Top 10 Market Conduct Issues For U.S. Insurers

Oct. 27, 2014 – Wolters Kluwer Financial Services has unveiled lists of the top criticisms found on U.S. property and casualty and life and health insurance market conduct actions. This is the tenth year the company has compiled and released the data to the insurance industry, based on its annual review and analysis of results from the previous year’s state exams.

Research by the company’s regulatory experts reveals the key compliance issues that continue to impact insurance companies include claims-handling, underwriting and producer requirements.

“Our research consistently reveals that implementing regulatory requirements in the claims, underwriting and distribution processes is a challenge for insurers,” said Kathy Donovan, senior compliance counsel, Insurance, at Wolters Kluwer Financial Services. “However, conducting internal audits is an excellent way to monitor the effectiveness of regulatory implementation in company systems and help ensure consistently compliant results.”

Beyond the data compiled into the “top 10” lists, company experts noted that insurers were also frequently criticized for complaint handling processes and failure to adhere to policy replacement requirements. Companies that regularly evaluate their regulatory compliance controls can use this information to help ensure that existing processes are adequate.

The top 10 most common market conduct compliance criticisms for property and casualty insurers are:

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

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

1. Failure to properly acknowledge, pay, investigate, or deny claims within specified time frames
2. Failure to adhere to advertising requirements
3. Failure to use licensed and/or appointed producers and to provide proper notification of producer appointments or terminations
4. Failure to provide required claims and underwriting disclosures including those concerning coverage issues, policy replacements and fraud warnings
5. Improper documentation of underwriting and claim files
6. Failure to adhere to required claims appeal processes including timeframes and disclosures
7. Failure to pay claims properly in accordance with policy provisions
8. Failure to use compliant policy forms and/or maintain compliant plans
9. Noncompliant claim denial notices
10. Failure to issue correct Explanation of Benefits

For more information about how Wolters Kluwer Financial Services can help with insurance regulatory compliance and risk management, visit our website.

About Wolters Kluwer Financial Services

Wolters Kluwer Financial Services provides more than 15,000 customers worldwide with risk management, compliance, finance and audit solutions that help them successfully navigate regulatory complexity, optimize risk and financial performance, and manage data to support critical decisions. With more than 30 offices in over 40 countries, our prominent brands include: 

AppOne®, ARC Logics®, AuthenticWeb™, Bankers Systems®, Capital Changes, CASH

Suite™, FRSGlobal, FinArch, GainsKeeper®, NILS®, TeamMate®, Uniform Forms™, VMP® Mortgage Solutions and Wiz®. Wolters Kluwer Financial Services is part of Wolters Kluwer, which had 2013 annual revenues of €3.6 billion ($4.7 billion), employs 19,000 employees worldwide, and maintains operations in over 40 countries across Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.