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Wolters Kluwer Financial Services Unveils Annual List of Top 10 Criticisms Found on U.S. Insurance Market Conduct Exams

Wolters Kluwer Financial Services unveiled its annual top 10 lists of criticisms found on U.S. insurance market conduct exams, which serve as checklists for insurers in helping them minimize compliance risk exposure.

The company’s regulatory experts carefully review and analyze results from the previous year’s state market conduct exams to identify areas with the most criticisms in the property and casualty, and life and health markets. Research shows that fundamental processing areas within insurance companies continue to have challenges that cross claims, licensing and underwriting.

“Managing compliance risk is difficult at best, given all the regulatory requirements governing insurers’ claims, underwriting and distribution processes,” said Kathy Donovan, senior compliance counsel, Insurance, at Wolters Kluwer Financial Services. “However, understanding where the greatest problems exist can assist insurers in prioritizing audits of internal processes.”

The top 10 lists identify areas of concern at both the regulatory and company levels and indicate compliance risk areas that require additional scrutiny and evaluation. Companies may want to check existing controls to help ensure that they are adequate and error-free.

Wolters Kluwer Financial Services’ industry research shows that the top 10 most common market conduct compliance criticisms for property and casualty insurance are:

  1. Failure to acknowledge, to pay, or deny claims within specified time frames
  2. Using unapproved forms, unfiled rates and/or misapplication of rating factors
  3. Failure to cancel policies or non-renew policies in accordance with requirements
  4. Failure to provide required compliant disclosures in underwriting processes
  5. Failure to process total loss claims properly
  6. Failure to provide required compliant disclosures in claims processing
  7. Improper documentation of underwriting files
  8. Failure to adhere to producer appointment, termination and/or licensing requirements and adjuster licensing requirements
  9. Failure to pay correct amount under policy
  10. Improper documentation of claim files

The top 10 most common criticisms for life and health insurance are:

  1. Failure to pay claims properly in accordance with policy provisions
  2. Failure to use compliant policy forms and/or compliant plans
  3. Failure to properly acknowledge, pay, investigate, or deny claims within specified time frames
  4. Improper documentation of underwriting files
  5. Failure to use licensed and appointed producers and to provide proper notification of producer appointments or terminations, including maintenance of producer registers
  6. Failure to provide required disclosures including coverage issues, fraud warnings, and free-look periods
  7. Failure to adhere to required claims appeal processes
  8. Using unapproved/unfiled rates or forms and rating errors
  9. Improper documentation of claim files
  10. Failure to adhere to replacement requirements