Recommendations include establishing formal complaint handling procedures and measuring performance, Department expresses intent to adopt all recommendations
Vermont Business Magazine State Auditor Doug Hoffer released an audit today of the Vermont Department of Financial Regulation’s (DFR) handling of consumer insurance complaints. The audit, the third of four the Auditor’s Office is producing relating to how State government responds to Vermonters’ complaints, assessed whether the Department investigates complaints within expected timeframes. In addition, the audit evaluated whether the Department uses performance measurement to improve complaint response services for Vermonters.
Vermonters purchase a variety of insurance products, including auto, homeowners, health, and travel. DFR is responsible for supervising insurance companies and insurance agents, which includes protecting consumers against unfair and unconscionable practices.
Vermont policyholders who have a problem with an insurance company can contact DFR’s Insurance Division and file a complaint, which is handled by its consumer services unit. Examples of complaints are disputes about whether and how much a policyholder is owed on a claim or insurance cancellations. Between January 1, 2022 and December 31, 2024, consumers submitted nearly 1,200 complaints to DFR’s Insurance Division.
“Insurance is intended to protect us from financial risk, but when we need to claim our benefits it often feels like we have to pass through a gauntlet of fine print,” said Auditor Hoffer. “Insurance policies have to be honored by both the company and the policyholder, but many consumers struggle to know if they’re getting a fair resolution. That’s why DFR’s consumer services division’s work is so important.”
Examples
The following are examples of the types of outcomes that the consumer services unit was able to facilitate for consumers through the complaint process. Each of these complaints were closed within 30 days.
- On February 22, 2023, a consumer complained that an insurance company had not agreed to pay for a rental car for the duration of the repair. That next day, the consumer services specialist emailed the insurer an expedited request to continue to cover the rental cost citing a regulatory requirement and the company agreed that same day to extend the payment of the rental.
- In August 2022, a consumer who had been furloughed complained that the effective date of new health care coverage was not properly implemented, causing claims to be denied coverage. After receiving a letter from the consumer service specialist, the insurance company worked with Vermont Health Connect to correct the complainant’s coverage dates and agreed to reprocess her denied claims based on these revised dates.
- On April 12, 2024, a homeowner complained that his insurance company had not replied to his February 2024 claim about a damaged roof allegedly caused by a windstorm. On the same day that the complaint was filed, the insurance company denied his claim. In a letter to DFR, the insurer agreed that it had fallen short in its communications with the homeowner and agreed to reconsider its decision if it received a roofer’s estimate along with photos. On May 7, 2024, the Insurance Division sent a letter to the complainant with the insurer’s response and stated that such coverage disputes must be decided in a court of law. That same day, the consumer service specialist closed the complaint and sent an email to the insurer stating that it was confirming the complaint for not complying with the regulation on time limits for claim settlements.
Highlights of the audit include:
- DFR’s Insurance Division’s consumer services unit addressed each of the 45 complaints that we reviewed although not always within its 30-day goal. In 17 of the 45 complaints (38 percent) insurance companies paid claims or reinstated insurance policies after the consumer service specialist’s inquiry.
- In 2024 and 2025, DFR reported to the Legislature that its intent was to answer and close consumer complaints within 30 days. Between January 1, 2022, and December 31, 2024, the median time that it took DFR’s insurance consumer service unit to address all 1,199 consumer complaints filed was 25 days and the average was 34 days.
- There may be justifiable reasons why complaints take longer than 30 days to resolve, such as the consumer services specialist submitting multiple requests for information to the insurance company, complainant, or both. Nevertheless, the Insurance Division has not investigated the reasons why so many complaints take more than 30 days to close and whether improvements to its processes could reduce this number.
- The Insurance Division may be able to improve the timeliness of its responses by establishing written procedures for addressing consumer complaints and performing trend analyses of complaints received.
- DFR has not measured the performance of the Insurance Division’s consumer services process even though this is a long-standing State requirement.
The Department expressed its intent to adopt the audit’s six recommendations to improve in these areas.
Hoffer added: “I want to thank the Department of Financial Regulation staff who worked with my team of auditors. Overall, DFR is quick to respond to Vermonters who ask for help, and they handle cases professionally until they reach a resolution. By implementing our recommendations they’ll raise the bar a little higher still. I look forward seeing their progress in the coming year.”
The full audit can be found here. The Department’s complaint form can be found here.
Office of the Vermont State Auditor. Montpelier. auditor.vermont.gov
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