Property and casualty insurers' biggest regulatory compliance problem is failure to properly terminate a policy, according to a study by a consulting firm that listed areas of difficulty.
Policy termination made the top 10 list compiled by Wolters Kluwer Financial Services' Insurance Compliance Solutions group in Waltham, Mass.
The firm said its list is generated from market conduct examinations from all regulatory jurisdictions. David Evans, general manager of Insurance Compliance Solutions at Wolters Kluwer Financial Services, said the information "is pulled from actual examination reports from each state, so there is no opinion involved."
The criticisms are identified in order to help insurance carriers avoid the noncompliance violations they are prone to, the firm said.
The product Wolters Kluwer Financial Services provides insurers with is a necessary tool to improve their business as complaints are "an area of extreme high cost," Mr. Evans said. The analysis "provides a good heads up" for what each state's department of insurance or team of regulators might be looking for in compliance examinations, as the examination process could result in fines or bad PR for the carrier, Wolters Kluwer explained.
Rounding out the top five criticisms are failure to acknowledge, pay, or deny claims within specified times frames; using unapproved or unfiled rates; failure to communicate a delay in the settlement of claims in writing; and failure to notify of producer appointments or terminations.
Analysis of compliance issues is ongoing at Wolters Kluwer, and Mr. Evans said "it is constantly, continuously being updated."
Complaints "seem to be trending toward, on the property and casualty side, the claims area," Mr. Evans said. "The states are focused on how the carrier is interacting with their customer when the customer is requesting a claim."
Claims are "where state legislators and the department of insurance are protecting the consumer, so they tend to have more requirements and it is extremely complex for the carrier," Mr. Evans explained.
The bottom five criticisms include improper documentation of underwriting policies; improper documentation of claims policies; using unapproved or unfiled forms; failure to produce requested records for an examination; and failure to provide required disclosures (such as selection/rejection issues or notices in the claims process).
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