California Insurance Commissioner’s Annual Report Details Consumer Protection

By Don Jergler | August 30, 2012

The California Department of Insurance has issued California Insurance Commissioner Dave Jones’ annual report for 2011 that details CDI’s progress on its “ambitious consumer and business protection agenda.”

The report, released each year around August, details the work of the California Department of Insurance during the 2011 calendar year. It states that under Jones’ direction CDI has “improved upon department processes, while also introducing new initiatives that are necessary to protect consumers in today’s insurance marketplace.”

During the 2010 and 2011 fiscal year CDI collected $2.3 billion in premium and surplus lines taxes, according to the report. That’s up from 2.26 billion in 2009/2010. CDI had a budget for the 2010-2011 fiscal year of nearly $204.8 million, of which $63.3 million went to the regulation of insurance companies and producers. Roughly $53.5 million went to local assistance for fraud control, more than $47 million went to consumer protection and $38.2 million went to statewide fraud control.

For the 2010-11 fiscal year CDI’s revenue was $197.9 million, with $91.5 million from fraud assessment, and more than $33.2 million collected in license fees and penalties.

At the top of Jones’ report is healthcare reform, which details efforts to prepare California for the Affordable Care Act. Among other efforts, as part of the act CDI provided assistance to the California Health Benefit Exchange to assist in the establishment of the Health Benefit Exchange.

Much of the report hails CDI’s pro-consumer efforts, as well as its efforts to lower insurance rates for businesses. CDI reviewed health insurance rate increases and obtained reductions in proposed rates that resulted in in $152 million in annual premium savings to individuals and small businesses, the report states.

In Jones first 18 months in office the department also processed more than 1,500 property-casualty rate filings under Proposition 103, while reducing the overall amount of requested rate increases by $69 million and approving over $482 million in rate reductions.

That totals more than $551 million in savings to California consumers and businesses, which includes roughly $132 million in rate reductions for personal auto coverage, the report states.

The report also states CDI lowered medical malpractice rates to the tune of $44 million in annual savings in premiums for doctors and other medical providers.

Fraud was another area in which the report focuses. According to the report, more than 1,100 arrests were made and 859 convictions resulted for crimes like fraud, theft and embezzlement.

The report includes details of the ins and outs of day-to-day department operations.

During the year, CDI licensed and renewed the licensed of nearly 200,000 agents and brokers. The department fielded 181,144 consumer calls in 2011 to its automated call center, with 34,219 complaint cases open, and 35,490 complaints closed.

Complaints about auto coverage lead the list, and had been on the decline until 2011. The report, which shows trends in percentage of complaints by lines of coverage, reveals that complaints in auto have fallen steadily from 2005 at 40.36 percent to 2010 at 31.01 percent. However, they were up to 33.08 percent in 2011.

Conversely, accident and health has been on the rise since 2005, but in 2011 that line fell to 35.11 percent in 2011 from a peak of 37 percent in 2010. Liability has been largely on the decline since 2005, falling from 2.85 percent to 1.96 percent in 2011.

Denial of claim is at the top 10 types of complaints at 26 percent. That’s followed by unsatisfactory settlement offer (13 percent), and claim handling delay (11 percent). At 7 percent premium and rating misquotes fell from 8 percent in 2010, but has been on the rise since 2006, when it was 5 percent.

The number of total rate fillings rose to 7,924 in 2011 from 7,079 in 2010, with private passenger automobile leading the way at 644 rate filings – that’s up from 516 in 2010. Homeowners fillings were down at 209 from 296 in 2010, as was workers’ compensation filings (491 in 2011 from 540 in 2010). Other commercial lines products and medical malpractice both rose, the report shows.

The number of license applications received rose 7 percent in 2011 to 70,432, while the number of new licenses issued rose 13 percent to 61,053. Licenses renewed rose 6 percent to 113,812. In 2011 the number of property-casualty broker/agent licenses were 15,088, personal lines broker-agent were 4,614, limited lines automobile agent 1,083, life and accident/health agent were 27,234, life agent was 16,972 and accident/health was 5,117.

Following is the reporter’s top 10 complain reasons for 2011 looking back five years:

Top 10 Types of Complaint Reasons (2006-2011)
Top Ten Types of Complaint Reasons (2006-2011) # Types of Complaint Reasons 2006 2007 2008 2009 2010 2011
1 Denial of Claim 24% 24% 25% 26% 26% 26%
2 Unsatisfactory Settlement Offer 16% 15% 12% 13% 13% 13%
3 Claim Handling Delay 15% 15% 13% 13% 13% 11%
4 Other – Claim Handling 4% 5% 6% 6% 6% 4%
5 Premium & Rating / Misquotes 5% 5% 6% 5% 8% 7%
6 Premium Refund 5% 5% 5% 4% 4% 4%
7 Coverage Question 4% 4% 4% 3% 3% 3%
8 Cancellation 3% 3% 3% 3% 3% 3%
9 Agent Handling 3% 3% 3% 3% 3% 3%
10 Premium Notice/Billing Problem 3% 3% 3% 2% 3% 3%
All Other Reasons 18% 18% 21% 22% 18% 23%

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