• He said the consumer complaint analysts in a state are a “focus group” that each state should rely on.

2009-3, NAIC Proceedings

⇒ He = Joel Ario - Pennsylvania Insurance Commissioner

  • Monitoring of litigation may alert regulators to issues that the regulatory system has not yet addressed.

2008-3, NAIC Proc. 

  • They are complaints about things that we can’t do anything about because the contract might be a universal life type product with nonguaranteed elements, and there is no regulatory framework to deal with those issues.

  • Those complaints just fall by the wayside because there is nothing that can be done.

-- Larry Gorski - (Illinois Insurance Department - Actuary)

1996 - SOA - Nonforfeiture Law Developments, Society of Actuaries - 23p

  • 33 percent of the sales complaints concerned misrepresentation by agents in the course of a sale. (p8)
  • Such complaints were not new, but due to recent media attention and other factors, have been received and handled in large numbers. (p12)
  • There is ample evidence to suggest that many of the practices at Prudential are, or were, present at other life insurers.

1996 05 - Report of The Multi-state Life Insurance Task Force and Multi-state Market Conduct Examination of The Prudential Insurance Company of America - By the Examiners of The Multi-state Life Insurance Task Force From Several State Departments of Insurance and other State Regulatory Agencies - 270p

  • Mr. Weber suggested that the illustration show ... how the policy values are paying the premium.
  • Mr. Morgan said that this issue needs specific attention because many complaints were received in the state insurance departments on this issue.  

Richard Weber - (Merrill Lynch Life)

1994-3, NAIC Proceedings (p521) - (Life Disclosure Working Group – NAIC)

  • An increase in the number or type of complaints filed by policyholders, claimants, employees, agents or third parties which could indicate liquidity or internal control problems (consumer affairs).  (p8)

1998 - NAIC - Financial Analysis Handbook - 349p

  • The Financial Analysis Handbook (the Handbook) was developed under the direction of the NAIC Financial Analysis Handbook Working Group.

Most state insurance regulators generally only conduct investigations of insurance company sales practices when they receive customer complaints.

  • Although some state insurance regulators review insurance companies’ product sales practices as part of market conduct reviews, few insurance products are subject to any suitability or appropriateness standards.  (p11)

2005 11 - GAO - Financial Product Sales: Actions Needed to Better Protect Military Members - 88p

  • Teresa Winer (GA) - asked if it would be useful to ask states whether they have received consumer complaints about the summaries.
  • Richard Wicka - Chair (WI) - said that it would be helpful to have that kind of information but that he is not sure it would be possible to track down complaints to that level of detail.

2016-2, NAIC Proceedings - NAIC Life Insurance Illustrations Working Group (LIIIWG)

  • Complaints and inquiries related to life insurance and annuity products were less frequent, and generally concerned consumer dissatisfaction with, or confusion regarding, universal life insurance policies.  (p90)

2018 - Wisconsin Insurance Report - 219p

Teresa Winer (GA):

I'm guessing that, perhaps, this came out of the fact that Illustrations were not as clear.

  • Maybe there's been complaints.
  • And the purpose of this entire committee was to provide some kind of summary to make it a little bit more clear.

2019 0903 - NAIC Life Insurance Illustrations Working Group (LIIIWG), NAIC, <Bonk>

John PEARSON (ACLI) -  Our records say less than 10 percent of complaints are life insurance and life insurance-related.

  • Having said that, however, we frankly think the current network does a very good job of handling consumer complaints.
  • We would prefer for more uniformity across States with some of these model laws that have passed
  • But, frankly, we look at it as something that we could build upon as through the Federal bill that we would expect nothing less than an exemplar customer complaint and recourse.  (p29)

2008 0729 - GOV (Senate) - The State of the Insurance Industry: Examining the Current Regulatory and Oversight Structure - The Current State of Insurance Regulation, Oversight and Ways to Enhance Consumer Protection, Promote Competition and Efficiency, and to Address What Role, if any, the Federal Government should play - [PDF-472pVideo-Senate-Error

Judy Faucett: We contacted a number of regulators during the course of our research.

The California department was gracious enough to pull 80 complaints that they had received from consumers in the last year, a random 80 complaints.

  • Out of those 80 complaints on life insurance, they determined that 35 of them were illustration-related.
  • Fifty-five percent were for reasons you would have expected; that is, the premium didn't vanish when it was supposed to, or the dividends that were paid weren't as high as what was illustrated.
  • The other 45% believed that they had bought an annuity product and didn't even know that they had life insurance?

Maybe there is something that we're not communicating to buyers out there.

We may think that our illustrations are straightforward, but somehow the people who aren't actuaries or agents or who just don't understand insurance, are missing the point.

