Farmers Insurance Received Most Complaints for Auto and Homeowners Insurance

Oregon's Department of Consumer and Business Services Insurance Division has published the 2007 Annual Complaint Statistics, ranking major insurers based on their complaint records in six common lines of insurance: personal auto, health, homeowner, life, annuities, and long-term care.

This report ranks major insurers by their complaint records, which are based on the number of confirmed consumer complaints closed by the Insurance Division and the amount of premium dollars written by the insurers. According to DCBS, the report allows consumers to see at a glance how a company compares with its competitors; the information should help consumer to make sound insurance decisions.

During 2007, the Oregon Insurance Division closed 2,934 complaints in six common lines of insurance. The insurers listed in the report accounted for 2,275 complaints or 78 percent of all complaints in the six lines. In 2007, most complaints involved disputes about claims processing and benefits, DCBS indicated. Other complaints involved problems with the sale and servicing of insurance policies, such as cancellations, nonrenewals, and rate increases. The Insurance Division's Consumer Advocacy Unit helped recover $1.78 million in claims for consumers who contacted the office in 2007.

Of personal auto insurance companies, Farmers Insurance Company of Oregon received the most complaints in 2007, with 211 complaints of 187 confirmed. Northwestern Pacific Indemnity Co. and Oregon Automobile Insurance Co. tied for receiving zero complaints last year, the statistics indicate.

Of homeowners insurance companies, several companies -- California Casualty General Insurance Company of Oregon, North Pacific Insurance Co., Northwestern Pacific Indemnity Co., Oregon Automobiles Insurance Co. and Western Protectors Insurance Co. -- received zero complaints. Farmers Insurance Company of Oregon received the most complaints with 36 confirmed complaints.State Farm Fire and Casualty Co. received the second-highest number of complaints with 31 comfirmed complaints, followed by Allstate Insurance Co., which had 16 confirmed complaints.

To view the statistics, visit insurance.oregon.gov

Source: insurancejournal.com

Colorado Bill 1407: Law Would Enforce Insurance Company Fairness

Fairness. It’s a simple principle that guides the lives of most Americans. Yet for insurance companies, the principle is often overlooked and brushed aside for one reason: profit. House Bill 1407 is now on Governor Ritter’s desk awaiting his signature to make it the law. The new law would require insurance companies to pay double damages plus attorney fees if they are found to have unreasonably delayed or denied a valid insurance claim. The law is the culmination of years and years of insurance company abuse against its policyholders by unreasonably denying claims or delaying the payment of valid claims.

Colorado needs this law. For too long insurance companies have made large profits on the backs of their policyholders. This law would help policyholders stand up against multi-billion dollar corporations. In 2005, the year of Hurricane Katrina, it was estimated that the insurance industry made over $40 billion dollars in profit and $63 billion in 2006.

Fairness. It’s a simple principle that guides the lives of most Americans. Yet for insurance companies, the principle is often overlooked and brushed aside for one reason: profit. House Bill 1407 is now on Governor Ritter’s desk awaiting his signature to make it the law. The new law would require insurance companies to pay double damages plus attorney fees if they are found to have unreasonably delayed or denied a valid insurance claim. The law is the culmination of years and years of insurance company abuse against its policyholders by unreasonably denying claims or delaying the payment of valid claims.

Colorado needs this law. For too long insurance companies have made large profits on the backs of their policyholders. This law would help policyholders stand up against multi-billion dollar corporations. In 2005, the year of Hurricane Katrina, it was estimated that the insurance industry made over $40 billion dollars in profit and $63 billion in 2006.

It’s hard to imagine a world without insurance. Insurance is a wonderful social tool that allows us to pool our money and transfer the risk of loss from us to the insurance company. At its core, insurance is an agreement (a contract). You agree to pay premiums and the insurance company agrees to pay claims. The insurance company takes your premiums and invests that money, and makes money on those investments.

However, when insurance companies don’t keep their end of the bargain and unreasonably deny or delay claims, they have breached the contract. In every insurance contract, the law presumes that the insurance company will treat the policyholder fairly. In law we call it the “covenant of good faith and fair dealing.” Cases in which insurance companies are sued for their breach of this covenant are also known as “bad faith” cases.

