Lawmakers see a need for reforming insurance - A Star Watchdog series pointed up problems with delayed claims, denials and agent misconduct

U.S., Missouri and Kansas legislators said they would work to tighten insurance industry regulations in response to problems that The Kansas City Star revealed in a series this week.

The Star analyzed millions of computer records and found that hundreds of thousands of consumers are angry with insurers over claims delays, denials and other issues.

The newspaper also found that insurance agent misconduct is a widespread and growing problem, and that state regulation of insurers is often lax.

"Insurance is like any other industry when there is little oversight or accountability, customers usually are abused," said U.S. Rep. William Lacy Clay, a Missouri Democrat. "Certainly, your investigation draws that out."

Clay, who is a member of the House Financial Services Committee, said insurance reform would be a priority for him next year in the new Congress.

Currently, states are the primary regulators of insurance companies on issues ranging from paying claims to setting premiums, but some in Congress favor more federal scrutiny.

U.S. Rep. Paul Kanjorski, a Pennsylvania Democrat, is poised to lead the subcommittee that oversees insurance and said the series provided "real-world examples of consumers encountering problems with their policies and agents at times when they need the financial security ... the most."

Insurance industry spokesmen downplayed the significance of the newspaper's complaint data analysis. They said that insurers are doing a good job overall and that many disputes arise because consumers don't understand their policies or don't have the proper coverage.

But Kanjorski said the newspaper's findings will play a role in the congressional debate over the need for additional federal regulation.

U.S. Rep. Dennis Moore of Kansas, a member of the House Financial Services Committee, said he also wants to find ways to bolster consumer protections in the current state-based system of insurance regulation. Moore, a Democrat, said he favors a "comprehensive approach to reform, working for a higher level of uniform, improved standards to protect consumers."

The national group based in Kansas City that represents state insurance regulators remains convinced that the state-based system is best for consumers.

"This system, as does every governmental system there is, has its flaws," said Cathy Weatherford, chief executive officer of the National Association of Insurance Commissioners. She said regulators constantly work to streamline and enhance the state-based regulatory system.

State legislators in Missouri, such as Rep. Brian Yates, a Lee's Summit Republican, called the newspaper's findings about bad insurance agents "very eye-opening.?...It is disheartening to know that there are so many dishonest people out there."

Yates led the House Insurance Committee during the last General Assembly and offered these suggestions:

-- Increased civil and criminal penalties for agents who break the law.

-- Tougher sanctions against companies that fail to process claims properly.

-- Simplifying policies so consumers can better understand coverage.

Lawmakers in Kansas echoed many concerns.

State Sen. Chris Steineger, a Kansas City, Kan., Democrat, said he is researching potential reform bills.