  • Admittedly, not everybody complains, but the number was a lot higher than we had expected, and it was a very different type of complaint than we had expected.  (p10)

1991 - SOA - Illustrations, Society of Actuaries - 20p

One problem area in a lot of policies has been interest rates.

A slow cumulative, very large decline in interest rates has affected everything.

  • Why are we getting so many complaints?
  • Did the policyholder expect rates to stay the same forever?
  • Did the agent or the company mislead?
  • Did the policyholder think we were promising?
  • He shouldn't have, I hope he didn't.

-- Bruce E. Booker

  • Vice President and actuary with Life of Virginia in charge of product development.
  • Member of the American Council of Life Insurance (ACLI) Task Force on Cost Disclosure 
  • Member of the National Association of Insurance Commissioners (NAIC) Advisory Group on Illustrations

1993 - SOA - Sales Illustrations - We Can't Life With Them, But We Can't Live Without Them!, Society of Actuaries - 28p

Senator Metzenbaum:

  • Mr. Rips, you testified that last year the largest group of complaints that you received about life insurance came from people whose policies didn't have the amount of cash value that they had been told and were shown.
  • l am talking about illustrations like those on the charts in this room.

(Geoff Rips, public information director, Texas Office of Public Insurance Counsel)

1992 - GOV - Consumer Disclosure of Insurance  - [PDF-323p]

  • 2000 - NAIC - Suitability of Sales of Life Insurance and Annuities - 33p

Information available from the NAIC, including the following, should be reviewed:
• Examination Jumpstart Reports;
• Special Activities Database (SAD);
• Regulatory Information Retrieval System (RIRS);
• Complaints Database System (CDS) and Complaint Index Report;
• Examination Tracking System (ETS); and
• Financial Analysis and Solvency Tracking System (FAST).

2009-3, NAIC Proceedings

  • Commissioner Tyler said that because one consumer complaint often means that other consumers are also harmed by a particular practice, he would like to know the relationship between consumer complaints and proper market regulation.
    • He said market regulators should leverage consumer-complaint data to ensure that what happens to one consumer is not happening to others.

2009-3, NAIC Proceedings

Examples include:

  • Complainants were sold a whole life policy that provided no short-term liquidity except through loans or surrender.
  • The complainants were in their sixties at the time that the policy was sold.
  • Their stated purpose for purchasing the policy was to provide an income stream upon retirement.
  • The whole life product did not meet these needs and the Department <Vermont> was able to reverse the transaction.  (p125)

2000-1, NAIC Proceedings


  • Once the companies, producers and products are in the marketplace, state consumer service personnel monitor the way in which the marketplace operates by handling consumer inquiries and consumer complaints.
  • The consumer service representatives in state insurance departments are truly the “front line” regulators, as they interact with consumers on a daily basis.
  • In addition to responding to specific consumer concerns, state consumer service representatives also conduct educational outreach efforts.

2012 - NAIC - Existing U.S. Corporate Governance Requirements - 22p

  • Some vague idea of the quality of service to policyholders can be gained from the number of policyholder complaints received, but this is a crude measure at best and represents a measure more of the total breakdown of service than of its quality.

--  Kenneth R. MacGregor

1971 - SOA - Mutual Life Insurance Companies--Their Objectives and Operating Philosophy, Society of Actuaries - 250p

(3) A task force of the Unfair Trade Practices (B4) Subcommittee is considering uniform complaint procedures for state insurance departments.

  • Under a pilot project, several departments have reported complaints by company, type, line, Reason, disposition, etc. on a uniform format to the Central Office. 
  • This information will be fed into a computer and reports generated for the departments so as to identify and document problem companies, evaluate complaint handling procedures, identify unfair trade practice problems, etc.

1974-1, NAIC Proc,


TO: NAIC Members

FROM: Robert E. Wilcox, Chair, Life Disclosure Working Group

DATE: January 21, 1996

RE: Life Insurance Illustrations Model Regulation

  • In December the NAIC membership adopted a new Life Insurance Illustrations Model Regulation to address some of the problems we have all been experiencing as consumers complain that their "vanishing" premiums haven't vanished and the high returns they expected haven't materialized.

1996-1, NAIC Proc. 

  • .....system of monitoring to assure consumer satisfaction should be designed.
  • He asked members of the working group to consider an appropriate mechanism to achieve effective monitoring.

