INSURER MARKET CONDUCT TROUBLES OFTEN TRACED TO CLAIMS HANDLING ERRORS

Mistakes by claims professionals were the most common reason for enforcement actions taken against U.S. property and casualty insurers in 2018, taking the No. 1 and No. 2 spot on a top 10 list issued by the Wolters Kluwer consulting firm.

In fact, five of the 10 top reasons documented by Wolters Kluwer involved errors in claims handling. The Boston-based compliance consulting firm reviewed every market conduct examination and enforcement action taken by state regulators in 2018, said Senior Compliance Counsel Kathy Donovan. The number of individual citations examined numbered in the hundreds, she said.

“The claims area is one combined area that has many moving parts, many individual timeframes — timeframes that aren’t necessarily the same from state to state,” Donovan said. “So it’s no surprise at all that once again failure to acknowledge claims, investigate or deny claims, within specific time frames in the states certainly takes the top spot for the exam process for 2018.”

In order of frequency, the claims-related mistakes that prompted sanctions by insurance regulators were for:

Failure to acknowledge, pay, investigate or deny claims within specified timeframes.
Failure to provide required disclosures in claims processing.
Failure to issue correct payments or proper denial notices.
Failure to process total loss claims properly.
Improper/Incomplete documentation of claim files.
Donovan said during a telephone interview that for property and casualty insurers, the commercial auto, personal auto, workers’ compensation and homeowner’s lines drew the most enforcement actions. She said in personnel auto, several states have passed strict notice requirements, especially for claims involving total loss. In workers’ comp, states enforce strict deadlines to ensure that injured workers receive wage-loss benefits…

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