Oregon state regulators say insurance carriers are too often using photo estimates as a means of making low-ball settlement offers to policyholders without a thorough investigation.
Insurance Commissioner Andrew Stolfi on Oct. 21 released a proposed draft of a bulletin that would remind carriers that they cannot require policyholders to use a mobile application to submit claims and that they have a duty to conduct timely and adequate investigations.
Agency spokesman Brad Hilliard said the Division of Financial Regulation has received about a dozen complaints from consumers who said they were required to file claims using a mobile app and then received proposed settlements of far less than the actual cost of repairs. Some consumers said they were told the claim payment would be delayed if they did not consent to a photo estimate.
“You’re looking at offers around $1,000 and then it comes back that the car is totaled or it turns out that they are needing several thousands of dollars in repairs,” Hilliard said.
Hilliard said the proposed bulletin would just be a reminder that existing Oregon statutes require insurers to do an in-person inspection when asked and they shouldn’t make a settlement offer unless they are confident that it accurately represents the amount of the loss.
“You shouldn’t regularly see dramatic difference from the initial estimate to the supplement,” Hilliard said. “Insurers should not be relying on the supplemental process to accurately assess the damage to the vehicle.”
Hilliard said if the bulletin doesn’t change insurers’ behavior, the division may conduct market conduct examinations and levy administrative penalties to enforce state law. At the very least, the insurance department will make another data call if it continues receiving complaints from consumers.
Such complaints persuaded lawmakers in one state to bar the use of photo estimates for high-dollar claims. On July 2, Rhode Island Gov. Gina Raimondo signed into law Senate Bill 849 by Maryellen Goodwin, D-Providence. The bill requires insurers to use licensed appraisers to physically inspect damages and prohibits estimates based on pictures for claims where losses exceed $2,500.