Navigating a California Claims or Rating and Underwriting Exam Association of Insurance Compliance Professionals WELCOME!
Who Are We? Field Rating & Underwriting Bureau (FRUB) Field Claims Bureau (FCB)
What Do We Do? Statutory Examinations Routine Examinations Data Data-Only Examinations Target Examinations Reexaminations
How Are Exam Costs Recouped? Prop 103 assessment (All FRUB P&C Exams) Direct Billed to Insurer (All FCB, and non (All FCB, and non-prop 103) Rate is $152 per hour Recalculated on an annual basis
How are Companies Selected? Statutory Requirements Market Analysis Complaints Market Conduct Annual Statement (MCAS) Financial Info Info From Other Units (Investigations, Financial, etc.) Premium Writings Lines of Business and Type of Exam Marketplace Info
How Do We Do It? Notification of Exam Examiner In Charge Contact Opening Meeting File Review Exit Meeting Non-Compliance Letter (FRUB) Draft Report Adopted Report
What Are We Looking For? Statutory Compliance Internal Compliance Unfair Discrimination Documentation Notices to Policyholders Compliance w/ New Laws or Changes in Law Compliance with Filed Rates Eligibility Guidelines Advertising and Marketing
What Happens From There? Resolved Without Further Action Resolved With Ongoing Insurer Action Direct Enforcement Action Legal Division Action
What Do We Commonly Find?
Private Passenger Automobile At-Fault Regulations CCR 2632.13 51% of legal cause Bodily injury or death PD excess $1,000 None of the statutory exceptions apply
POP QUIZ How many points may an insurer charge for an accident if the insured fails to respond to a request for additional information?
Notice of 3 rd Party Designee Auto, HO, Disability Income CIC 396 Effective January 1, 2016 Upon New Business Notification at least Every 2 Years
Loss Exchange Reports CCR 2632.13(f)(2) Policyholder s address Driver s Name Date of Incident At-fault Indicator Property Damage Bodily Injury/Death Statutory Exceptions Were Considered
Private Passenger Automobile Second Mandatory Rating Factor Annual Mileage CCR 2632.5(c)(2) Estimated vs. Verified Insured s Estimate New Business Renewal Third Party Reports
What do you think? Is there a 60 day underwriting period in Private Passenger Automobile?
Effective January 1, 2013, CIC 661(b) was removed from the California Insurance Code.
Allowable Reasons For Cancellation Substantial Increase in Hazard Insured Against Fraud or Material Misrepresentation Non-payment of Premium
Homeowners Losses Substantial Relationship to Loss Exposure Underwriting Rating
POP QUIZ #2! Can an insurer have a rule that any additional or return premiums due less than $10 may be waived?
CIC 481.5 requires that all unearned premium be returned to the policyholder upon termination or if there is a reduction in coverage.
Commercial Lines DOCUMENT, DOCUMENT, DOCUMENT!!!
Schedule Rating Plan DOCUMENT, DOCUMENT, DOCUMENT!!! Subjective vs. Objective Criteria Characteristics of a risk not otherwise contemplated in the rating plan
Prior Approval of Rates Adhere to filed rating plan a rating Rate Ranges Document!
Required Mail Time Additional Mail Time Based on Location Code of Civil Procedures 1013(a) Add 5/10/20 Days Private Passenger Automobile CIC 662 Cancellations CIC 663 Notice of Renewal/Non-Renewal Homeowners CIC 677.4 Cancellations CIC 678 Notice of Renewal/Non-Renewal Commercial Insurance CIC 677.2(c) Cancellations CIC 678.1 Non-renewal (Commercial/Excess Umbrella) CIC 676.2(c)(1) Midterm premium change, Reduction in Coverage, Change in conditions Workers Compensation CIC 676.8 Cancellations CIC 11664(c) Non-renewal
Annuity Sales - Suitability CIC 10509.914
Life & Annuity Free Look Notices What are the required timeframes? 30 DAYS for Group Life Seniors age 65 + [CIC 786] 10-30 DAYS for Ind. Life/Annuities [CIC 10127.9] 30 DAYS for Ind. Life/Annuities age 60+ [CIC 10127.9] 30 DAYS for Replacements [CIC 10509.6]
Life Insurance 3 rd Party Designee CIC 10113.72 Upon New Business Annual Notification
Electronic Transmission Life and Annuity Records CIC 38.6 Effective January 1, 2016 Opt-in Consent Disclosure Two Standards of Delivery
Claim Handling Automobile In total loss settlements, were all required taxes and fees included and was any deduction for salvage value based on a guaranteed bid? [CCR 2695.8(b)] Does the company have procedures for identifying if there was a child passenger restraint system damaged or in use in the accident? [CIC 11580.010] Property Is the basis for depreciation documented in the file, explained in writing to the claimant, and determined considering the age, condition, and useful life of the item?[ccr 2695.9(f)]
Claim Handling General All lines: Although there may be different specifics in timeline, etc., for certain lines and products, the following points are valuable to keep in mind overall: Does acknowledgment of claim occur promptly and are claimant contacts and inquiries responded to promptly? Are investigations thorough and diligent? Are procedures in place to prevent duplicate requests, or requests not pertinent to resolving the claim? (Special focus for health and disability income claims) Are claims paid timely once liability is determined? Is appropriate interest included when claims payments do not meet regulatory requirements for promptness? (Especially relevant to life and health claims)
Life Insurance CIC 10172.5(a) Was the payment made within 30 days after date of death? If no, was interest included in the death proceeds? CIC 10172.5(c) Disclosure of interest rate CCR 2695.4(a) Were all available settlement options disclosed?
Health Insurance CIC 10123.13(a), (b), (c) Paid within 30 working days Late Payment - Uncontested claim interest Late Payment Contested claim interest
Disability Income Long Term Care INVESTIGATION - CCR 2695.7(d) State Disability Income (SDI) Offsets
Salvage Certificate Fee Increased to $20 effective 01/01/2015
Reminders Documentation is Key Transparency is a Plus Meetings Are Welcome We are here to help
THANK YOU!