Most Enforcement Actions by Insurance

Regulator in US caused by mistakes by

Claims Professionals

A Report issued by Wolters Kluwer Consulting has found that the most common reason for regulatory Enforcement Actions against US Property and Casualty Insurers in 2018 were mistakes made by Claims Professionals in handling claims. The Report lists the most common reasons for Actions taken by regulators against Insurers and of the top ten reasons, five were mistakes made in the Claims handling process by Insurers.

Wolters Kluwer is a leading Compliance Consulting Firm based in Boston.

In compiling its Report it reviewed all the relevant data including details of all Enforcement Actions initiated by State Regulators in 2018.

The Consultancy reviewed hundreds of Actions taken by Regulators during that year. Errors included failure to acknowledge claims, failure to investigate claims or to deny claims within specific time frames.

The most common mistakes which caused the Regulators to act were in order of frequency as follows: -

1. Failure to acknowledge, pay, investigate or deny claims within specified time frames.
2. Failure to provide required Disclosures in claims processing.
3. Failure to issue correct payments or proper Denial Notices.
4. Failure to process total loss claims properly and in accordance with the guidelines.
5. Improper/Incomplete documentation of Claim files.

Most of the Enforcement Actions related to commercial motor, personal motor and worker’s compensation claims and also property damage claims by home owners. The most active State in monitoring the behaviour of Insurers is California. California carries out dozens of market conduct examinations each year in relation to the performance of Insurers providing insurance in that state.

The Report by the Consultants set out details where the California Department of Insurance proceeded against an insurer for failing to disclose all benefits available under a policy or explain the coverage, time limits, and other policy provisions and also failing to notify claimants that the driver of a vehicle insured by it had been found to be principally at fault for an accident.

In New Jersey a citation was issued against an insurer for failing to notify a Claimant as opposed to a Policy Holder that coverage for a rental vehicle was available. The law said that the insurer should not only inform its own insured but claimants of such cover.

One New Jersey insurer was pursued by the Regulator as the Adjuster handling the claim had not printed off emails and put same on the paper file. The excuse that the emails were available on the system was not accepted by the Regulator. Some files contained blank templates of required Notices which have not been filled out which again was a breach of the regulations.

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This document is for information purposes only and does not purport to represent legal advice.  
© O’Rourke Reid 2019