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Ask Commissioner Donelon About General Department Information


 

A friend of mine was recently checking over his insurance policies, and he said it's a good idea to review your insurance periodically, especially with the rise in fake insurance. What can I do to make sure I am properly covered?

Your friend is right. It is a good idea to check over your insurance policies at least once a year, and the beginning of the new year is a good time to make sure all of your affairs are in order and all of your insurance needs are covered. That's why the Louisiana Department of Insurance, along with the National Association of Insurance Commissioners (NAIC), encourages you to "Get Smart" about your insurance coverage during Get Smart About Insurance Week, Jan. 24-28, 2005.

Here is a list of some important things you should consider to Get Smart about your insurance.

1. Contact us here at the Department of Insurance.
The Louisiana Department of Insurance works for you. We are an unbiased source for information that can help you understand what you need and should expect from your insurance policies and providers.

2. STOP. CALL. CONFIRM...before signing up for any new policies. Call the Department to verify that the insurance company and producer you are dealing with are legitimate and licensed to do business in Louisiana.

3. Schedule a routine insurance check-up.
It is a good idea to get with your insurance providers at least once a year to make sure you have the right insurance, in the right amounts, to adequately protect you and your family. Be sure to let them know of any changes in your life, such as marriage or a birth in the family.

4. Dig for discounts.
Ask your producer about ways you may be able to reduce the cost of your coverage. Some companies offer discounts for such things as good driving, good grades, special education and training, safety equipment, as well as discounts for multiple policies and healthy lifestyles. Also inquire about the cost benefit of opting for higher deductibles.

5. Filing a complaint.
If a claim has not been resolved to your satisfaction in a reasonable amount of time, contact us at the Department of Insurance. Often, your questions can be answered without a written complaint. However, if you feel you need to file a formal complaint, contact us for a complaint form and a copy of our brochure, How to File an Insurance Complaint.

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I can't find an insurance company that will sell me the coverage I need. Don’t I have any rights?

You have the right to apply for insurance, but insurance companies also have the right to refuse to write you a policy if you don’t meet their underwriting guidelines. You don’t say what kind of insurance coverage you need, so let’s take a look at three major types of insurance and your right to purchase them.

The Louisiana Automobile Insurance Plan was formed to provide insurance for people who have trouble getting the required auto liability insurance. You have the right to apply for, and receive, coverage through this plan if you have a valid Louisiana driver’s license and have been turned down by other insurers. Any property and casualty insurance producer can complete the application for you. Expect to pay significantly more than you would for a regular policy.

The Louisiana Health Plan operates an assigned risk pool that makes health insurance available to at least some of the people who have been turned down by other health care plans. Also, people who have recently lost their group health insurance through no fault of their own may be eligible for the state HIPAA pool. Because only a limited number of slots are added each year, this coverage may not always be available. Health insurance coverage through these plans is also very expensive. Contact us here at the Department of Insurance for details and other possible options.

The FAIR and Coastal Plans were established for people who are turned down for insurance on dwellings that are at high risk for property damage losses. If you have been unable to get insurance on your home because of where you live, you can apply for coverage through one of these plans. As the name implies, the Coastal plan is especially designed for property along the coast where insurance is hard to get because of the threat of hurricanes and other storms. Any property and casualty producer can help you complete an application for the plan that is right for you. Both plans offer the standard coverage that you would buy from any insurance company. In addition, they cover vandalism, malicious mischief and windstorm damage.

If you have additional questions about the availability of the insurance you need, give us a call here at the Department of Insurance.

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How do I go about filing a complaint against an insurance company that won't pay my claim?

If you have tried everything and still feel you are not being treated fairly by an insurance company or producer, you can file a complaint with us here at the Department of Insurance.

In fact, we have an award-winning brochure called "How To File An Insurance Complaint" that explains how to go about filling out a complaint form. We can mail you a free copy of the brochure along with a complaint form, or you can download both from our web site. Details on how to contact us are listed at the end of this column.

We receive thousands of insurance-related complaints each year. That means we are able to help thousands of individuals and their families get the insurance payments and other insurance-related benefits and services they are entitled to.

