Top 10 Reasons Insurers Are Out of Compliance
Claims, renewals head annual list of market conduct complaints filed with state insurance departments.
Insurance Networking News, August 18, 2011
A failure to process claims in a timely manner and a failure to use compliant policy forms top the list of complaints filed in the P&C and life/health insurance markets, according to Wolters Kluwer Financial Services. Other continuous challenges cited were a failure to properly embed regulatory requirements into claims, underwriting and distribution processes.
“These noncompliance risks can be mitigated through a program of regulatory change management and frequent self audits,” said Kathy Donovan, senior compliance counsel, Insurance, at Wolters Kluwer.
This is the seventh year Wolters Kluwer Financial Services’ insurance compliance experts have compiled market conduct exam content for the lists. The data helps serve as a compliance checklist for insurers, giving them a sense of what regulators look for during examinations.
According to Wolters Kluwer, industry research shows that the top 10 most common market conduct compliance criticisms for property and casualty insurance are:
1. Failure to properly acknowledge, investigate, pay or deny claims within specified time frames
2. Failure to cancel or non-renew policies in accordance with requirements
3. Using unapproved forms, unfiled rates and/or misapplication of rating factors
4. Failure to adhere to producer appointment, termination and/or licensing requirements and adjuster licensing requirements
5. Failure to provide required disclosures in the claims process
6. Improper documentation of claim files
7. Failure to process total loss claims properly
8. Failure to pay the appropriate claim amount
9. Failure to adhere to underwriting rules and/or provide required disclosures
10. Failure to respond to the department of insurance and/or produce records requested during the exam process
The top 10 most common criticisms for life and health:
1. Failure to use compliant policy forms
2. Failure to use licensed and appointed producers and to provide proper notification of producer appointments or terminations, including maintenance of producer registers
3. Failure to properly acknowledge, pay, investigate, or deny claims within specified time frames and notices
4. Failure to provide required disclosures including coverage issues, fraud warnings, free-look periods, right of appeal, or guaranty fund notices
5. Failure to pay claims properly in accordance with policy provisions
6. Improper documentation of claim and underwriting files
7. Failure to provide compliant explanation of benefits forms
8. Failure to respond to the department of insurance and/or produce records requested during the exam process
9. Using unapproved/unfiled rates or forms and rating errors
10. Failure to adhere to replacement requirements
For more information on related topics, visit the following channels: