Statistics — NAIC & Insurance Confusion


Every year the National Association of Insurance Commissioners (NAIC) releases the top complaints it receives about insurance companies. Most involve claims. And most people — the data says — don’t really understand insurance so they aren’t all that satisfied with the companies they get insurance from.


The suggestion that comes along with the complaints is that insurers and agents find more, and better, ways to improve communication with insureds.


The NAIC says these are the top-5 complaints from 2021:


1. Claim handling delays

Number of complaints: 10,121


2. Unsatisfactory claims settlement or claim settlement offer

Number of complaints: 6,491


3. Claim denied

Number of complaints: 5,986


4. Dissatisfaction with how the claims adjuster handled the claim

Number of complaints: 2,334


5. Failure to pay the claim promptly

Number of complaints: 2,112


As we noted earlier, the NAIC says people are very confused about insurance and really don’t understand the policies they purchase. A study done on auto insurance by Forbes Advisor agrees.


It says 40% of those with auto insurance think their policies cover things it doesn’t cover. Here’s are some examples:


* 47% think their auto policy has money for additional living expenses

  • *49% think their policy has extended crash coverage
  • *We all know there is no such thing

* 40% think their policy has vehicle emissions insurance — whatever that is


The Forbes survey says younger drivers age 18 to 25 are the most confused. Their numbers on extended crash coverage and vehicle emissions are 69% and 65% respectively.


And 75% of the people in that age group say their policy has accidental death and dismemberment insurance. One very funny statistic has 91% believing their insurer will pay them if their auto won’t start. 


On the reverse side of things, a lot of policyholders don’t think they have coverage where they do have coverage.


* 60% don’t know their liability policy covers damages if they crash into a neighbor’s fence

* Just 3% know that none of the standard types of insurance will cover the medical bills of an uninsured motorist if they crash into another vehicle


Here are some of the questions and the wrong answers:


1. If your car is damaged by a flood, what type of auto insurance would pay for the damage?


* 56% got the answer, comprehensive coverage, wrong.


2. If someone crashes into you and they are injured but don’t have auto insurance, what type of auto insurance would pay for their medical bill?  The options were liability, collision, comprehensive, uninsured motorist or none.


* 85% got the answer — none — wrong.


3. If you cause an accident, what type of auto insurance pays for the damage to the other vehicle?


* 62% got the wrong answer and did not know that liability coverage takes care of the damages.


4. If you crash into a neighbors fence accidentally, what type of insurance pays for the fence?


* 60% did not know their liability insurance covers the damages.


5. If a tree falls on the roof of a car what insurance pays for the damages?


* 59% did not know comprehensive covers it.


6. If you back into a poll, what type of insurance pays for the damage to your vehicle?


* 57% did not know that collision pays the damages.


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The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


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