The complaint brochure gives a step-by-step explanation of what information you should include on the complaint form and what supporting documents you may need to attach, such as medical bills or vehicle damage estimates. One important thing we emphasize is that you should never send any original paperwork to us, or to anyone else. Do, however, send us copies of anything you think may help us resolve your problem with the insurance company.

Once we have a chance to review your complaint, we may contact you to request more details. Keep a file on everything you send to us and have it where you can get to it if we need to discuss the complaint with you. If we ask you to contact us with more details, remember that we may not be able to continue our investigation if you don't get the additional information to us. Many times, we are unable to help people who contact us because they don't provide some of the critical information we need.

Once you file a complaint, you should get an acknowledgement letter from us in a couple of weeks, and we will keep you updated on our progress during the course of the investigation. Even if your problem is not resolved exactly as you would like, I can assure you that we will have taken all necessary steps to see that you are treated fairly and equitably by the insurance company.

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I keep hearing that citizens should help fight insurance fraud. I know fraud is a bad thing, but what does that have to do with me?

You may be surprised to know that Louisiana law requires you to report any knowledge of insurance fraud to the Fraud Section of the Department of Insurance. Reporting insurance fraud is also in your best interest because it costs you and me money. Statistics indicate that more than 10 percent of every insurance dollar we pay goes to make up for insurance claims fraud.

We follow up on every insurance fraud tip we get, and you can report your suspicions of fraud confidentially. Make your fraud report by calling our toll free number, 1-800-259-5300, and asking for the Fraud Unit, or by calling the Fraud Unit directly at 225-342-4956. Or, fill out your report on the Internet by going to our website, www.ldi.state.la.us, and clicking on Report Fraud.

One of two major sources of information about fraudulent insurance activities is individuals like you. The other major source is insurance companies, who can lose their right to do business in the state if they don’t report suspicions of insurance fraud committed by their employees, producers or the general public.

Individuals usually contact us quickly when they feel their insurance producer is pocketing their money instead of sending it to the insurance company. However, we also need to hear from you and your neighbors if you have reason to believe that someone is committing claims fraud. The bit of information you give us may not seem like much to you, but it could be that one piece of the puzzle that will lead to the conviction of a perpetrator of fraud. For example, in one case, our Fraud Unit received an anonymous tip that a homeowner had submitted a bogus theft claim for valuable personal items that the homeowner still had. That anonymous call started an investigation that led to the arrest and conviction of the guilty parties.

If you have reason to believe that an individual or a group has committed insurance fraud, do your part by passing that information along to us. We’ll do the rest.

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What is the Department of Insurance, and what does it do for the people?

The Department of Insurance is a state agency created by the Louisiana Legislature. One of its major functions is to make sure you get the insurance coverage you are paying for. Regulation of the insurance sellers is especially important because insurance is not a tangible product that you can see and touch. We constantly monitor the insurance industry so that you can be reasonably sure your insurance will be there when you need it.

Here’s a very general overview of how the regulatory process works. First of all, to write insurance in the state, a company must file an application with the Department of Insurance requesting permission to write specific kinds of insurance under specific guidelines. Department staff members check to be sure the applicant is offering the kind of insurance policies Louisiana citizens need and that it has adequate financial resources to pay claims. Background checks are done on the people involved in the company to make sure they meet the high standards the Department has set for the insurance industry. Similar rules apply to anyone wanting to become a licensed insurance producer in Louisiana. Each one must submit an application to the Department, undergo a background check and pass a rigorous written exam.

To remain in business, companies must file quarterly and annual reports for review by the Department. Also, producers must earn continuing education credits to keep their licenses.

One of the best tools we have in monitoring the insurance industry is feedback from people like you. We encourage people to file a complaint with us if they have a conflict with an insurance producer or company that they can’t seem to resolve.

Common causes for complaints are that a company 1) isn’t being cooperative when people file claims, 2) doesn’t pay its claims on time, or 3) denies claims that should be paid. We rely upon the watchfulness of the consumer to let us know about such problems. Fortunately, we often are able to work with the consumer and the insurance company to resolve the complaint to everyone’s satisfaction.

