Thursday, March 8, 2018

Consumer complaints can lead to investigations, legal action against industry

Consumers can file complaints against insurance companies or against an agent or broker (they are called producers). Sometimes those complaints spur broader investigations where we identify a bigger issue.

That’s where our regulatory investigations unit comes in. We have nine investigators who come from military and civilian law enforcement, and one former insurance producer. The team investigates insurance producers in Washington who violate state insurance laws and rules. If the producer is from another state, we refer the case to that state’s insurance department. We also work closely with our own Criminal Investigations Unit and local law enforcement agencies.

In 2017, our regulatory investigators closed 188 cases, ranging from producers illegally selling insurance without a license to complex cases like annuity scams that target older consumers.

Here are some examples:
  • A simple complaint about a car rental company selling personal accident insurance resulted in an investigation that determined the company had sold 9,054 unauthorized personal accident insurance policies to consumers without being licensed. Our investigators determined the company earned $615,475.60 from the unauthorized sale of these policies. The insurance commissioner fined the company $45,000
  • Discount Tire sold more than 1.2 million unauthorized tire warranties to customers in Washington state. Discount Tire is not licensed to conduct insurance business in Washington state, and made over $32 million in sales from these unauthorized warranties between 2014 and 2016.  
  • While investigating an insurance agency suspected of employing unlicensed employees to sell insurance, one of our investigators posed as a consumer. The investigator worked with an unlicensed agency employee to fined and negotiate an insurance policy. The agency later denied the practice of employing unlicensed producers, not realizing it had had attempted to sell insurance to an OIC Investigator. The insurance commissioner fined the agency $500 for the violation.  
  • A consumer who had a language barrier bought a life insurance policy to cover future funeral expenses. When her husband passed away, the insurance wouldn’t pay the death benefit because her husband had a pre-existing health condition. One of our bilingual investigators worked with the consumer to find out what happened -- the insurance producer failed to ask her the required health questions on the insurance application. Upon review of the insurance application, our investigator found it was not possible to accurately translate the questions for consumers who don't speak English. The insurance commissioner fined the producer and the consumer received a settlement from the insurance company. 
  • A Washington consumer filed a complaint with the insurance commissioner about an annuity. The consumer asked the insurance producer for an annuity with socially responsible investments and she wanted complete access to her funds. The insurance producer sold her an annuity that allocated 20 percent of the funds to oil and gas investments and made none of the funds available to the consumer. The consumer requested a refund on the annuity; the producer, brokerage and the company declined to refund her money. As a result of the insurance commissioner’s investigation, the producer’s license was revoked, the agency was fined $2,000 and the company was ordered to refund the consumer for the annuity plus 8 percent annual interest and pay a $20,000 fine for violating state insurance laws.
If you have a question about your insurance policy, agent or company, you can find us online or call us at 1-800-562-6900.