We all pay hard-earned money to insurance companies for the comfort of knowing that if something goes wrong, we have a financial security net that will protect our savings, homes, and prevent us from falling into bankruptcy. If insurance worked properly and insurance companies were guided by fairness and a sense of what is right, it would be a system without lawyers. Unfortunately, insurance companies do not act with a sense of fairness; they are motivated by money and go to great lengths to keep it. Because this is how the insurance companies work, lawyers are the last line of defense for policyholders.

Like most of us who invest in the stock market, insurance companies lose money. This becomes part of the problem. How will the insurance companies make up their losses? One way is to get more policyholders—thus, the incessant television ads and sponsorship of sporting events by insurance companies. The other way for the insurance companies to make money is to pay less money out on valid claims or to delay the claim. The longer the insurance company holds onto money for your claim, the more interest and money it makes. This is where insurance companies have focused their efforts for the last 15-20 years. This scheme is great for insurance companies, and horrible for policyholders who often find that their financial security net is gone when they need it the most.

Claims centers, the place where insurance companies process claims, have been converted into “profit centers.” Claims adjusters do everything they can to offer you as little money as possible to settle a claim—a process widely known as “lowballing.” Practically speaking, insurance companies need to make profits. This article is not intended as some anti-corporation or anti-profit rant. Profits for insurance companies are great. They generate jobs and ensure that there is money to pay claims. My fundamental problem with insurance companies is where and how they are making their billion dollar profits.

“Quest for Gold.” “Bring back a Billion.” “Advanced Claims Excellence or the ACE Program.” There is current litigation across the United States against Farmers, State Farm, and Allstate over these types of programs. Policyholders have sued both Farmers and State Farm claiming that these programs are and were designed to force insurance adjusters to deny or delay claims. In return for denial or delaying of claims, the insurance adjusters received bonuses. In a memorandum dated September 17, 2001, Farmers Insurance explained that “employees whose locations achieve their Quest for Gold goals, will receive 1.25% of their eligible salaries ($100,000 maximum).”

Naturally, the insurance companies claim that these programs were not intended to incentivize their claims adjusters to deny or delay payment on valid claims or to reduce the amount of payments made on valid claims. However, in court case after court case, evidence has been presented that shows these programs were specifically designed to delay or deny valid claims. At the center of the controversy is McKinsey & Co., a New York-based consulting firm that has worked for many large insurance companies, including State Farm and Allstate.

Goods Hands or Boxing Gloves? In 1992, Allstate Insurance retained McKinsey. In fact, “McKinsey’s advice helped spark a turnaround in Allstate’s finances. The company’s profits rose 140 percent to $4.99 billion in 2006, up from $2.08 billion in 1996. Allstate lifted its income partly by paying less to its policyholders. Allstate spent 58 percent of its premium income in 2006 for claim payouts and the costs of the process, compared with 79 percent in 1996, according to filings with the U.S. Securities and Exchange Commission.” You might question how an insurance company can make such a dramatic increase in its profits in just four years.

During court proceedings McKinsey was forced to divulge 13,000 documents relating to the “advice” it provided Allstate. McKinsey told Allstate things like “sit and wait” regarding claims. Delaying claims could, and most likely did, discourage policyholders from pursuing their claims. This delay forced many policyholders to just walk away. One less claim to pay means one thing for insurance companies: more profit. Many of my clients come to me because they “don’t want to deal with the insurance company.” While many of them could not put their finger on how they were being taken advantage of, they just knew it was happening.

Allstate was also advised by

Source: northdenvernews.com

For more information about Bad Faith Laws Passing see: Farmers Insurance Bad Faith Law

These Insurance People (Farmers Insurance) Are Trying To Get Out Of Something

Robert Ewens awoke early Monday to find water pouring into his home.

Two days into putting a new roof on his house in the 3100 block of South 74th East Avenue, Ewens had nailed tarpaulins and waterproof sheeting to his roof after forecasters predicted rain for Monday.

The storm's high winds blew off the tarps. Then the water came in.

"Inside, it looks like someone got a hold of 1,000 gallons of water and poured it in," Ewens said. "The furniture is sopping and soaking wet. It's pitiful."

He is fighting to get his insurance company to cover the damage.

Although his situation is unusual, Ewens isn't alone. This spring's storms have damaged a record number of roofs.

"More homes are being re-roofed from this series of storms than any other time in Tulsa history," said Neil Cagle, who owns All American Roofing in Tulsa. "It's overwhelming every roofing
company in the city."

Cagle estimated that 25,000 homes in Tulsa will need new roofs, causing a two- to three-month backlog. At this time of year, the normal wait is two to six weeks. Adding to the troubles, storms across the country are driving up the demand for shingles.