I hope this brief overview gives you some idea of what we do. If you have specific questions about the Department, let us know.

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What kinds of questions should I expect to be asked when I apply for an insurance policy?

You will be asked a number of questions when you apply for any kind of insurance. Take your time in answering these questions. If you fail to give the insurance company full and accurate information, they may reject your application or refuse to pay your claims at some later time.

You will be asked two different kinds of questions. The first type is the familiar demographic question, such as name, age, gender, and address. The second type is specific to the insurance you are interested in. When applying for health or life insurance, you will be asked about your health, any medical procedures you have undergone, your occupation, hobbies, and family medical history.

When shopping for automobile insurance, the insurance company will ask about your driving record, any recent accidents or tickets and the type of car you are insuring. With a homeowners policy, you’ll be asked how much the house is worth, and with life insurance your age and health are the two big questions.

Asking questions provides the insurance company with the answers it needs in two areas. With this information, the insurance can determine whether you and your lifestyle match with the type of insurance the company offers. For instance, some automobile insurers specialize in offering low-cost insurance to very safe drivers and will only insure people whose driving habits fit their criteria of a safe driver.

Secondly, your answers will be used to determine which rate to charge you. For instance, based on your driving record, the insurance company will decide which rate you should be charged. Rates will vary from person to person, but they must always be based on approved underwriting standards that apply equally to every individual applicant.

Now that you understand the reason for the questions insurance companies ask, you should feel comfortable asking the insurance producer to explain if you are presented with a question you feel is unnecessarily personal. A good producer should be happy to explain why any question is relevant to your application.

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I’ve recently gone out on my own and need to purchase insurance. What are some things I should look for when trying to find a producer?

There are several things to think about when starting out on your own. Making sure you have the right kind of insurance is a major concern, so it is important to find a producer and a company you can trust.

A good place to start is to ask family, friends or co-workers who they are insured with and what kind of service they receive. Many times personal referrals are the best way to find a producer. Remember, though, that your insurance needs may not be the same as someone else’s, so take your time and talk to several individuals before you make a decision. We can provide you with a list of producers in your area if you need it.

Many people stay with the same insurance representative for years, so it is important to be as informed about your producer as you are about the policy he or she wants to sell you. One way to do this is to determine if the person is a licensed producer in good standing in Louisiana. You can contact us here at the Department to check on a producer’s credentials.

Another factor to keep in mind is that some insurance producers represent only one company while others offer a choice of insurance carriers. One advantage to doing business with someone who represents more than one company is that he or she can look for the best policy for you and find the best value for your money.

Also ask if the producer works with a full-service agency that can handle all of your insurance needs. You may have only one car to insure right now but that will probably change over time. Some insurance companies offer multiple policy discounts, which could be to your advantage in the future.

No matter how you find a producer or insurance company you are interested in, give us a call before you make a final decision. We can tell you whether any complaints have been filed against the producer or insurance company. We can also give you the company’s rating which will indicate the financial stability of the insurance company.

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My neighbor says she checks up on her insurance every now and again, and she’s trying to get me to do the same. Is this really necessary?

Yes, it is important that you look over your insurance policies once every two or three years to make sure you really have the insurance protection you think you are buying.

On a life insurance policy, for example, write the company for a status report periodically, even if the policy is paid up. Sometimes life insurance companies are bought out by other companies. When this happens, you may need to call us here at the Department of Insurance to get a phone number for the new company. When you make contact with the company, ask for a current status report, in writing. If the report shows that the company will pay out less money at your death than your original company would, ask for an explanation.

On automobile policies, look over the amount of coverage you are carrying at least once a year. If you are carrying the minimum 10/20/10 liability limits and you’ve been doing pretty well financially, you may want to increase those limits to protect your hard-earned assets in case of a serious accident.

With homeowners insurance, keep track of what homes are selling for in your area and adjust your homeowners insurance coverage accordingly if there is a significant change in the prices or if you make improvements in your home that will increase its value.

