The U.S. insurance industry’s top compliance shortcomings relate to claims handling noncompliance, including timeliness, required disclosures, benefit payments, underwriting and rating. That’s according to a comprehensive review by Wolters Kluwer’s Compliance Solutions business of U.S. insurers’ market conduct actions. The annual review uses public data published during 2018 and looks at U.S. property and casualty, life, and health insurers’ market conduct actions, including exams and other enforcement actions.
Now in its 15th year, the review continues to assist insurers by providing a compliance checklist of operational areas within their own companies that may warrant additional audits to check for adherence to regulatory requirements.
“Effectively and sustainably embedding regulatory requirements into claims, underwriting and distribution processes continues to pose challenges for insurers,” says Steven Meirink, Executive Vice President and General Manager for the Compliance Solutions business. “Our annual review results help to confirm the importance of implementing a sound compliance program management process. The Top 10 market conduct issues for all lines of insurance reflect the ongoing nature of these compliance challenges and can be used as informative input to such a process. A robust compliance management program that includes dynamically determining regulatory requirements and a strong risks and controls framework is key to improving the success rate in market conduct compliance.”
The following are listings of the top compliance issues determined in market conduct actions by state insurance regulators across the U.S., primarily found in insurers’ claims and underwriting processes.
2018 Top 10 Market Conduct Actions for Property and Casualty Insurers
- Failure to acknowledge, pay, investigate or deny claims within specified timeframes
- Failure to provide required compliant disclosures in claims processing
- Using unapproved/unfiled rates and rules or misapplying rating factors
- Failure to cancel, non-renew, or renew policies in accordance with requirements
- Failure to issue correct payments and/or compliant denial notices
- Failure to adhere to producer appointment, termination, records and/or licensing requirements
- Failure to process total loss claims properly
- Improper/Incomplete documentation of claim files
- Failure to provide required compliant disclosures in underwriting processes
- Improper/Incomplete documentation of underwriting files
2018 Top 10 Market Conduct Actions for Life and Health Insurers
- Failure to acknowledge, pay, investigate, or deny claims within specified time frames
- Failure to pay claims properly in accordance with policy provisions and requirements/noncompliant claim denials
- Failure to adhere to required claims utilization review, grievance and appeal processes, including timeframes and disclosures
- Failure to provide required and compliant claims, underwriting and policyholder disclosures and notices
- Failure to adhere to replacement requirements
- Failure to issue compliant EOBs
- Use of unfiled/unapproved or noncompliant forms
- Failure to use licensed and/or appointed producers, provide proper notification of producer appointments or terminations and maintain appropriate documentation
- Failure to maintain adequate/complete claims and underwriting documentation
- Failure to report/respond to regulatory requests for information
To access Wolters Kluwer’s September 2019 webinar focused on property and casualty market conduct actions, listen here; for the webinar on life and health market conduct actions, listen here. Learn more about Wolters Kluwer’s insurance compliance expertise and solutions.