California Department of California Department of Insurance Insurance

CONSUMER SERVICES CONSUMER SERVICES DIVISIONDIVISION

AN OVERVIEW PRESENTED BY:AN OVERVIEW PRESENTED BY:

•JOEL LAUCHER Chief, Consumer Services Division

•DAVE STOLLS, CPCU, AIC

Chief, Claims Services Bureau

CONSUMER SERVICES CONSUMER SERVICES DIVISION:DIVISION:OrganizationOrganization

CONSUMER COMPLAINT HANDLING•Claims Services Bureau•Rating & Underwriting Services Bureau

MARKET CONDUCT EXAMINATION•Market Conduct Bureau (Claims)•Field Rating & Underwriting Bureau

RESPONDING TO CONSUMER RESPONDING TO CONSUMER INQUIRIES AND COMPLAINTSINQUIRIES AND COMPLAINTS

•Consumer Hotline (1-800-927-HELP)

•Requests for Assistance

•Response Within 10 Days

CONSUMER COMPLAINT CONSUMER COMPLAINT HANDLING:HANDLING:3 PRIMARY RESPONSIBILITIES

•EDUCATION

•MEDIATION

•ENFORCEMENT

MOST FREQUENT MOST FREQUENT VIOLATIONSVIOLATIONS

Claims• Violations of Claims Settlement

Practices Regulations and Statutes

(CA Insurance Code § 790.03(h) and CA Code of Regs, Title 10, § 2695 et al)

1. 2695.5a - Responding to Dept. of Insurance Inquiries.

2. 2695.3 - Claim files containing all documents, notes and work papers.

MOST FREQUENT MOST FREQUENT VIOLATIONSVIOLATIONS (claims continued)

3. 2695.5b - 15 day response time to any communication from a claimant.

4. 2695.7b - accept or deny the claim within 40 days of receiving Proof of Claim.

5. 2695.7b3 - written notification that claimant may have denied claim reviewed by the Dept. of Insurance.

MOST FREQUENT MOST FREQUENT VIOLATIONSVIOLATIONS (claims continued)

6. 2695.7c1 - if additional time is needed written notice of reasons every 30 days.

7. CIC 790.03h5 - Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims …..clear.

MOST FREQUENT MOST FREQUENT VIOLATIONSVIOLATIONS

Rating & Underwriting• Producer Violations

1. CIC 481.5 - Failure to refund premium within the mandated time frame (25 days).

2. CIC 1668j - “The producer has shown incompetency or untrustworthiness in the conduct of any business, or has by commission of a wrongful act or practice exposed the public to the danger of loss." Used for failure to place coverage.

MOST FREQUENT VIOLATIONSMOST FREQUENT VIOLATIONS (rating continued)(rating continued)

• Insurance Company ViolationsLife Insurers

1. CCR 2694a3 – Failure to following own rules or guidelines...

2. CCR 2694a5 - failure to respond to the consumer (or us) within the mandated

15 day time frame.

P&C Insurers

1. CIC 1861.05a – “…no rate shall … remain in effect which is excessive, inadequate, or unfairly discriminatory….”

WHAT HAPPENS NEXT???WHAT HAPPENS NEXT???

• Issue is Resolved and • Consumer is Notified of Results or

Options

• Complaint is Determined to be Justified, a Question of Fact, or Other

• Insurers are Notified of Justified Determinations and Violations

• Enforcement Action?

Types of Enforcement Types of Enforcement ActionsActions

• Admonishment Letter Admonishment Letter • Meeting with Insurer ManagementMeeting with Insurer Management• Market Conduct Examination RequestMarket Conduct Examination Request• Direct Enforcement Action by CSDDirect Enforcement Action by CSD• Legal Division ActionLegal Division Action (Including Notice of Non-Compliance, Order to Show(Including Notice of Non-Compliance, Order to Show Cause, Stipulation and Consent Order)Cause, Stipulation and Consent Order)

• Formal HearingFormal Hearing• Monetary PenaltiesMonetary Penalties

HOW TO AVOID OR HOW TO AVOID OR MINIMIZE PROBLEMSMINIMIZE PROBLEMS

• COMPLAINTS (DOI AND COMPANY)

• DISCIPLINARY ACTIONS

• BAD FAITH

YOU NEED TO ……...YOU NEED TO ……...

• SELECTIVELY HIRESELECTIVELY HIRE• TRAINTRAIN• ESTABLISH ESTABLISH

PROCEDURESPROCEDURES• TRAINTRAIN• IMPLEMENT IMPLEMENT

PROCEDURESPROCEDURES• TRAINTRAIN• SUPERVISESUPERVISE• TRAINTRAIN

BACK TO BACK TO BASICSBASICS

The Market Conduct The Market Conduct Examination ProcessExamination Process

In California, separate market conduct exams are conducted of claims payment practices and of rating and underwriting practices (including advertising, pricing, and consumer selection activities).

All regulated lines of business are reviewed.

Types of ExaminationsTypes of Examinations

•Routine Examinations

•Re-Examinations

•Targeted Examinations

MARKET CONDUCT EXAMS:MARKET CONDUCT EXAMS:Focus of Exams

• Fair and Consistent Treatment of Insurance Consumers

• Compliance with California Insurance Code and Related Regulations and Case Law

• Resolution of Unfair or Illegal Practices Discovered During the Examination Process or From Consumer Complaint Review

Hot Topics in CaliforniaHot Topics in California

Over time, with changes in technology and in the law, new issues come to the forefront of regulatory discussion. Right now, these issues include….

CDI WebsiteCDI Website

To get an overview of the entire California Department of Insurance, to review a listing of enforcement actions taken, or to obtain copies of current regulations, please visit the Department’s Internet Website at:

www.insurance.ca.gov.www.insurance.ca.gov.

ANY QUESTIONS…….?ANY QUESTIONS…….?

Don’t be afraid to ask.

We will do our best to answer, that’s all we can promise……

Anyone, anyone?