States Rate Poorly on Consumer Insurance Information on Web

A national consumer group says state insurance departments vary in the quality of the information they provide consumers online, with differences in the usefulness of information such as the rates and practices of individual insurance companies.

According to the Consumer Federation of America (CFA) “State Insurance Department Web sites: A Consumer Assessment,” state insurance department Web sites in six states were “excellent” while those in 18 states were “inadequate.”

The DOI Web sites in California, Georgia, Kansas, Oklahoma, Texas, and Utah had complete, up-to-date information that is easy for consumers to use, the study indicated. Consumers accessing those Web sites could easily find current price, complaint and solvency information to make well-informed purchase decisions and could find key information on how to get the best claim settlements as well.

On the other hand, Hawaii, Idaho, Nevada, New Mexico and Wyoming were among the states with the worst ranked DOI Web sites. Those state’s sites lacked important aspects of information about purchase and claims settlement decisions in auto and home insurance, the study noted.

“At a time when consumers are under increasing financial pressure, state insurance departments can do their part by making available current information about the rates, solvency, and complaints of individual insurers as well as tips for consumers to use to secure fairer and faster claims settlements,” said J. Robert Hunter, CFA’s director of insurance (and former Texas Insurance Commissioner).

Hunter emphasized states should more widely publicize the availability of their Web sites and related information. “States with inadequate Web sites do not have to reinvent the wheel. They need only use the excellent sites already in use by other states as a guide for improving their own sites,” he added.

By using information on the best state Web sites, those purchasing home and auto insurance can potentially save hundreds of dollars a year in lower premiums and avoid serious problems settling claims, CFA indicated.

To rank the Web sites, states could receive up to 105 points. Scores of 79 and greater were considered excellent. Scores of 65 to 78 were considered good, but not the best. States with scores of 50 to 64 were considered fair. States that received fewer than 49 points had inadequate Web sites to properly help consumers in shopping and/or claims processing.

States that had current (2008) price data for auto or home insurance received 15 points for each type of coverage. States with older price information received fewer points. For solvency data, states received 10 points each for auto and home insurance if the information was directly available on the Web site and five points if the site provided links to information available on rating agencies sites, and no points if no rating information was offered. For complaint indices, states received 10 points each for auto and home insurance if the information was available, and no points if the information was not offered. A state received five points for each of the following: offering market conduct exam information, posting consumer alerts, and responding to CFA’s request to verify data in CFA’s report. If state Web sites allowed users to search by either the name of an insurer or agent they received two and a half points for each. An additional two and a half points each was awarded for sites that displayed information about disciplinary actions taken against insurers or agents. Finally, states received up to 10 points for providing claims information.

Looking at the six “Best Practices” states, three of them have smaller populations, showing that all states can reach a level of excellence, the study indicated. Kansas only has links to rating information on solvency and has limited information on claims matters. Oklahoma does not have auto and home insurance complaint indices on its site. Otherwise the information on its Web site is complete and current, the study noted. Utah offers all necessary information except for market conduct exam results. Moreover, the information Utah provides on insurer solvency is offered only by link, rather than directly on the site.

Of the three larger states using best practices, Georgia’s only problem is that solvency data is not directly available, although the state does provide links to rating agencies for such information, the report noted. Texas’ site was deemed comprehensive and up-to-date except for the lack of market conduct exams online. California’s site was rated complete and current, but it requires a consumer to use a link to a rating agency for solvency information.

“Consumers need information so they can make an informed choice on insurance, and I’m proud that California is at the forefront of using the Web to provide that information,” said Insurance Commissioner Steve Poizner of his state’s ranking. “As we implement our paperless initiative, in addition to the obvious environmental benefits, we will also be able to put even more data online so people can see for themselves information that’s only available in our reading rooms.”

CFA sent its report to all state insurance departments with a letter urging the states that are not yet excellent to improve.

“The best state Web sites contain far and away the most objective and useful information available to consumers,” said Stephen Brobeck, CFA’s executive director. “Only state insurance departments have the expertise and resources to provide up-to-date information about individual insurers.”

For a list of state insurance department Web sites, visit www.consumerfed.org. To view the CFA report, visit www.consumerfed.org/pdfs/state_ insurance_Web sites.pdf.

State Ratings for Consumer Insurance Information on Web

Excellent (6 states): California, Georgia, Kansas, Oklahoma, Texas and Utah.

Good (12 states): Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Maine, Missouri, New Jersey, Ohio, Oregon, and Wisconsin.

Fair (15 states): District of Columbia, Illinois, Kentucky, Louisiana, Maryland, Michigan, Montana, New Hampshire, New York, North Carolina, North Dakota, Pennsylvania, South Carolina, Virginia, and Washington.

Inadequate (18 states): Alabama, Connecticut, Hawaii, Idaho, Indiana, Iowa, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, New Mexico, Rhode Island, South Dakota, Tennessee, Vermont, West Virginia, and Wyoming.