Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 14, 1990                   TAG: 9006140488
SECTION: BUSINESS                    PAGE: B9   EDITION: METRO 
SOURCE: DIANE LEVICK THE HARTFORD COURANT
DATELINE:                                 LENGTH: Medium

INSURANCE BUSINESS FOUND FULL OF ERRORS

Insurance departments across the United States have quietly been increasing their investigations of companies' conduct, and the findings are sometimes alarming.

An industry that boasts state-of-the-art technology and quality customer service often charges customers too much or too little, cancels policies improperly and violates many other state laws, regulators say.

Regulators believe most of the errors are unintentional. Some companies undercharge more than they overcharge.

The national total of overcharges is unknown, but regulators think it is well into the millions of dollars. They see only random samples. Overcharges to individual consumers range from a few dollars to hundreds.

The problems have surfaced in "market conduct" examinations by insurance departments, which review individual companies to see how they are treating customers.

Some of the best-known companies have been found to overcharge or undercharge one out of three or one out of four auto insurance customers in some random samplings.

The studies also found that insurers pay too much or too little on certain claims and fail to give customers enough notice of new premiums before policies are renewed.

Insurers admit they have made errors but say they correct them when notified and still believe they do a good job of serving customers.

"Examinations are meant to look at the flaws," said Richard D. Broome, counsel for Aetna Life & Casualty Co. "You shouldn't take the problems they've uncovered to mean we don't do a very good job."

Companies blame human error, faulty computer programming, the complexity of premium calculations and difficulty in complying with new laws.

J. Robert Hunter, president of the National Insurance Consumer Organization, said he is not surprised by the frequency of insurers' errors, attributing them to multiple-level bureaucracies.

"You can be incompetent and have integrity," Hunter said. "You know what the road to hell is paved with."

When they find mispricing or other errors, regulators fine insurers. The fines are seldom more than $100,000 in most states, and usually much less.

Even a $50,000 fine, Hunter joked, is a "corporate lunch" to a major insurer. Such fines would be more effective if insurance departments publicized them, he said.

"The only way to effect change is to hit them in the wallet or in the public relations area," Hunter said.