Good Complaints

It’s human nature to complain, even if it is to complain about complaints. But there actually is good news in complaints. Industrywide, they’re down. They can be revealing of trends and troubles ahead. Good can come of them, whether it’s improved products and service or just good old-fashioned “we’re better than the competition” marketing.

Happily, the most recent statistics from the states’ insurance regulators reflect a continuing decrease in consumers’ insurance complaints for the fourth consecutive year. A total of 222,814 consumer complaints were reported to the National Association of Insurance Commissioners in 2007 — a 3.6 percent decrease from 2006.

The overall tally is down, although the grounds for complaints remain relatively unchanged. According to the NAIC, the top three reasons consumers filed formal complaints against their insurance companies in 2007 were delays, denials of claims and unsatisfactory settlement offers. Policy cancellations and premium/insurance rating issues completed the top five.

It’s interesting that pricing is not on top among the topics of concern, given all we hear about it. It’s also curious that life and auto beat out homeowners as the coverage most complained about.

Top Complaints in 2007

Top Five Types of Complaints in 2007

Top Five Types of Complaints in 2007 by Coverage

Source: NAIC

The NAIC collects the data through its electronic Complaint Database System, through which states voluntarily report “closed” complaints. A closed complaint is one that has been investigated and resolved. The CDS houses data on more than 2 million complaints.

Complaints should be kept in perspective, especially when they are reported on an industrywide basis. This means not over-reacting. Of course, it makes no sense to re-engineer an entire claims or billing department around a single, isolated snafu — unless it’s a huge one and a harbinger of more like it.

But keeping complaints in perspective does not mean dismissing them. Industrywide compilations do provide guidance as to the areas within operations where consumers appear to have the most concerns and where it’s worth double-checking systems and procedures.

Keep in mind that agents are perhaps most likely to bear the brunt of the complaining from customers, while carriers most often control the circumstances that prompt the complaints.

Both carriers and agents should use the industrywide benchmarks to their advantage. Where carriers’ own tracking shows they are superior to the industry average or the competition, they should crow about their performance and give their agents another reason to recommend them.

But don’t overstate the case — that would just be one more thing for someone to complaint about.