What frustrates people most about their insurer? 68% of complaints deal with filing a claim

What frustrates people most about their insurer? 68% of complaints deal with filing a claim

As a product you hope never to use, insurance occupies a unique spot in the consumer mindset. As long as all goes well and rates are affordable, most people stay happy — but when accidents or disasters happen, frustrations can pile up quickly.

Claims handling was the biggest area of concern among consumers, with issues regarding underwriting a distant second

Overall, the complaint data showed that insurance customers were most likely to encounter problems when filing a claim. We found that 68% of all complaints involved claims issues, such as low settlement offers (how much an insurer pays you when you make a claim), delays during the claim process and outright claim denial.

It's no surprise that claim issues got the most attention among consumers. Handling one of these covered events, such as a car accident or theft in the home, is stressful enough. But the promise of getting fair and prompt reimbursement after a loss is the reason you buy insurance in the first place.

The second-most common area of complaint was underwriting, which is how an insurer assesses a customer's risk. It determines how much a customer pays and whether their policy will be renewed after filing a claim.

This category only accounted for 17% of complaints nationwide. But it relates to claims, too, because insurers may cancel a policy if a customer files frequent or expensive claims.

Most common insurance complaints among major insurers

RankComplaintComplaint areaNumber of complaints in 2019
1Unsatisfactory settlement/offerClaim handling890
2DelaysClaim handling834
3Denial of claimClaim handling550
4Adjuster handlingClaim handling313
5Premium and ratingUnderwriting166
6CancellationUnderwriting161
7NonrenewalUnderwriting157
8SurchargeUnderwriting142
9State specificClaim handling126
10 (tie)Comparative negligenceClaim handling118
10 (tie)Premium refundPolicyholder service118

Claims problems are especially bad in Vermont and Missouri, but some states have other issues

Some states had bigger claims problems than others. Among the complaints we looked at, every single one filed in Vermont involved claims. And in Missouri, every complaint except one dealt with claims.

Top 5 states with frequent claims-related complaints

RankState% of complaints that were about claims
1Vermont100%
2Missouri99%
3West Virginia94%
4Montana91%
5Arizona86%

There were a few states that bucked the national trend, however. For example, 79% of complaints in Maryland were related to underwriting, especially nonrenewal and insurance surcharges. In fact, Maryland had the most complaints of any state except California — a state more than six times its size.

Half of the complaints in Nevada related to policyholder service. In particular, customers were often unhappy with billing practices and how they were notified about their premiums.

Overall, the states with the most complaints tend to be populous and experience a lot of natural disasters, such as California (which experiences wildfires) and Florida (frequently gets hurricanes).

RankStateNumber of complaintsTop complaint
1California772Unsatisfactory Settlement/Offer
2Maryland298Surcharge
3Florida297Delays
4Texas277Delays
5Georgia200Adjuster handling
6Colorado187Unsatisfactory settlement/Offer
7Oklahoma168Unsatisfactory settlement/Offer
8Louisiana144Delays
9Ohio137Delays
10New Mexico125State specific
Complaint totals are based on the number of complaints filed to the top ten P&C insurers nationwide in 2019.

What bothers people most about your insurer?

Customers at all 10 insurers were most likely to gripe about a claims-related issue, but not every insurer had the same distribution. About three-quarters of complaints directed at GEICO dealt with claims, typically with claims delays and unsatisfactory settlement offers.

Conversely, Chubb customers were much less likely to complain about a claims issue. Only 43% of complaints made about that insurer involved claims. Instead, customers said they weren't happy with the sales and marketing process. "Misrepresentation" of coverage offerings was the single most common complaint among Chubb customers, and Chubb received more complaints regarding this issue than any other insurer we looked at.

Most common insurance-related complaints among the top ten American insurers

CompanySingle most common complaint
AllstateDelays
FarmersUnsatisfactory settlement/offer
ChubbMisrepresentation
GEICODelays
Liberty MutualAdjuster handling
NationwideDenial of claim
ProgressiveUnsatisfactory settlement/offer
State FarmUnsatisfactory settlement/offer
TravelersUnsatisfactory settlement/offer

Which companies have the least (and most) complaints?

While customers may find a number of reasons to be dissatisfied with their insurer, what matters most to consumers is how often an insurer receives a complaint at all. That's where the NAIC's Complaint Index comes in: It compares the number of complaints an insurer has received with its size.

When controlling for size, Nationwide has the fewest complaints among top insurers for car insurance, and Chubb has the fewest complaints for home insurance.

Nationwide has a Complaint Index for car insurance of 0.43. That means Nationwide car insurance customers are only 43% as likely to file a complaint as they would at another insurer.

And for home insurance, Chubb has a home insurance Complaint Index of just 0.15. Chubb customers only file complaints 15% as often as customers of a typical company.

On the other hand, other insurers didn't fare as well. Liberty Mutual car insurance customers are 96% as likely to file complaints as a typical insurance customer — which still beats the national average.

And for home insurance, Allstate had a national Complaint Index of 1.2 — that's worse than the average insurer nationwide.

InsurerAuto Complaint IndexHome Complaint Index
Allstate Corp.0.61.2
Chubb0.510.15
Farmers0.860.34
GEICO0.81--*
Liberty Mutual0.960.75
Nationwide0.430.21
Progressive0.78--*
State Farm0.69--*
Travelers0.620.32
USAA0.690.25
*The subsidiaries we researched for these companies do not offer homeowners insurance, though other divisions of these companies may offer it.

The NAIC Complaint Index is one of the main ways we evaluate customer service quality from insurers, as it's an objective way to compare service across multiple insurers nationwide. Ratings are weighted toward claims performance, since customers are most likely to file complaints about this.

Methodology

To perform this analysis, ValuePenguin collected complaint data from the National Association of Insurance Commissioners from the 10 largest property and casualty insurers in the country. We based our comparison on each insurance group's largest overall property and casualty subsidiary.

Not all state insurance agencies consistently report data to the NAIC. For our state-level analysis, we excluded any state with fewer than 10 complaints in 2019. Those states were Alaska, District of Columbia, Idaho, Hawaii, North Dakota, Rhode Island, South Dakota, Utah and Virginia.

NAIC complaint reason data is not sorted by type of insurance, so these complaints may apply to homeowners insurance, car insurance or another type, though the majority of complaints logged are for those two.

Companies included:

  • Allstate
  • Farmers
  • Chubb
  • GEICO
  • Liberty Mutual
  • Nationwide
  • Progressive
  • State Farm
  • Travelers
  • USAA

Matt is a Technical Writer at ValuePenguin who works on distilling the complex details of insurance into accessible advice. He previously created educational content at Grovo Learning and MarketSmiths Content Strategists. Matt's consumer-focused analysis of insurance has appeared in publications like CNBC, Yahoo Finance and the Miami Herald.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.