The Washington Office of the Insurance Commissioner (OIC) is proposing claims handling rule changes following an uptick of consumer complaints in recent years, according to a meeting notice.
“The spike in consumer complaints and lawsuits against insurers indicates potential insurance code violations,” the notice says. “In the midst of a changing technological and workforce environment, rulemaking may update and clarify requirements to maintain a fair claim environment for consumers that will provide transparency into the decisions that affect their financial recovery.”
Justin Lewis, president of the Washington Independent Collision Repair Association (WICRA), said the state’s new insurance commissioner, Patty Kuderer, is taking steps to update unfair claims practices for the current market.
“We are extremely excited that the new commissioner is taking into account the complaints of the consumers, and it looks like she has drafted some very positive changes that are going to help ensure that future claims are handled in a more fair and quick manner,” Lewis said.
A meeting on the rule changes will be held virtually on Thursday at 10 a.m. Pacific Time. Those interested in attending can register here.
The changes would extensively update Washington Code 284-30-300 through 284-30-395.
If the OIC finalizes the rule changes, insurers would be required to acknowledge receipt of a notice of a claim within five business days, or within 10 business days under a group insurance contract. Currently, insurance companies have 10 days for individual claims and 15 days for business claims.
It would also require insurance companies to respond to estimates, supplements, and final bills within three days. Previously, insurers had 10 days to respond to each.
“We have some insurers who push it to 10 days for every one of them, so the 30-day rental coverage is exhausted after a preliminary estimate, supplement, and a final bill,” Lewis said. “We don’t even touch the car, and the rental coverage is expired, just trying to wait for insurers.”
The rule changes would also require insurers to notify a claimant in writing if they need more than 30 calendar days to complete the investigation of a claim. It would be required to include the reasons it cannot complete the claim within 30 days, including every item the company is waiting on to complete its investigation of the claim.
Additional notice would be required to be sent every 30 days.
Insurers would be required to provide the database or survey it uses to decide either material pricing, labor rate, or both, upon the request of the claimant. It should include where the data was collected, which businesses provided the data, and whether the business will honor the price provided if the insured were to consider using them.
Lewis said this could provide some transparency in how insurance companies complete surveys.
“Industry concern has been raised by the potential of selective rate surveying,” Lewis said.
Insurers would also be required to notify claimants if they are using photo estimating, and to inform claimants that they can request an in-person inspection of their vehicle. Insurers would not be able to require photo-based estimating as a condition of coverage.
“When a claimant has utilized the virtual inspection process and there is a disagreement on the amount of loss, the insurer must accept the claimant’s request for an in-person inspection and conduct the inspection of the vehicle within five business days for any vehicle determined unsafe to operate and within 10 business days for any vehicle determined safely operational,” the proposed rule change states.
WICRA presented a survey of members about the impact of photo estimating on their businesses to the OIC in July 2023 during a workshop.
On average, the 30 independent shops said they see more than 1,000 photo estimates at their businesses each month. About 93% of auto claims were settled solely on the insurer’s review of photos.
Eighty percent of the shops said none of the photo estimates they reviewed were accurate.
Seventy percent of shops said they had to resubmit information to the insurer multiple times before receiving a response or payment.
During the workshop, former Insurance Commissioner Mike Kreidler commented, “I believe we have some serious issues right now. We’ve seen a 63% jump in complaints about claims issues, on average… I know supply chain issues have caused some repair delays, but I’m especially concerned with the increase in consumers with complaints about the claims experience that do not involve supply chain problems… Some of the most concerning issues we’re hearing involve the issue of the use of photos that can produce very little repair estimates. Actual human adjusters are not inspecting the damage, and insurers are not thoroughly explaining why they disagree with a consumer’s repair estimates.”
The OIC also previously reported a historic volume of complaints since 2021, according to a trends report released in July 2023.
Insurers will be required to clearly explain how storage and towing fees are covered under the policy within three business days of the notification of the claim, the proposed rule says. Jeff Butler’s auto repair shop, Haury’s Collision & Vintage, in Washington State, sent a letter to legislators in 2023 about a vehicle abandoned at his shop by Safeco/Liberty Mutual that was incurring thousands in storage fees.
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Featured image: Screenshot of Commissioner Patty Kuderer testifying during a Washington House Consumer Protection and Business Committee meeting.
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