Claims issues continue to dominate the focus of auditors reviewing insurers’ market conduct compliance, according to a new report issued today.
“Claims issues, such as timely claim handling and proper documentation of claims files, have clearly dominated the areas criticized each year,” said Kathy Donovan, senior compliance counsel at Wolters Kluwer Financial Services. “This pattern should serve as a wake-up call to insurers, who continue to receive fines and other sanctions for these noncompliance violations.”
Wolters Kluwer Financial Services’ insurance compliance experts reviewed and analyzed the content in last year’s market conduct exams from across the United States, and assigned the criticisms to various categories. The categories with the most criticisms comprise the top 10 lists for property/casualty and life and health insurance.
Wolters Kluwer Financial Services’ industry research shows that the top 10 most common market conduct compliance criticisms for property/casualty insurance are:
1. Failure to acknowledge, pay or deny claims within specified time frames
2. Failure to properly terminate a policy, including inadequate days’ notice, improper reasons and omitted required language
3. Failure to pay claims properly (sales, tax, loss of use)
4. Improper documentation of claim files
5. Using unapproved or unfiled rates and/or rating errors
6. Failure to provide required and appropriate disclosures, such as selection/rejection or coverage notices in the underwriting process or notices like statute of limitations, reasons for denials, and bill of rights in the claims process
7. Failure to use licensed producers and provide proper notification of producer appointments or terminations, including maintenance of producer register
8. Failure to communicate a delay in the settlement of claims in writing
9. Using unapproved or unfiled forms
10. Use of unlicensed claims adjusters or appraisers
The top 10 most common criticisms for life and health insurance are:
1. Failure to adhere to advertising requirements
2. Failure to adhere to replacement requirements
3. Failure to use licensed and appointed producers and to provide proper notification of producer appointments or terminations, including maintenance of producer registers
4. Failure to adhere to grievance and appeals and utilization review requirements
5. Improper documentation of files
6. Failure to properly terminate a policy, including conversion requirements
7. Failure to properly acknowledge, pay, investigate or deny claims within specified time frames
8. Using unapproved, unfiled or noncompliant forms
9. Failure to provide required disclosures, such as explanation of benefits statements, coverage issues, fraud warnings, free-look periods, right of appeal or guaranty fund notices
10. Failure to pay claims properly
“There is a misconception that market conduct information is easily accessible on state department insurance Web sites,” said David Evans, GM of insurance compliance solutions at Wolters Kluwer Financial Services. “The truth is, market conduct information is not widely available, and often hard to find. Our research and tools, including the annual top 10 lists, [are designed to] help insurers easily access the information they need and identify business practices that are of significant regulatory interest or that have resulted in fines across the industry.”
A recent assessment by Wolters Kluwer Financial Services shows that 31 states offer access to market conduct enforcement actions online, and only 16 offer it in a way that can be easily used. The company’s compliance experts have compiled two guides highlighting the availability of enforcement actions on state department of insurance Web sites—one for