"The price of shingles has risen so dramatically and so quickly," Cagle said. "We're paying over 50 percent more for shingles than we were back at the start of the year."

Because of high shingle prices and a shortage of workers, a roof that would have cost $5,000 six months ago might cost $6,800 today. Cagle said many insurers are "dragging their heels" about paying the higher cost, which is causing some homeowners to resort to lower-cost roofers who might not do as good a job.

"There's a lot of guys who just go in and out of business," Cagle said. "Do you think those people will be here after this storm is all roofed up?"

The storm damage is apparently not finished. Tulsa International Airport has received 8.17 inches of rain so far this month, compared with a June average of 4.72 inches, the National Weather Service reported.

That puts Tulsa on pace to break the June record of 14.87 inches. The weather service predicts a good chance of rain Wednesday night and Thursday.

Ewens was replacing his roof because a storm in April damaged his old one. Farmers Insurance Co. had just sent a check for the new roof, which was scheduled to be finished by Tuesday.

Ewens said a Farmers representative told him that the water damage would be added to the existing claim because the new roof was "work in progress."

However, several other Farmers employees told him later Monday that he wouldn't be covered.

"I thought it was the sickest joke you've ever heard," Ewens said. "These insurance people are trying to get out of something."

Craig Dejager, a property claims manager with Farmers Insurance, said Ewens' claim had not been denied. The company will review a recording of Ewens' initial phone conversation with a Farmers representative to see whether he was told something "inaccurate."

"If he was misled, then we'll do the right thing," Dejager said.

Under a normal policy, he said, a homeowner would not be covered unless the storm created an opening in the roof.

A temporary roof usually would not qualify under most policies, he said.

Ewens' case might have to go to mediation offered by the state Insurance Department.

Lance Thomas, a spokesman for the department, said, "A mediation scenario occurs whenever everything else fails.

"We're going to try and resolve it as best we can before it gets to there."

Ewens, who runs a handyman service, said he spent nine years and more than $30,000 remodeling his home's interior. Much of that work was lost in Monday's storm.

He said he did everything he could to protect his house.

"I don't feel like I was negligent in the slightest," he said. "I took care of my property as best as anybody would do."

Source: tulsaworld.com

Farmers Insurance Doesn't Care About Its Customers

This is an email we received today:

"We have left Farmer's Insurance after 34 years with the company. We had hail last summer & reported a claim. Adjuster who arrived from the south could barely walk since he was soon having surgery. He said that we didn't have hail damage. We were unaware that we could have another adjuster come out to recheck the roof. We were worried about the roof & decided to get it reroofed at our expense. This spring we noticed many houses up & down the street getting new roofs paid for by their insurance companies due to hail damage. We recontacted Farmer's Insurance & were told that they would not reconsider since we had the roof repaired at our expense. By doing that we took away their rights to reexamine the roof. One person that we talked to regarding the denial asked me if we learned something by this episode. My reply - we learned that Farmer's doesn't care about the policy holder, just doesn't want to pay claims. We leaned that Farmers didn't deserve our business any longer & we've dropped them. Meanwhile, all around us roofs are being replaced by many different insurance companies. We feel we had a bum deal & our agent wouldn't even return phone calls to listen to our concerns. Don't know how an insurance company can treat their loyal customers like that!!!!! "

Fifth Circuit Court hears appeal to move Farmers Insurance price-fixing case back to state court

The Fifth U.S. Circuit Court of Appeal heard arguments Thursday afternoon on whether a price-fixing lawsuit filed in November by former Louisiana Attorney Charles Foti against insurance companies and their vendors should proceed in state or federal court.


The suit, filed Orleans Parish Civil District Court under the Louisiana Monopolies Act, alleges that seven major insurance companies (including Farmers Insurance), their claims adjusting software manufacturers and other associates conspired to artificially depress the price to repair damage from Hurricane Katrina by manipulating construction values in computer programs, enriching insurance companies and leaving Louisiana homeowners without enough money to repair their homes.

Insurance companies successfully removed the case from state to federal court in December, and won a hearing in April that it should stay in U.S. District Court because of the application of a 2005 law known as the Class Action Fairness Act that overhauled the rules for filing class action lawsuits.

The State of Louisiana appealed that ruling by U.S. District Court Judge Jay Zainey in hopes of moving it back to state court.

