Firm releases Top 10 identified Market Conduct issues in U.S. in annual review
A review of state insurance regulators’ market conduct actions of U.S. insurers published in 2016 shows that slow claims handling, non-compliant underwriting practices, and failure to provide required compliant disclosures are the top shortcomings in the insurance industry. These results were derived from data compiled by Wolters Kluwer in its most recent annual review of U.S. property and casualty, life, and health insurers’ market conduct actions.
While managing compliance risk presents challenges across functional areas, violations of claims and underwriting regulatory requirements continue to dominate these annual findings, including those applicable to: 1) timely claims handling; 2) claims and underwriting file documentation; 3) compliant policy termination notices; 4) compliant claims and underwriting disclosures; and 5) compliant grievance and appeals processes.
“Insurance professionals have to manage a variety of internal and external factors when processing claims, including claimant communications and mandatory disclosures, and these areas continue to pose a challenge for insurers,” said Kathy Donovan, Senior Compliance Counsel for Wolters Kluwer’s Insurance Compliance business. “Conducting focused, targeted internal audits in these problem areas can provide insurers an avenue for better monitoring the effectiveness of their regulatory practices, and thereby help foster more consistent compliance results.”
Following is a summary of the top issues identified:
2016 Top 10 Market Conduct Actions for Property and Casualty Insurers
- Failure to acknowledge, pay, investigate or deny claims within specified timeframes
- Use of unapproved/unfiled rates and rules, or misapplication of rating factors
- Failure to process total loss claims properly
- Failure to cancel or non-renew policies in accordance with requirements
- Failure to adhere to producer appointment, termination, records and/or licensing requirements
- Failure to provide required compliant disclosures in claims processing
- Improper/Incomplete documentation of claim files
- Failure to provide required compliant disclosures in underwriting processes
- Improper/Incomplete documentation of underwriting files
- Failure to issue compliant denial notices
2016 Top 10 Market Conduct Actions for Life and Health Insurers
- Failure to acknowledge, pay, investigate, or deny claims within specified time frames
- Failure to provide required and compliant claims and underwriting disclosures
- Use of unfiled/unapproved or noncompliant forms
- Incomplete/Improper documentation of underwriting and claim files
- Failure to adhere to required claims grievance and appeal processes, including timeframes and disclosures
- Failure to respond to regulatory requests for information
- Failure to use licensed and/or appointed producers, provide proper notification of producer appointments or terminations, and maintain appropriate documentation
- Noncompliant claim denial notices
- Failure to adhere to replacement requirements
- Failure to pay claims properly in accordance with policy provisions and requirements
These lists of the top 10 market conduct actions taken against U.S. insurers are developed by Wolters Kluwer using public data published during 2016. This is the 13th year Wolters Kluwer GRC’s insurance group has compiled and ranked the compliance challenges facing U.S. insurers.
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Wolters Kluwer Governance, Risk & Compliance (GRC) is a division of Wolters Kluwer, which provides insurance, legal, finance, risk and compliance professionals and small business owners with a broad spectrum of solutions, services and expertise needed to help manage myriad governance, risk and compliance needs in dynamic markets and regulatory environments.
Wolters Kluwer N.V. (AEX: WKL) is a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide.