Boston - As some insurance companies have learned the hard way, a market conduct exam uncovering noncompliance violations has the potential to cost millions of dollars in fines and lost business. To help insurers steer clear of costly noncompliance risks, CCH Insurance Services, a part of Wolters Kluwer Financial Services, has identified the top 10 reasons property/casualty insurers are found to be out of compliance during a market conduct exam.CCH's research has shown that the most common market conduct compliance criticisms are:

  • Failure to pay or deny claims within specified time frames
  • Using unapproved or unfiled forms
  • Using unapproved or unfiled rates
  • Failure to notify of producer appointments or terminations
  • Failure to maintain complaints
  • Failure to communicate a delay in the settlement of claims in writing
  • Failure to produce requested records for an examination
  • Failure to properly terminate a policy
  • Improper documentation of claims policies
  • Improper documentation of underwriting policies

"When issues are uncovered during a market conduct exam, the importance of compliance can be an expensive lesson to learn," says Joe Bieniek, manager of regulatory compliance for CCH Insurance Services. "Not only do the fines add up quickly, but what's often worse is the irreparably tarnished reputation that can come from negative publicity surrounding an unsatisfactory exam, potentially causing a company to lose millions of dollars in business. That's why it's essential for insurers to be aware of possible compliance issues before they are identified as a problem during an exam."
Because the most common compliance citations involve so many different functions within a company, it's not just the compliance department's responsibility to make sure correct procedures are being followed, notes Bieniek. Educating all employees about the importance of compliance within their job functions is key to a successful market conduct exam.

"Nearly every department is affected by compliance regulations, including claims, customer service, human resources and sales," says Bieniek. "With the dramatic impact market conduct exams can have on a company's reputation and revenues, understanding the importance of staying in compliance and ensuring that all employees are educated is more important than ever."

Source: CCH Insurance Services

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access