Consumers with health and accident insurance complaints were among the top beneficiaries of the $8.7 million recovered by the Connecticut Insurance Department for policyholders and state taxpayers in 2012, the state agency announced Thursday.
More than half of the $4.1 million recovered for policyholders by the Department’s Consumer Affairs Unit – a total of $2.1 million – stemmed from consumer complaints over health and accident insurance with unfair claims practices leading the list of offenses by insurance carriers.
The Department’s Market Conduct division levied more than $4.6 million in fines against carriers with the money going back to the state General Fund. The fines resulted from various violations and settlements from untimely claim payments to improper licensing.
The state’s Consumer Affairs Unit fielded more than 6,100 complaints and inquiries in 2012, including 2,143 from residents with questions about health and accident insurance. More than half of these complaints (1,095) fell under the category of “unfair claims practices” from failing to make prompt payments to false advertising.
“Many people don’t realize that we’re here to offer free assistance,” said Gerard O’Sullivan, the unit’s program manager. Consumers can contact the unit by phone, online or by mail.
The breakdown for funds recovered for policyholders stemming from health and accident insurance complaints include: $2.03 million for unfair claims practices; $37,387 for premium/rating; $12,361 for marketing/sales; $10,578 for underwriting; and $7,282 for other miscellaneous complaints.
“The most common violation is not paying claims on a timely basis,” said Kathy Walsh, the unit’s supervisor for health insurance issues. State law requires health insurers to pay claims filed electronically within 20 days or begin paying interest; they have 60 days for claims filed on paper.
Of the total $8.7 million recovered by the state, the breakdown for recouped funds for policyholders includes: $2.1 million for health and accident; $790,000 for homeowners and farmers; $409,000 for fire and commercial; $407,000 for automobile; $241,000 for life and annuities, $76,000 for general liability; and $62,000 for miscellaneous.
According to Walsh, the “most prominent topics” among consumers with health-related complaints are payment issues and the denial of coverage for a service or prescription drug. But in recent months, consumer complaints about specific claims have given way to a growing number of inquiries about the Affordable Care Act, which takes full effect in 2014.
“I think people are more confused than ever. They’re unsure about the details and timetable,” said Walsh. “It’s our mission to educate people about the law’s provisions.”
Even consumers with self-insured health insurance plans can now receive assistance from the Consumer Affairs Unit since passage of a 2011 law giving the state Insurance Department limited review authority to contact third-party administrators, explained Walsh. With self-insured health plans, employers take on the financial burden and often hire an outside company to administer the plan.
“It’s opened a whole new world for us in terms of customer satisfaction,” said Walsh, who estimates staff can now assist about 90 percent of the consumers who contact the department. “We can contact third party administrators to make sure claims are being paid promptly and according to their policies.”
The complaint process helps the state to regulate the insurance industry and “spot trends,” including those that warrant investigation by the Market Conduct Division, said O’Sullivan. “We have a good rapport with insurance companies and work together” to resolve complaints and help carriers to improve communication with their policyholders, he said.
Upcoming changes under health care reform will address some of the issues consumers face today. An online marketplace opening this fall will offer a “simpler way of shopping” where people can easily compare health plans, said Walsh. Among the most “frustrated” consumers are those who have been denied insurance due to pre-existing conditions. But starting January 2014, carriers must accept all applicants, regardless of pre-existing conditions. “That’s what people are so much looking forward to.”