Variances: Preparing to Address Issues of "Customer Service" under Variance 3(a)

In assessing a request under Variance 3(a), which permits an insurer to use a different efficiency standard due to higher  "quality of service" (as demonstrated by objective measures of consumer satisfaction), insurers should not delay in considering where they stand in the latest industry reports (such as those issued by J.D. Power and Associates) and what may be reflected in their market conduct examination reports.  Based upon recent rate approval hearings, it is evident that the CDI and the intervenor will be looking at these resources to rebut any claims by an insurer that they provide good high or superior service. 

For instance, in a recent petition for hearing and intervention, the intervenor cited to relied upon J.D. Powers and Associates's 2007 Homeowners Insurance Study (press release here) to show that a particular insurer may have only have average or less than average customer service.  (Obviously, depending upon where a particular insurer sits on this report, this report could help or hinder its efforts to obtain a variance for good service.)  A J.D. Powers and Associates' study concerning the auto line was also referenced in another rate approval hearing. 

Market conduct examination reports have also come up and used as evidence of "poor" or "bad" customer service.  From the perspective of the CDI and the intervenor, there are a whole host of issues in relying upon such reports, including the fact that their contents are not "facts," but rather reflect "alleged" violations that have not adjudicated, rebutted or proven.  Further, there are significant hearsay, foundation and relevance issues that arise from using these reports, particularly as the parties and the ALJ will obviously not be privy to the actual documents that were reviewed in coming up with these reports and the reports themselves are non-specific and generalized.

Notwithstanding the evidentiary issues (of which, only some are discussed above) that may arise in connection with the use of such studies and reports, every insurer can safely assume that their public reports will still be reviewed and used in opposition to a variance request.  Steps should be taken now to explore what options are available to augment a future request for relief under this variance.