Customer complaints: Fred Loya Insurance above average but far from highest [El Paso Times, Texas]

July 22--When the El Paso Times several weeks ago published a story about Fred Loya Insurance being fined by state regulators for violating state insurance laws, several people chimed in online with complaints about the El Paso company -- a major auto insurance provider and large employer.

One writer said Loya had the most consumer complaints of any auto insurance company in Texas.

That's not the case. But Loya does rank high on a complaint index compiled by the Texas Department of Insurance.

Loya had the 10th-most complaints among Texas auto insurance providers last year, the agency's data show.

It had the second-highest complaint rate among the largest insurance providers, those with at least 200,000 auto insurance policies in force in Texas, an El Paso Times analysis of the index data found.

The 38 justified consumer complaints against Loya received by the Texas Department of Insurance last year produced a complaint rate well above the state average when the company's 209,712 auto insurance policies in effect in Texas in 2011 were factored in.

Some of the largest companies with many more policies in effect had much lower complaint rates than did Loya.

But Loya's

complaint rate and number of complaints declined substantially last year. Loya's complaint rate was more than triple the state average from 2007 through 2009, and dropped to around double the average in 2010.

Last year, its complaint index, calculated by the Texas Department of Insurance, was 1.58, with 1.0 the state average. In 2007, when it had 123 complaints, its complaint index was 3.63 --almost four times as much as the state average.

And while Loya's complaint rate remains above average, it's well behind the state's complaint leader for auto insurance: Old American, a Dallas-based company. Last year, Old American had 249 justified complaints, and a complaint index of 3.83. The company has been on top of the state complaint index for several years.

Old American officials had no comment on the company's complaints standing.

Loya officials also had no comments last week on the issue.

Loya recently paid a $300,000 fine after insurance regulators determined the company in the past used false advertising, and failed to follow required criteria for customer discounts. Loya did not admit any wrongdoing in its settlement with the state.

Jerry Hagins, a spokesman for the Texas Department of Insurance in Austin, said the agency's complaint index gives consumers an indication of a company's customer service. It's one way to judge an insurance company, he said.

"We encourage people to look at other things other than price" when shopping for insurance, Hagins said.

A company's financial status is another important consideration. The agency's complaint index provides links to companies' profiles, which include some financial data.

The index includes complaints deemed justified by the agency, which means the complaint was investigated by the agency and a violation of the insurance code was found or policy requirements weren't met, he said.

"We want consumers to get a sense if a company is above or below average (for complaints), and this index evens the playing field for big and small companies," Hagins said. "A big company may have more complaints, but more policies," and this is a mathematical way to communicate that, he said.

Joseph McCormick, a Texas spokesman for Allstate Insurance, one of the state's largest insurers, said the 114 complaints listed on the state Complaint Index for Allstate is small considering the number of policies it has in Texas. The index shows Allstate had more than 900,000 auto insurance policies in effect last year spread over five Allstate companies.

"It's a small number of complaints, but we are striving to get that number lower in 2012," McCormick said.

Allstate offers a "claim satisfaction guarantee," he said. If a customer is not satisfied with a claim settlement, he or she can get a refund for the cost of the customer's six-month policy term for the insured vehicle involved with the claim, he said.

The state Complaint Index doesn't provide specific complaint information for companies. But state data show that the top complaints for most companies are delays in claims processing, unsatisfactory settlements/offers, and claim denials, Hagins reported.

Allstate's complaint rate ranged from 0.80 to 1.41 for its five Texas companies on the state index. The Allstate company with the most auto policies (405,262) had a complaint rate of 1.14, slightly above the state average (1.0). That ranked fourth-highest among companies with at least 200,000 Texas policies in 2011.

Allstate, like several other large insurance groups, has several separate companies listed on the Complaint Index.

"Over time, Allstate has closed companies to new business when a new company was opened after a new policy type or rating plan was developed," McCormick said.

"The different companies can also contain different lines of vehicle insurance -- auto, motorcycle, recreational vehicle."

Patti Kelly, a Texas spokeswoman for State Farm Insurance, the largest provider of auto insurance in Texas, said the company takes complaints seriously and "will work closely with our customers to reach a fair resolution."

State Farm's 125 complaints was the second-highest among companies on the Texas index. Those were spread over three State Farm companies, which were created to cover varying levels of risk, Kelly said. But the complaint rate for its largest company, with more than 3.1 million auto insurance policies, was 0.31 -- one of the lowest on the index.

Vic Kolenc may be reached at vkolenc@elpasotimes.com; 546-6421.

Complaints rate

Companies with at least 200,000 Texas auto policies ranked by state Complaint Index rate (1.0 is state average). Index rate is followed by number of justified complaints, and number of Texas policies in 2011:

1. Old American, Dallas: 3.83 complaint rate, 249 complaints, 566,063 policies.

2. Fred Loya, El Paso: 1.58, 38, 209,712.

3. Home State, Waco: 1.35, 58, 375,040.

4. Allstate Fire and Casualty--, Northbrook, Ill.: 1.14, 53, 405,262

5. USAA Casualty--, San Antonio: 1.06, 25, 205,681

6. Allstate Indemnity, Northbrook, Ill., 0.94, 25, 230,820

7. USAA, San Antonio: 0.80, 23, 251,252

8. Consumers, Dallas: 0.72, 18, 217,409

9. Progressive, Mayfield Village, Ohio: 0.71, 78, 960,731

10. GEICO----, Washington, D.C.: 0.69, 39, 490,164.

Sources: Texas Department of Insurance Complaint Index; El Paso Times analysis.

--Allstate has five separate companies on state index; two have more than 200,000 policies.

--USAA has three separate companies on state index; two have more than 200,000 policies.

----GEICO has three separate companies on state index; one has more than 200,000 policies.

Total complaints

Auto insurance companies ranked by total number of complaints. Number of complaints followed by state Complaint Index rate (1.0 is average), and number of Texas policies in 2011:

1. Old American, 249 complaints, 3.83 complaint rate, 566,063 policies.

2. State Farm--, 125, 0.31-10.33--, 3,399,745.

3. Allstate----, 114, 0.80-1.41, 901,357.

4. Farmers----, 91, 0.57-7.43------, 1,369,315

5. Progressive, 78, 0.71, 960,731

6. Driver's, Duluth, Ga.: 76, 72,599, 9.12

7. Home State, 58, 1.35, 375,040

8. USAA------, 57, 0.80-1.06, 539,944

9. GEICO--------, 55, 0.52-1.11, 633,610

10. Fred Loya, 38, 1.58, 209,712

Sources: Texas Department of Insurance; El"Paso Times analysis.

--Complaints for three State Farm companies, and range of complaint rates for each company.

--10.33 rate is one complaint for 843 policies for State Farm Fire and Casualty Co.

----Complaints for five Allstate companies, and range of complaint rates.

----Complaints for two Farmers companies.

------7.43 rate is two complaints for 2,345 policies for Farmers Insurance Exchange.

------Complaints for three USAA companies.

--------Complaints for three GEICO companies.

More information-- tdi.texas.gov/consumer/cpportal.html

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