NAIC complaint index

The NAIC complaint index measures how often an insurer draws complaints relative to how much business it writes. The NAIC builds it from closed, confirmed complaints that state insurance departments report, and publishes it through its Consumer Insurance Search tool, which covers the past three years. State regulators and some consumer sites use the same ratio.

The math is a division. Take the insurer's share of all complaints in a line of insurance, such as homeowners, and divide it by its share of premium in that line. Say a company writes 5% of a state's homeowners premium but accounts for 10% of the confirmed homeowners complaints: its index is 2.00. A score of 1.00 means complaints are proportional to size. Below 1.00 is better than proportional, above 1.00 worse.

Use it as one input, not a verdict. A small insurer with a handful of complaints can swing widely from year to year, and the index says nothing about financial strength. Look at the line of insurance, the years and the state before you compare two companies. How to read the index covers the pitfalls, and how to research a home insurer in 15 minutes shows where it fits among the other checks.