Last year several states recovered tens of millions of dollars from fines and claim disputes against insurers that the state regulators discovered violating the state insurance regulations.
Each state has its own regulatory department that serves in an advocacy role for protecting consumers from insurance fraud. These departments allow consumers to call and seek help from the state if they feel they are being treated unfairly by their insurer. Policyholders may request help for items such as violations of state regulations when settling claims, being overcharged for their car insurance or having their policy wrongly cancelled.
The state regulators will review and investigate the complaints from consumers and if warranted extract fines or compensation for the consumer.
Here are just a few states where regulators were able to recover money:
The Connecticut Insurance Department (CID) managed to recoup $8.7 million for consumers over the last year. Roughly 4.5 percent of that money was related to auto insurance claims.
Auto insurance claims were the fourth largest type of recovery, it totaled to $407,000. Accident and health, fire and commercial and homeowners insurance beat out auto claims for the top three recovery types.
Over half of the total dollar amount that was recovered came for the CID Market Conduct Division (MCD) which issued $4.6 million in fines to insurers for numerous violations. The violations ranged from improper licensing to untimely claims payments.
Fines are usually issued after the MCD auditors review the insurer and the complaint and determine they have violated state insurance policy. Violations include cancellations and non-renewals that were found to be non-compliant with state laws.
Insurance regulators in Illinois more than doubled their recovery amount between 2011 and 2012. They collected over $10.3 million for consumers in 2012, much of it coming from multi-state examinations of large nationwide insurers.
The majority of the fines collected came from AIG due to underreported premiums.
Louisiana was another state that managed to up recoveries for consumers in 2012. They brought in $6.4 million compared to $5.3 million in 2011. Property/casualty insurers were the biggest offenders, accounting for 71 percent of the money that was brought in last year. Health related insurance complaints were 20 percent of the fines and life and annuity-related insurance companies came in at 8.5 percent.
The state of Missouri managed to collect $11 million for consumers in 2012. Complaints from consumers prompted audits from regulators triggering a big year for fines.
Auto related complaints came in second in Missouri, just behind health insurance related filings. Denial of claim was one of the major complaints that were received by The Missouri Department of Insurance (MDI).
Maine boosted its recovery to $3 million, up $500,000 from 2011. Maine regulators received 10,000 complaints last year, the majority of them were related to property and casualty insurance companies. The total amount recovered though was higher from health insurance companies.
State insurance regulators managed to collect tens of millions of dollars from a number of insurers last year. Consumers received millions of dollars back from insurers due to the investigations of state auditors.