1991-1A - NAIC Proceedings, Life Marketing Practices to Senior Citizens Working Group

  • After a great deal of discussion, it was pointed out that the Data/Systems Management (EX4)Task Force specifically rejected any priority development within the next two years for an NAIC complaint data base system.
  • Mr. Connor noted that he has stressed for a number of years that a complaint data base system was important and needed to be given priority attention by the NAIC.
  • As was pointed out to the Data Systems Management Task Force, a data base was discussed 10 years ago after criticism was leveled at the NAIC by the General Accounting Office.
  • In his report to the Data/Systems Management Task Force in June in Cincinnati, Mr. Connor pointed out that there was mounting pressure in Congress for the NAIC to collect complaint data for Medicare supplement coverages.
  • It was the consensus of the subgroup then, as it is today, that it would be very short sighted to develop a system for a nationwide complaint system for merely one line of business when the problem crosses all lines.
  • The Data/Systems Management Task Force was reminded that the background work on such a system had been completed and that a modified NAIC Uniform Complaint Filing Form is in place awaiting to be computerized onto an on-line system.
  • In summary, it was the consensus of the subgroup that they are in wholehearted agreement and support of the concept behind the collection of complaint information as requested by the Medicare Supplement Working Group.
  • However, a decision to proceed on the development of a complaint data base merely for Medicare supplement insurance would be tantamount to building a large jetliner merely for the purpose of carrying one passenger.
  • The development of an on-line complaint data base on all lines of insurance readily accessible to the states, is a sine-qua-non for the competent scheduling of market conduct examinations.
  •  If the states are to adequately monitor the marketplace and sales abuses such as are seen in the Medicare supplement markets, the NAIC must give high priority to the implementation of such a data base.
  • Such a data base is as essential to market conduct needs as the Insurance Regulatory Information System (IRIS) is to financial examinations. (166)

1990-1A, NAIC Proceedings

  • (p7) - There were 6,118 insurers in the U.S. (including territories) in 2014, including 2,583 P-C insurers, 1,752 life-health (L-H) insurers, and 1,783 other insurers and related agencies.4
  • Given the objective to gauge the service quality of insurers by using the volume of consumer complaints, our analysis focuses on the P-C insurers.
    • Consumer complaints within the L-H industry may correlate only weakly with consumer experience, due to the obvious disconnect between purchasers and beneficiaries of these insurance policies—under life insurance policies claimants typically are not the policy buyer...

2016 - AP - Financial Intermediaries and Consumer Complaints - 61p

4. Discuss Complaint Reconciliation Survey – Next Steps

  • Mr. Belo said the survey is a compilation of all states that have responded to the survey question whether a complaint reconciliation process is in place in their state.
    • He said the question put before the Working Group is whether a best practice regarding complaint reconciliation should be developed.
  • Ms. Brown said the survey shows that there is quite a range among state insurance departments of complaint reconciliation processes.
    • She offered to present Colorado’s complaint reconciliation process as a model for other states to follow.
  • Mr. Ewen said this issue is in the current market regulation accreditation proposal being reviewed by the Special Accreditation Standards Working Group.
    • He said the Working Group needs to determine the best place for discussion of this issue.
  • Ms. Krier said this issue is not currently on the Market Analysis Procedures Working Group’s agenda, and suggested that this issue be forwarded up to the D Committee for review and to determine what Working Group is the appropriate venue for discussion.
  • Commissioner Ario said that since complaints are a part of market analysis, guidance needs to be provided by the D Committee with regard to which Working Group will work on this issue.
    • He said the same group that is reviewing the ICAE paper needs to review the complaint reconciliation survey as well.
    • Commissioner Ario said that he would bring this up at the Special Accreditations Standards Working Group meeting Sept. 22, as well as to the Market Regulation and Consumer Affairs Committee for their consideration. He will report any discussion on this issue back to the Working Group at the next
      scheduled conference call.
  • Mr. Belo said the Working Group can then proceed with how to form best practices with regard to complaint reconciliation.

2009-3, NAIC Proceedings

  • Commissioner Tyler said that because one consumer complaint often means that other consumers are also harmed by a particular practice, he would like to know the relationship between consumer complaints and proper market regulation.
    • He said market regulators should leverage consumer-complaint data to ensure that what happens to one consumer is not happening to others.
  • Mr. Mealer said complaints are included in the adopted market analysis process.
  • Ms. Baker said the Market Regulation Handbook includes the use of consumer-complaint data in the market analysis process.
  • Commissioner Ario said there are two methods of analyzing consumer complaints.
    • He said the first method is to perform statistical analysis of the complaint data and the second method is to have ongoing discussions with a state’s complaint analysts.
    • He said the consumer complaint analysts in a state are a “focus group” that each state should rely on.
  • Mr. Narcini said that because the adopted processes included the use of consumer complaints, they are not specifically mentioned in the proposal.
  • Commissioner Tyler said the requirement in the proposal that a state hold certain items confidential should be eliminated.

2009-3, NAIC Proceedings