• Bob Siems

Data and 27-1001 Bad Faith Claims: How Many Are There? What Happens To Them?


I love data. Data lets us move from suppositions and hunches and anecdotes to firm statements about how things work. And thanks to the MIA, we have data on 27-1001 filings. I've blogged about these before. (See above. I love data). But we have more data now and I have different things to say about it. So...

Let's start with numbers:

These are the adjusted numbers. I subtracted cases where the MIA did not accept the case for lack of jurisdiction or compliance. (Why anyone bothers to file a case that the MIA can't hear and gets it rejected is a whole different question).

These numbers show that basically nobody files 27-1001 claims. This doesn't tell us why nobody files them. Maybe Maryland insurers are particularly honest? Nor does it tell us how this stacks up to other states. Maybe 25 is totally normal? It just tells us that as a matter of absolute volume, Maryland had very few insurance bad faith claims.

The MIA also reported what happened to the cases:

Focus on 2016. Of the 26 cases the MIA considered, the MIA found for the Insurer 14 times. It found "Absence of Good Faith" (i.e. bad faith) once. Ten claims were withdrawn or settled.

The first number that leaps out is the odds of a favorable decision. Insurers won 14-1. That would give Insurers the best ratio in any year thus far. Because of the small sample size, that is a meaningless number except for illustrating what consumers can expect. By and large, insurers win almost every adjudicated case.

You can also see this another way. Ten cases were either settled or withdrawn. This (probably) means settled. Once an insured files a complaint, the insured doesn't need to do anything to get a decision. The insured just waits. I can't see why an insured would withdraw a complaint without a settlement. If ten cases settled before the decision, that indicates that the consumers got results they could at least settle for by filing complaints.

Seen that way, the data looks much more balanced. Eleven policyholders either got something for their trouble.

#InsuranceBadFaith #Data #MarylandInsuranceAdministration

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