The NAIC complaint index: how to look up an insurer

The NAIC complaint index compares how many confirmed complaints state regulators closed against an insurer with how much business that insurer writes. An index of 1.00 is the national baseline: an insurer at 2.00 drew twice its "expected" share of complaints for its size, and one at 0.50 drew half. You can look it up for free in the National Association of Insurance Commissioners' Consumer Insurance Search, and it is one of the few objective measures of how a company treats its customers.

How the index is calculated

The NAIC collects closed complaints from state insurance departments. For each company and line of insurance, such as private passenger auto, the index is:

Complaint index = the company's share of all complaints ÷ the company's share of all premiums

Because it is a ratio of shares, the index for the whole market always works out to 1.00. Companies above 1.00 had more complaints than their size would predict; companies below 1.00 had fewer.

A hypothetical example: suppose regulators closed 10,000 confirmed private passenger auto complaints nationwide in a year, and auto premiums nationwide totaled $300 billion.

Insurer A had twice as many complaints as Insurer B in raw numbers, but Insurer B drew complaints at more than twice the rate for its size. That is the whole point of the index: raw complaint counts mostly tell you which companies are big.

What counts as a complaint

The index counts complaints that a state state department of insurance has closed, generally those it recorded as confirmed or justified rather than every phone call or inquiry. States classify complaints by reason, such as claim delays, claim denials, unsatisfactory settlement offers, premium and rating questions, and cancellations or nonrenewals. The reason breakdown is often more useful than the index itself: a company with many "unsatisfactory settlement" complaints tells you something different from one with many billing complaints.

How to look it up, step by step

1. Get the exact company name from your declarations page or quote. A brand such as a national carrier is a group of several legal companies, and the index is reported company by company.
2. Open the NAIC Consumer Insurance Search and search by company name. You can narrow results by state.
3. Pick the matching company. The tool warns that insurers often operate under several subsidiary names; choose the one on your policy, then use the report options link.
4. Open the closed complaint reports. Look for the private passenger auto line, the complaint index, the number of complaints, the reasons, and the year.
5. Check several years. One bad year can be a blip; a pattern is meaningful.
6. Compare with competitors you are quoting, using the same line and years. Our compare auto insurers side by side can hold the results side by side.

Reading the number fairly

• Small companies swing more. A regional insurer with modest premiums can jump from 0.50 to 2.50 because of a handful of complaints. Look at the count, not just the ratio.
• Line matters. A company's homeowners index says little about its auto claims. Use the private passenger auto figures.
• Company vs group. The company on your policy can have a different record from its sister companies. Make sure you are reading the right one.
• National vs state. The NAIC index blends all states. A company can perform differently where you live; your own state's data, where published, adds that view.
• Data lag. Complaints are counted when they close, and a full year's figures can only be compiled after that year ends. The newest available year may already be a year or two old; note the year when you record it.
• Not a measure of price or solvency. Pair it with a financial strength rating; see AM Best financial strength ratings explained.

Putting it to work while shopping

Say you have three quotes within a few dollars of each other. A sensible way to use the index is as a tiebreaker and a warning light, not a ranking:

• If one company's private passenger auto index has been well above 1.00 for several years running, and the complaint reasons are mostly about claims, give that weight; claims are why you buy insurance.
• If an index is high in one year only, or rests on a handful of complaints, treat it as noise and look at other evidence.
• If indexes are all near or below 1.00, decide on price, coverage and service model instead.

Combine the index with a financial strength rating and, where available, claims satisfaction studies. No single number captures how a company will treat you.

State complaint data

Several states publish their own complaint measures, which can be more current or more local than the national index:

• Texas: the Texas Department of Insurance publishes complaint data, including complaint indexes and policy counts by company and line of coverage, and links to the NAIC reports.
• California: the California Department of Insurance publishes an annual Consumer Complaint Study that ranks auto, homeowners and life insurers by justified complaint ratio over the past three years.

Check your own state insurance department's website for similar reports. The full list of regulators is in the NAIC's state insurance department directory.

How your complaint feeds the index

If you file a complaint with your state and it is confirmed, it becomes part of the data behind the index, which is one reason filing matters even after your own problem is resolved. See how to file a complaint against a car insurance company. For the complete pre-purchase checklist, see how to research a car insurance company before you buy.

Key takeaways

• The NAIC complaint index divides an insurer's share of confirmed complaints by its share of premiums; 1.00 is the national baseline.
• Above 1.00 means more complaints than expected for the company's size; below 1.00 means fewer.
• Look it up free in the NAIC Consumer Insurance Search, using the exact company name on your policy and the private passenger auto line.
• Check several years and the complaint count, especially for small insurers whose index can swing widely.
• Texas, California and other states publish their own complaint data that can add a local view.