Insurance companies, who were represented by 35 lawyers from around the country, argued that Foti's suit is actually a class action in disguise, and therefore should be subject to CAFA rules, which means that it must proceed in federal court.

Richard Fenton, an Allstate attorney from Chicago who argued on behalf of all of the defendants, said that the State of Louisiana's name may appear on the suit, but the real beneficiaries are individual policyholders.

"It's a class action," Fenton said. "The real parties at interest are the citizens, who will be the beneficiaries of any recovery."

But Jane Bishop Johnson, assistant attorney general for anti-trust issues, argued that state attorneys general were not intended to be subjected to CAFA rules, and should have the freedom to choose whether to take action in state or federal court to most effectively protect the interests of their citizens and the state's economy.

"They're trying to force us into federal court," Johnson said. "The constitution says the attorney general can file any action he deems appropriate."

The case was heard by a panel of three judges: Priscilla Richman Owen of Texas, who was nominated to the court in 2005 by President George W. Bush; Carl E. Stewart of Louisiana, who was nominated to the court in 1994 by President Bill Clinton; and Leslie Southwick, a former Mississippi judge who was nominated by President Bush last year.

Owen told Johnson that the case represented no threat to the police power of the state, and said that she was confusing questions of power with questions of jurisdiction. "No one's saying the attorney general doesn't have the authority. We're talking about jurisdiction. It's a simple choice of forum," she said.

Southwick, meanwhile, questioned insurer arguments that the case needed to be in federal court because it met the CAFA definition of a class action regardless of whether it actually proceeded as a class action, and pushed Fenton to explain why state court shouldn't be the one to evaluate the substance of the case. "Why isn't that a matter to be determined in state court?" Southwick asked.

Another insurance suit filed by Foti, one that seeks to give the state the power to pursue insurance companies on behalf of the Road Home Program if it appears that grant recipients left money on the table, was moved to federal court. The state failed in its efforts to move it back, and the case is now proceeding in U.S. District Court Judge Stanwood Duval's court.

If the anti-trust suit has to stay in federal court and proceed as a class action, it will be much more cumbersome for the state to prosecute.

Attorney General Buddy Caldwell, who won a runoff election for Attorney General just nine days after the price-fixing suit was filed, told the Baton Rouge Press Club earlier this week that he was awaiting the outcome of this ruling before deciding how to proceed with the cases.

Named in the suit are insurers State Farm Fire & Casualty Co., Allstate Insurance Co., Farmers Insurance Exchange, USAA Casualty Insurance Co., Lafayette Insurance Co. and the Standard Fire Insurance Co., better known as Travelers; software makers Xactware Solutions Inc. and Marshall & Swift/Boeckh LLC; data aggregator Insurance Services Office Inc.; and consulting firm McKinsey & Co. Inc. United States. \\

More information about the lawsuit can be found at Farmers Insurance and Xactware Xactimate

Source: nola.com

Profitable Farmers Insurance "Error" Has Been Going On for A Year And A Half Now

Susan in Wisconsin was charged an extra $10.30 last October, even though she'd already paid the next six months of her premium in full a month before. "I thought maybe I had misread my initial bill and paid the amount said to be due," she writes. But then it happened again last month, so she began to investigate.

Here's what happened the second time around (emphasis ours):

In March 2008, I received my car insurance premium for six months and again paid the bill in full prior to the date it was due. Subsequently, I received another bill for $11.20 a month later. This time I thought “what is going on here? There is no way I made an error in my check writing again”. I called my agent and discovered the following:

"Their system is supposed to charge an additional 2% when people pay only the minimum due for the six month billing cycle which I believe is half. Unfortunately, their system has a glitch which automatically is charging all customers this additional fee even when paying in full by the date due. Although I am sure that many people catch this problem, I am also sure there are a ton of people who simply pay the extra amount with the assumption that they made an error (as I did the first time). Even worse is that this extra payment was somehow slipped into the financial abyss of the Farmers Insurance agency pocket and not applied to any future premiums. The agent wasn’t even sure if they would be able to refund the erroneously paid $10.30. The agent admitted that this problem has existed for more than a year and a half and that they haven’t been “able” to fix it yet. Sounds like a very lucrative mistake to me, and that lots of unsuspecting people are probably paying a “late fee” that they are not required to."

At what point does an error evolve into a tidy little scam on your customers? How about after you let it go on for a year and a half?

Source: consumerist.com