No Teeth in Insurance
Bill of Rights
By Mark Proulx - Special to GCN
The office of the MS State insurance Commissioner recently announced a proposed “Homeowner’s Policy Bill of Rights” designed, in part, to come up with a mission statement, a direction in which the Mississippi Insurance Department (MID) can legitimately follow in times of tragedy, citing what the policyholder should expect by way of service and coverage from insurers and the MID itself.
What it actually proposes to do is infuriate those who have lost so much through a glib and half thought out bill of rights whose language is just as vague and obfuscating as the insurance companies’ policies, and which has no actual “teeth” with which to force the money-hungry insurance companies to actually take care of the policyholders they so piously purport to protect.
Policyholders across the state can applaud the idea of a state bill of rights, but after having gone through the details of each “right,” any reasonable person can see that in its present form, this bill of right is nothing more than a PR stunt. One would hope that the public hearing on January 26, 2007 will bring forth a litany of enraged consumers with specific constructive criticisms to force the MID into a “protect the reason the insurance companies are doing business here” attitude.
In reading over the 14 points proposed, I was stupified not by the language, but by the complete lack of addressing the abuses heaped upon the citizens in Mississippi by insurers over the last 16 months since Hurricane Katrina. The very reasons I thought this bill of rights was introduced are almost completely missing. Let’s take these point by point:
1. Policyholders shall have the right to competitive pricing practices and marketing methods that enable them to determine the best value among comparable coverage.
Where is there mention of the industry-wide
conspiracy to not cover certain hazards, stop covering homeowners any time
they wish when it isn’t competitive for the insurers and to blatantly deny
meritorious claims? Why aren’t insurers required to cover everything
in order to do business in the State of Mississippi?
Where is the language designed to stop insurers from
promising coverage orally, yet not providing anything in writing to
support these claims? To whit, many policyholders came forward in legal
testimony and stated that they were told specifically by their agents that
flood insurance was not required or didn’t need it because their regular
homeowner’s policies covered the hazard? Better wording would be “…shall
have the right to request in writing what has been presented orally by an
insurer in clear and unambiguous language.”
Isn’t this the whole point of having an MID? Would
they be allowed to do business in the state of MS if they weren’t stable?
A better-worded right would be the “…right to have the Mississippi
Insurance Department bar an insurance company from doing business until it
met a satisfactory level of assets in order to do business in the State of
If you asked 100 agents if you were being serviced by an “honest” and “competent” representative of the insurance companies, you would get 100 responses that say “of course.” How would the MID propose they go about measuring honesty and competence? This is a sophomoric attempt at a serious bill of rights issue, if ever there were one. I would suggest language directed more at proving that whatever is stated orally by an agent is easily proved by having the information in writing immediately to hand to the customer.
Also, perhaps the following should be mentioned or
considered: “…right to a competent, honest insurer who puts the
interests of the customer before all other interests, including the
profits of the company he represents.”
Every policy is “readable”. The language more accurate and giving more protection to the policyholder would be “…right to a policy with clearly understandable and unambiguous language.”
6. Policyholders shall have the right to an insurance company that provides an economic delivery of coverage and that tries to prevent losses.
Were there insurance company lawyers in the room when this right was drafted? What does it even mean? Does this mean affordable coverage? Competitive rates? Whose losses are the insurance company supposed to protect? How would they protect the insured against losses? Strap themselves to the front of the house during the next storm? Or is this meant to actually protect the insurance companies from having to pay out claims? As it stands, all insurance companies in the State of Mississippi are protecting against loss…but not in the way that protects the policyholders.
7. Policyholders shall have the right to a
balanced and positive regulation by the Mississippi Department of
This may be nitpicking, but to whom is this request
made? If a person chooses to do business with a person or company that
refuses to provide a license to operate in the state, why would you do
business with them? Is this then, MID’s claiming responsibility to provide
these licenses upon request?
This so-called “right” is practiced even now…and very poorly. It is not enough. The language should state that the policyholder should expect to receive an initial acceptance or denial report from the adjuster who actually witnesses the damage based on first hand evidence, along with his/her reasons for such.
Why would the adjuster need to go away, write it up,
send it to his superiors, only to have them make the final decision which,
by the way, meant an instant denial of coverage? This is the
consequential area of abuse that has been the crux of the problem with
claims regarding Katrina and this system of corruption is not even
mentioned anywhere in this bill of rights.
This right potentially allows the insurer to penalize
the policyholder for non-coverage should a consumer choose to exercise
his/her right to cancel. Without a grace period provision, immediately
upon canceling for cause, a policyholder now must endure a struggle to
even find coverage, much less competitive rates.
Again, nitpicky, but…if this isn’t a law on the books
of Mississippi, I’d like to know how insurance companies have been allowed
to do business within the state without their being required to do so.
This right also does not address the clear and unambiguous language
requirement needed in cases like these.
What has been completely missed here is how companies go about determining denial. There should be specific language that requires companies to state all the different means they used to make the denial determination, including the use of engineering firms or resources used, a copy of the original on-the-scene adjustor’s report, and convincing evidence why this is not a meritorious claim.
As it stands, the companies have a standard policy of
denial first and force the customer to have to expend funds to support a
meritorious claim. This is an alarming trend that must be stopped in its
tracks! Language to the effect “…right to receive a written
explanation…” should be paired with “…including all objective
evidence used in the denial decision.”
Who snuck in the words “not privileged”? Nothing
pertaining to the decision to deny a claim should be “privileged”! If the
information was germaine to the decision, those documents must be offered
up immediately in the best interests of the customer. If there were
nothing to hide, the insurance companies should adopt an open, honest and
transparent accounting system that allows the consumer to see the thought
processes and decision tree. But then again…that would be demanding the
impossible of a corrupt system, wouldn’t it?
It’s nice that they decided to add this last bit in, since any reputable organization should have a grievance policy and system in place to develop a better system, tighten up its controls and form a better relationship with its customer base. But what it doesn’t flesh out is reasonable time frames for dealing with disreputable companies or expecting the MID to address issues in a time frame that helps the consumer.
If this is to truly become a “Homeowner’s Bill of Rights,” the MID might want to actually start thinking about the homeowner when drafting up the next version.
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