Consumer Complaints Lead To Recovery of $32.3 Million & Other Actions Correcting Insurance Company Practices

NEW YORK, NY (02/24/2010)(readMedia)-- Governor David A. Paterson today announced that consumers recouped $32.3 million as the result of action taken by the New York State Insurance Department in 2009. The Governor praised consumers whose complaints about insurance company practices led to the monetary recoveries and other actions – some benefiting hundreds of other consumers.

A Rochester woman victimized after buying health insurance from a telemarketer who inflated the value of the policy, a Watertown area woman whose homeowners' insurance was improperly cancelled, and a New York City widow who had to fight a life insurance company for her late husband's $30,000 death benefit were among the cases.

"Consumer protection is one of the Insurance Department's key missions and New York State government is committed to making certain that insurance companies fulfill their obligations to consumers," Governor Paterson said.

"Consumer complaints led to monetary recoveries for 7,780 people across the state, but that's not the whole story. There are many things the Insurance Department does in addition to getting cash back for consumers. The Department often helps consumers restore insurance coverage that was improperly cancelled," Insurance Superintendent James Wrynn said.

"Sometimes the telephone call of a single consumer results in a wider examination of insurance company practices affecting many other consumers. For example, a Suffolk County property owner's complaint about the cancellation of his homeowners' policy resulted in the Department directing an insurance company to offer to reinstate his policy, as well as the policies of another 561 people who were improperly denied coverage because they were not given timely notice," Wrynn said.

The Insurance Department investigates approximately 60,000 complaints a year. Among the significant consumer issues addressed last year:

• Misleading Health Insurance Sales – The Department fined an insurer for misleading sales practices, and after holding a series of public hearings, further action regarding limited benefit health plans is being considered. The steps were taken after the Department received complaints from a number of consumers. They included a Rochester woman with $27,000 in uncovered hospital debts after buying a $419 a month policy from a telemarketer and a 36-year-old stroke victim whose policy paid only $250 toward $30,000 in medical bills.

• Homeowners' Policies Restored – The Department directed two insurance companies to offer to reinstate 260 homeowners' policies across the state after finding that the insurers had improperly cancelled or non-renewed the policies. The terminations came to light when a Watertown area woman complained that her insurance was cancelled while she was in the process of moving.

• Prescription Drug Coverage – A health insurance company agreed to cover the cost of prescription drugs for a Syracuse woman suffering from bronchitis, asthma and other ailments after the Insurance Department advised the company that its policy did not require the pre-authorization for coverage the insurer was initially demanding.

• Life Insurance Claim Settled – The Department confirmed that the life insurance policy of a New York City man remained in force after he left his job and directed an insurer to pay a $30,000 benefit to the man's wife after he died. Struggling to pay her late husband's medical bills, the woman unsuccessfully attempted to recover the benefit from the insurer for more than a year before filing her successful complaint with the Insurance Department.

• Coastal Insurance – The Department directed one insurance company to offer to renew the homeowners' policies of 113 Long Island property owners as the result of a complaint filed by one individual. An investigation revealed that the insurer had improperly failed to advise the homeowners of their options for obtaining new insurance when it non-renewed their policies.

Consumers with questions about their insurance policies should first contact their insurance company, agent or broker. If they are unable to resolve disputes, consumers are urged to contact the Department's Consumer Services Bureau by accessing the Department's website, www.ins.state.ny.us. The Department staffs a consumer hotline at 1-800-342-3736 from 9 a.m. to 4:30 p.m. Monday through Friday.

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