Get Your Claim Paid: Who's Supposed to Resolve the Disputes?

If getting your claim paid is an inherently conflicted proposition, shouldn't some disinterested third party be available to resolve disputes? Yes. This party is usually your state's Insurance Commissioner -- who doesn't always satisfy everyone.

One of the goals of insurance market regulation is to protect consumers from unfair practices in insurance claims settlement. Insurance contracts are complex legal documents which are often difficult for consumers to understand, and it is not uncommon that disputes over the existence or amounts of coverage arise during the claims settlement process.

Unlike most financial industries, insurance is regulated on a state-bystate level rather a national one. (This is a vestige of government policies of a hundred years ago. There was talk during the 1990s of changing the regulatory structure...but various interested parties objected.)

As a result, state Insurance Departments combine responsibility for industry regulation and consumer advocacy. It's a tough mix; and most Insurance Commissioners tend to focus on one part or the other.

If consumer advocates don't like a commissioner, they will complain that the fox -- beholden to big-money insurance companies -- is guarding the henhouse. If the insurance industry doesn't like a commissioner, it's spokespeople will complain that an opportunistic politician is destroying the marketplace.

And the response is usually one way or the other because not all insurance commissioners are alike.

Florida's commissioner puts on a baseball cap and goes undercover to bust crooked agents; but California's takes a more buttoned-down approach to fraud -- focusing on crooked claimants.