Two-Thirds of Closed Consumer Insurance Complaints Since 2021 Have Resulted in Settlements or the Insurer Being Overturned — Here Are the Breakdowns

Insurance often provides peace of mind and protection, but that may come with headaches for some consumers.

As of June 22, consumers’ top insurance complaints this year included claim handling delays, claim denials and unsatisfactory settlements, according to a ValuePenguin analysis of National Association of Insurance Commissioners (NAIC) data provided by state insurance departments.

Here’s what else we found.

Key findings

Claim handling delays are the top insurance complaint so far in 2023

There are various reasons why consumers file complaints against insurers. This year, consumers are particularly likely to say insurers are taking too long to process their claims. As of June 22, 2023, there were 7,751 closed complaints related to claim handling delays. That means 22.8% of closed insurance complaints were related to claim handling delays — the highest percentage among complaint types.

Why might insurers put off a claim? Delay tactics are seen as common among insurance companies as a way to save money and pressure policyholders to accept lower settlement amounts than they deserve. That money-saving tactic — while not necessarily ethical — may be more prevalent as insurers across most industries grapple with financial losses, largely due to inflation leading to higher settlements and less revenue.

To be fair, not all claims are delayed with bad intentions. Insurance adjusters may also have high caseloads, leading to longer response times.

Insurance complaints in 2023 by complaint type

The next biggest complaint was claim denials, accounting for 3,743, or 11.0% of the total.

Part of this again could stem from cost-saving measures, with many insurers turning to tools like automation to quickly deny claims with little review.

A 2023 study by Kaiser Family Foundation (KFF) found that 17% of in-network qualified health plan (QHP) claims were denied in 2021, with denial rates ranging from 2% to 49%, on average, depending on the issuer. And, despite the potentially high financial impacts that may have on consumers, just 0.2% of claims were appealed.

Unsatisfactory settlements and offers make up the third-highest complaint in 2023. They account for 3,356 closed complaints, or 9.9% of the total. As with the first two, profit-driven motives and the complex nature of the insurance claim process likely play a role here.

Overall, 70.9% of closed insurance complaints in 2023 have involved claim handling — and they represent six of the top 10 complaints.

35.6% of complaints this year have been filed against accident and health insurance providers

Which insurance types are consumers complaining about the most? As of June 22, 2023, 35.6% of insurance complaints have been filed against accident and health insurance providers. That’s up from 29.0% in 2022 and 26.9% in 2021.

That may be unsurprising given that rising costs have widely impacted insurance providers, leading to more claim delays, denials and lower payouts.

That’s particularly true for health insurance providers. According to another ValuePenguin study on health care expenditures, medical spending increased 14% between 2016 and 2019 alone — a trend that likely continued in the years we examined here. As medical spending continues to rise, insurance providers may be attempting to recoup losses through claim handling.

Insurance complaints by coverage type, 2021 to 2023

Auto insurance follows, with auto insurers receiving 31.2% of closed complaints so far in 2023. Similarly, increased repair costs, supply chain issues and labor shortages across the auto industry have led to higher premiums and slower claim processes, likely leading to more complaints.

Homeowners insurers have received the next highest percentage of complaints in 2023, at 24.4%. These providers have experienced record-setting claim payouts and financial losses due to worsening hurricane and wildfire seasons, unexpected cold snaps and other climate-related disasters. In fact, an early 2023 ValuePenguin survey on weather damages found that 70% of homeowners insurance claims were due to weather-related damages.

When severe weather strikes, homeowners insurers likely receive an influx of claims, which may cause delays in handling or payments. Additionally, coverage complaints may be common here — particularly as many homeowners wrongly assume certain weather-related disasters (like floods) are covered under their homeowners insurance.

By coverage detail, private passenger auto insurance received the most complaints

Breaking that down even further by coverage detail within the types, private passenger auto insurance (which covers personal usage vehicles) received the most complaints this year. So far, 7,922 complaints have been filed under this coverage detail. That makes up 15.2% of total complaints.

This comes alongside a rise in car insurance rates. According to ValuePenguin’s state of auto insurance, auto insurance rates were expected to rise by 8.4% in 2023 — the biggest jump in rates in the past six years. This rise (alongside potential claim delays, denials and low payments) may have led to an increase in complaints.

Insurance complaints in 2023 by coverage detail

Following that, general homeowners insurance also makes up a large portion of complaints at 6,118, or 11.8% of total complaints. That’s followed by individual accident and health insurance, which has received 4,959 complaints so far (or 9.5% of total complaints).

Majority of closed complaints end in a win for the complainant

There’s some good news for consumers: Insurers rarely see their decisions upheld during a complaint. From 2021 through June 22, 2023, 28.6% of closed complaints ended with a compromise settlement between the complainant and the insurer. These settlements are usually lump-sum payments.

Following that, the insurer’s position was overturned in 22.3% of closed complaints, and 16.8% ended with settled claims. (It’s important to note that state insurance departments voluntarily submit data to the NAIC, so states may categorize dispositions differently.)

Putting these dispositions into context may help. Suppose a health insurance provider denied a claim for a consumer’s weight loss medication because it didn't deem it a medical necessity. In that case, the company may reach a settlement with the consumer (like a payment to cover the consumer’s out-of-pocket costs for the medication), or the company's decision to refuse coverage may be overturned upon review of the complaint.

Insurance complaints by disposition, 2021 to 2023

Meanwhile, the insurer’s position was held in just 10.2% of complaint dispositions. Good news for the consumers: That may be due to the regulatory environment surrounding insurance. Insurers are required to follow state laws and regulations, many of which include provisions for fair claims settlement and practices.

According to ValuePenguin insurance expert Divya Sangameshwar, it’s clear most consumers who file complaints are getting resolutions for their issues with their insurer.

"The key takeaway is that we have options to advocate for ourselves if our claims are denied or delayed or if we’re not getting the responses we were expecting from our insurers," she says. "However, it’s important to note that filing a complaint doesn’t guarantee you’ll get what you were hoping for."

Prompt payment complaints rose the most between 2021 and 2022

Delays in claim handling are the most common complaint this year, though not the fastest-growing complaint. Between 2021 and 2022, complaints about prompt payments rose 52.3%.

Meanwhile, complaints about access to care rose by 51.4%, making this the next fastest-rising complaint. Finally, complaints about recoupment — a request for a refund when an insurer has overpaid — rose 49.0%.

Fastest-growing complaints between 2021 and 2022

Again, the rise in these complaints may be due to the economic challenges within the insurance industry: Lower financial performance likely impacted insurers’ ability to promptly pay claims or resulted in more recoupment efforts to help offset financial losses.

Additionally, many state laws and regulations include provisions for prompt payment and access to care. This increase in complaints may result from insurers struggling to comply with these regulations.

Filing an insurance complaint? Here’s what to know

If you’re dissatisfied with the actions of your insurance company or insurance agent, speaking up is vital and — as the data shows — often a successful endeavor. If you’re looking to file a complaint, Sangameshwar says to do so with your state insurance department. Here’s a checklist: