Firm Lists Top 10 Insurer Failures Seen By Examiners

Wolters Kluwer said the list, compiled by its Insurance Compliance Solutions Group, provides insurers with a detailed picture of what regulators are looking for during compliance audits.

The company said research for the list, now in its fifth year has turned up interesting trends. Ms. Donovan mentioned that, "Claims issues, such as timely claim handling and proper documentation of claims files, have clearly dominated the areas criticized each year. This pattern should serve as a wake-up call to insurers, who continue to receive fines and other sanctions for these noncompliance violations."

The top 10 most common market conduct compliance criticisms for property and 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 insurers 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.

David Evans, general manager of Insurance Compliance Solutions at Wolters Kluwer Financial Services said, "There is a misconception that market conduct information is easily accessible on state department of insurance Web sites.

"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, 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."

Wolters Kluwer Financial Services said that of 31 states offering access to market conduct enforcement actions online, only 16 offer it in a way that can be easily used.

The company said it has two guides highlighting the availability of enforcement actions on state department of insurance Web sites–one for property and casualty insurance and one for life and health insurance.

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