Most of us have a general idea of what our health care plan covers. But what would your policy actually pay if you had a serious illness? A health care plan may claim to cover a lot of different treatments, but if it also adds steep deductibles and copayments, you may not be getting as much protection as you thought. After all, the bottom line is the amount of money you have to pay out of your own pocket in order to get the best medical care available.

Being well informed about your insurance coverage gives you just a little added insurance against major financial surprises when you have a claim.

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Do you really do something about it when you find out somebody is committing fraud or is involved in other illegal insurance activities?

Yes, we take appropriate action promptly when suspected cases of insurance fraud or other illegal insurance activities come to our attention. Let’s look at some recent examples from our files. One involves a producer charged with fraudulent activities, another is about false claims filed by an individual, and the third concerns an illegal insurance company operation. Notice that in each case the fraudulent or illegal activity was shut down once it was discovered and investigated.

In our first example, it was the insurance producer’s customers who first alerted us. A producer took money from customers but did not turn it in to the insurance company. After several customers became suspicious and called us, we investigated, issued cease and desist orders to stop the producer and his wife from selling insurance, and subsequently suspended his insurance license. Even after the producer was arrested, customers continued to file complaints, which led to additional charges against him.

In another case, a man was charged with six felonies, including staging an accident and submitting false claims, after an insurance company employee noticed he had misspelled the name of a medical clinic on a claim form. An investigation revealed he had falsely claimed he was treated at the clinic after an auto accident that never happened. In reporting the discrepancy to us, the insurance company was complying with a state law that requires insurance companies to report all suspected fraud to the Department of Insurance.

In our third example, an insurance company and related association were found, by the Department, to be operating illegally in Louisiana. We issued a cease and desist order to stop them from selling insurance in the state and called them both into a hearing. They were found to be in violation of the Louisiana Insurance Code, and each was fined $10,000.

If you suspect that an individual or group is guilty of fraud, contact us here at the Department of Insurance. You do not have to give your name.

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I've heard that it is very important that I have a good credit record, even when I go to buy insurance. Why is that?

Yes, it is true that your financial credit record plays a very important role in your life. In the past, your credit rating was just something a bank or other lending institution looked at if you applied for a big loan. But, in recent years, more and more insurance companies have started checking credit ratings before they will sell you an automobile or homeowners insurance policy.

You may think you don't need to worry about such things as you have always had a good credit rating. Right? But what if there is an error on your credit report?

A recent survey reports that as many as 29 percent of all credit reports may have mistakes in them. It's easy to see how some of these mistakes could happen. One person with a bad credit rating may have the same name as another who has a good rating. Or a family member, business associate or former spouse may make a bad financial decision that implicated you when you didn’t do anything wrong, and the list goes on.

Just think about how long it has been since you called your local credit bureau to ask for a copy of your credit report. I wouldn’t be surprised if you said you had never checked on it. Most people haven’t.

So why don’t we check on our credit reports more often? For one thing, it just isn’t that high a priority, and it seems rather silly to call up the credit bureau to ask for information on yourself.

But it’s too late to check when you apply for a loan or an insurance policy that you need right away, only to find that you can’t follow through with the transaction because there is a mixup in your credit history. It may take you weeks, even months, to get the matter straightened out.

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According to ads I’ve been seeing, my local insurance producer is giving seminars that can help me “plan for my golden years of retirement.” Can he do that?

Insurance producers may have additional credentials which certify that they are qualified to help you with financial planning. However, just being a licensed insurance producer is not enough. And mail order training won’t properly qualify a producer as a financial planner, either. Furthermore, producers need to realize that they can lose their licenses or be fined for taking part in misleading or deceptive advertising and sales schemes.

We have received calls from a number of people who have been ripped off by the sales pitches used in these seminars. In one case, an 83-year-old man was talked into buying an annuity that matures in 12 years. He will have to pay heavy penalties if he takes the money out before he is 95 years old. By law, such contracts must mature by the anniversary date following the annuitant’s 70th birthday or 10 years, whichever is later.

Before you waste time going to a seminar or invest in something called a financial or retirement package, insist that the so-called financial planner show you the appropriate credentials. An example would be that a CPA would be able to show proof of state certification.

