Wolters Kluwer identifies top compliance challenges for U.S. insurers

Nov. 29, 2022 — The U.S. insurance industry’s top market conduct compliance challenges continue to relate to various claims handling requirements, including timeliness, required disclosures, along with payments and grievance and appeal processes—as well as underwriting, rating, marketing and producer requirements.  This annual, comprehensive review by Wolters Kluwer Compliance Solutions  of U.S. insurers’ market conduct enforcement actions is based on public regulatory data from 2021, examining the market conduct actions of U.S. property and casualty, life, and health insurers, including exams and other enforcement actions.

Now in its 18th year, the Top 10 market conduct actions review serves as a reminder of the ongoing challenges  insurers face in managing the risk of non-compliance. Insurers can use the results of this annual review as a compliance aid in their own internal compliance audits.

“Managing compliance risk is a significant concern for insurers,” said Steven Meirink, Executive Vice President and General Manager for Wolters Kluwer Compliance Solutions. “However, monitoring the changing regulatory requirements and the enforcement action environment using a compliance program management approach can be instrumental in fostering insurers’ market conduct compliance.”

The following are listings of recent, top compliance issues determined in market conduct actions across the U.S. by state insurance regulators. As in prior years, these issues are primarily found in insurers’ claims, underwriting, and sales processes:

Top 10 Market Conduct Criticisms for Property and Casualty Insurers

1. Failure to acknowledge, pay, investigate or deny claims within specified timeframes
2. Failure to provide required compliant notices and disclosures in claims processing
3. Using unapproved/unfiled rates and rules, rating errors
4. Failure to process total loss claims properly
5. Failure to issue correct payments and/or compliant denial notices
6. Failure to cancel, non-renew, decline, or increase premium in accordance with requirements
7. Failure to adhere to producer appointment, termination, records, reporting and/or licensing requirements
8. Failure to provide required compliant notices and disclosures in underwriting processes
9. Improper/incomplete documentation of claim files
10. Improper/incomplete documentation of underwriting files

Top 10 Market Conduct Criticisms for Life and Health Insurers

1. Failure to adhere to required claims utilization review, grievance and appeal processes, including timeframes and disclosures
2. Failure to pay claims properly in accordance with policy provisions and comply with claim denial requirements
3. Failure to acknowledge, pay, investigate, or deny claims within specified timeframes
4. Failure to provide required and compliant claims, underwriting and policyholder disclosures and notices
5. Failure to use licensed and/or appointed producers, provide proper notification of producer appointments or terminations, or to maintain appropriate documentation
6. Use of unfiled/unapproved or noncompliant forms; unfiled/unapproved rates
7. Failure to adhere to replacement requirements
8. Failure to maintain adequate/complete claims, underwriting and complaint documentation
9. Failure to adhere to suitability requirements
10. Failure to adhere to advertising requirements

While these Top 10 lists provide insight into insurers’ continuing compliance risk challenges, other noncompliance issues include failure to perform required audits of third-party administrators, complaint handling timeframes and policyholder service.

The market conduct examination process for insurance companies is complex, time-consuming and costly. To learn more, access Wolters Kluwer’s September 2022 webinars, which focused on Top 10 property and casualty market conduct actions as well as Top 10 life and health market conduct actions. Wolters Kluwer’s Exam & Management solutions help insurance companies in managing these compliance challenges.