caution in making a judgment about the company based only on that factor. The Kentucky Department of Insurance offers the complaint ratio data only as an additional tool for you to use in making informed insurance buying decisions.

Please consider other factors when shopping for insurance, such as the advice of an insurance agent, recommendations of friends or family, the financial stability of an insurer, etc. Here are some specific examples of other factors to consider:

• License Status: Verify that the company has a license to do business in Kentucky by going to the home page of the Department of Insurance and selecting “Search for a Company” or you can contact the Department's Consumer Protection Division at 800-595-6053.

• Financial Stability: A financially stable insurance company has the ability to pay its claims. The Kentucky Department of Insurance has requirements and monitors each company operating in the commonwealth to verify its financial stability. An insurer licensed in Kentucky must meet certain financial standards. Independent organizations such as A.M. Best Co., Fitch Investors Service, Moody’s Investors Service, and Standard & Poor’s rate the financial stability of insurance companies and have separate Web sites providing this information. Selecting the “Get Rating” button from a company’s “Insurer Search – Company Details” screen will take you directly to the A.M. Best rating for that company. There is a further link to an explanation of Best’s rating system and procedures.

• Policyholder Service: How is the product marketed to a consumer? Are the needs of the policyholder served by a local agent or by other means? How are claims resolved? It is the consumer’s right and responsibility to ask these questions when purchasing insurance.

What is a formal complaint?
A formal complaint is any written complaint from a consumer expressing dissatisfaction with an insurance company, an insurance agent, or other licensee. The consumer complaint ratio only reports on formal complaints against insurance companies; it does not list consumers who called with general questions about the insurer. A complaint is considered closed only when the investigative process is concluded. To inquire about justified complaints filed against agents or licensees, please contact the Division of Consumer Protection at our toll free number: 800-595-6053. The TTY line for the deaf/hard-of-hearing is 800-462-2081.

Only justified complaints included
Only justified complaints are listed in the complaint ratio database. A complaint is considered justified when the consumer complainant is correct and the insurer or agent must take corrective action, pay a legitimate claim or arrange for whatever restitution is required.

Consumer complaints
Consumer complaints are an important and immediate way for the Department to monitor the business practices of insurers in Kentucky and to encourage changes or better service. In addition, complaints can identify trends or the need for changes in law by the Kentucky General Assembly or in administrative regulations by the Department.

In most cases, insurers and agents work with us cooperatively to resolve complaints and improve consumer services. In some cases, complaints can trigger in-depth investigations or examinations of companies and their agents. If consumers cannot resolve complaints with insurers or agents first, they are encouraged to file a formal, written complaint with us. You can fill out a formal complaint form online at the Department of Insurance site or download a copy for mailing or faxing. You may also write the department without using the formal complaint forms. Please include your name, address and telephone number; the type of insurance involved; the name of the company; your policy, claim, ID or group number; and a summary of your complaint, including copies (not originals) of any related documents.

How complaints are handled
When the Department of Insurance receives a complaint, an investigative officer in the Consumer Protection Division opens a file on the complaint by contacting the insurance company or agent involved and sending a copy of the complaint. The Department will also send the consumer an acknowledgement that the complaint has been received.

In general, Kentucky law requires the company or agent to review the complaint and report back to the Department within 15 days. Some types of cases require a response within a shorter period of time. When the Department is satisfied that the complaint is resolved and the case is concluded, the consumer and company or (agent) are notified of the finding.

Complaint files are stored for five years
The Department maintains each complaint file for a period of five years as required by Kentucky law. We also report our closed complaint information on a monthly basis to the National Association of Insurance Commissioners.

Ratio covers auto, health, home and life
While the Department receives complaints on all types of insurance, this ratio includes a table with data on four major lines of insurance: automobile, health, homeowners and life.

The database does not separate premiums paid by line of insurance, just by company. For example, a company might sell both auto and homeowners’ insurance under the same company name. In this case, the ratios for both auto and homeowners’ will be based on the total amount of premium paid for both lines of insurance.

What time frame does the complaint ratio database cover?
It is important to note that this database covers only closed cases after all data for a calendar year has been processed. Complaint ratio information is currently available for 2011. This can be helpful in determining the history of how a company treats consumers.