One thing that makes these seminars suspect is the sensational advertising. Notice that the wording in financial planning seminars sponsored by banks and other financial institutions is usually very professional.

Compare that to seminar advertisements that claim “Grandma is going to be thrown in the slammer” for breaking some law, or that “disgusting and cruel attacks are being made against the elderly,” and “all government programs for the elderly are going bankrupt.” The ads also promise “nobody will try to sell you anything.”

Before you decide to buy a financial planning package of life insurance, annuity contract and/or long term care insurance through an insurance producer, ask several different producers what they have to offer. If one person’s story is very different from another’s, go back to each one and ask why that particular program is best. If they cannot explain why you need their product, then you probably don’t need it.

Meanwhile, call us at one of the numbers listed below to check out any insurance-related advertisement or sale pitch you feel is suspect.

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What is the time limit in Louisiana for filing a claim or a lawsuit against an insurance company?

Generally speaking it is best to always file a claim report with the appropriate party at the earliest opportunity, or as soon as is practical after an accident. This will help to ensure that you receive the best possible cooperation regardless of the kind of claim involved.

Claims generally fall into two basic categories: those you file when someone else is liable and those you file under one of your own insurance policies.

It is always to your advantage to see a doctor right away if you sustain injuries that may involve filing an insurance claim, for two reasons. The first, and most important, is to safeguard your health. Injuries sustained in an accident are not always apparent to the individual. The second reason is to establish a record of the injury. The date, time and circumstances of the injury should be reported by you for the medical records. If you learn later that you were seriously injured and require extensive medical treatment, you have that early medical report to support you.

Even if you file a liability claim against someone else’s insurer, you still have just one year from the date of the accident to file a lawsuit against the individual who caused the accident and the insurance company. After one year the individual or company may no longer be responsible if a suit has not been filed, even if your treatment is ongoing or your claim is not completely settled. The company the claim is filed with is required to advise the claimant of the statute of limitations that applies.

The responsibility of the company is for a longer time period when you file a claim with your own insurer. For example, you may have up to 10 years before your insurance contract is no longer responsible. This applies to contracts where the insurer is directly responsible to you, such as your auto collision, homeowners, health care, and life policies. In one recent case in another state, a court ruling upheld a property damage claim for storm damage to a building even though the hidden damage was not discovered for seven years.

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If I think a person or a business is committing insurance fraud, what should I do?

You should contact us at the Department of Insurance directly with any information you have concerning activities that may involve insurance fraud.

Every shred of information you have is important to us. All tips we receive will be investigated by the Department's Fraud Division. If our investigation indicates that fraud is involved, we will turn the matter over to the appropriate law enforcement or regulatory agency. What you tell us may be that one last piece of information we need to shut down a fraudulent operation.

Insurance fraud is often committed by those we least suspect. For example, a person may risk personal injury by stepping in front of a car or faking a fall to collect insurance money. Others may sell bogus insurance policies, ask for premium payments in cash, and pocket the money. Sometimes people go from state to state, running their own particular insurance fraud scam at every stop.

We work closely with state, national, and international insurance regulators and law enforcement officers to detect, apprehend, and convict all perpetrators of insurance fraud as quickly as possible. Information from people like you helps us do that.

There are a number of ways for you to submit your confidential fraud tip to the Department of Insurance. You may contact the Fraud Investigation Division at the toll-free number or mailing address listed at the end of this article. Or, if you prefer, you can fill out the official Fraudulent Claim Report. You can get a copy by contacting us at the Department or by accessing the form on the Internet at the Department’s web site, also listed below, and you can e-mail your information to the Fraud Division at ldiFraud@ldi.state.la.us. To contact the Fraud Division directly, call (225)342-4956 or send a fax to 342-7393.

Insurance fraud costs us an estimated $120 billion per year in this country, and insurance consumers pay the price in the form of higher insurance premiums. To learn more about other ways you can fight insurance fraud, ask us for your free copy of the Louisiana Insurance Fraud Investigator, a publication outlining the Department's plan for stamping out insurance fraud in our state.

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