Contacting Your State’s Insurance Department: The Benefits & The Risks
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UPDATED: Jul 16, 2021
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When your insurance company is not responsive or has acted in bad faith, contacting your state’s insurance commissioner can sometimes give you a leg up – especially if the company is treating others in a similar way. However, consumers should beware as state insurance departments don’t always agree with their point of view.
Charles Surrano, an attorney who has practiced in the insurance industry for 30 years and member of the Advocate Law Group network, clarified some of the benefits and the risks involved. As far as benefits are concerned, Surrano says that the biggest benefit is that “you have begun recordation of your grievance against the insurance company. The second benefit is that the department of insurance should, and undoubtedly will, commence an investigation, so there will be inquiries made of the insurer for which they will be required to respond to the questions posed by the department of insurance. At that point in time, you’ll have a record of what the insurance company’s officiall response is to your grievance, which may differ somewhat from what the insurance company has told you.
These exchanges between the department of insurance and the insurance company may end up having some relevance in a potential bad faith case down the road where what the insurance company tells the department of insurance is perhaps at variance with what you find out was going on at the insurance company or in the claim file itself.”
We’ve looked at the potential benefits of contacting the state insurance department, but what about the risks? Surrano continued, “Well, one of the risks is that the insurance department sometimes gets it wrong. It’s been my experience to see investigations undertaken by the department that in the process of doing the investigation, conclude, albeit erroneously, on the side of the insurer.
If the insured is complaining that he’s been treated improperly or that his claim has been wrongfully denied and the investigation conducted by the insurance department concludes that the insurance company was acting properly, that may sometimes be used as evidence or hoisted up by the insurance company as evidence that, ‘Well, the department of insurance didn’t think we were doing anything wrong, so why would we think we were doing anything wrong?’ Hence, ‘Who could say we were acting in bad faith? Even the department of insurance agreed with us.’
That is the risk of involving an insurance department that has limited resources, limited man hours to investigate claims and sometimes is more willing than it should be to accept what the insurance company says and reject the grievance filed by the insured.”
Surrano pointed out that going to your state’s insurance department is not the only avenue consumers have; contacting an attorney is always an option. For many, this actually may be the best option as an attorney whose practice focuses in this area knows how insurers operate.
To contact an attorney in your area, click here. If you do choose to contact your state’s insurance department, the National Association of Insurance Commissioners provides links to each state’s insurance commissioner / department on their website at www.naic.org.