By Erin Ayers, Front Page News
The insurance industry is “facing an unprecedented slate of challenges,” including criticism over claims payment, concerns around affordability, and easy-to-miss opportunities to improve broader understanding of insurance for policyholders, according to experts speaking the American Property Casualty Insurance Association’s (APCIA) recent annual meeting in Boston.
“When provocative headlines suggest that getting an insurance claim paid is essentially a coin flip, our industry must be able to respond with clear, credible, and unambiguous facts,” said David Bell, president and CEO of ALPS Insurance and APCIA’s board chairman, citing recent Wall Street Journal coverage of personal auto and homeowners insurance claims payment rates.
The WSJ coverage, which indicated that about 45% of auto and home claims are closed without payment, prompted a call from U.S. Sens. Elizabeth Warren (D-MA) and Josh Hawley (R-MO) for more information on the “surge” in claim denials.
“Closed without payment” doesn’t tell the full story, according to Bell, and it’s on the industry to make that clear. Insurers today find themselves “caught in the crosshairs,” he added, cast as “easy villains” in the public’s eye.
“Claims are closed without payment for a variety of reasons other than a coverage denial,” he said. “But without consistent definitions and standardized coding – which we do not currently have as an industry — very different outcomes can be grouped together under one alarming statistic.”
To that end, Bell added, APCIA is launching an effort to develop a “claims closed data call template” to delineate claims outcomes more clearly.
“If we do not bring consistency to how claims outcomes are categorized, then we will remain on the defensive against narratives that the underlying data simply does not support,” he said.
However, Bell cautioned that insurers need to get comfortable with calling out conduct that falls short of expected industry standards. Trust, he commented, “has to be earned again and again” for insurance.
“Credibility requires more than correcting inaccurate criticism,” he said, adding, “Defending the industry does not mean defending every action taken within the industry … When conduct falls short, we need to call it what it is. Otherwise, we risk sacrificing the credibility we need when the industry is being scrutinized unfairly.”
Bell’s was a message echoed during another APCIA panel, with current and former regulators urging the industry to collaborate more on educational outreach for consumers.
That information will also go a long way toward helping better educate consumers at a time when insurance affordability has become a real concern, Louisiana Insurance Commissioner Tim Temple commented. He urged the insurance world to spend less time “talking about return on equity and underwriting income and capital allocation” and more on the industry’s consumer protection aspects.
“You all have a great story to tell. Let’s move beyond how well you all did financially, and start talking about how well you’re taking care of customers when they have a claim,” Temple said, adding that he views insurers as “financial first responders.”
“Insurance is there to help people, literally to pick them up when they’re falling … it’s not given enough justice,” he said. “When I think about insurance company advertising, it’s the wrong message. It’s hard for me as a regulator to defend your business model when you spend so much money trying to make people laugh instead of talking about the good things you do for them.”
Educational partnerships between the insurance industry and regulators offer a real opportunity to help consumers understand what drives their premium prices, according to Dana Popish Severinghaus, former director of the Illinois Department of Insurance and now a partner with consulting firm Noted Advisory.
“We are perpetually looking for ways to lower costs,” said Popish Severinghaus, citing reforms passed in Florida in 2022 and recent focus from New York Gov. Kathy Hochul on rooting out fraudulent auto insurance claims. High-profile attention from public policymakers and consumer education will help drive the message, she noted.
“The needle is moving,” she said. “I think that opportunity exists for all of us.”
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