Top 10 insurance company compliance issues

Wolters Kluwer Financial Services has released its annual lists of the top 10 reasons insurance companies are found to be out of compliance during market conduct examinations. The categories with the most criticisms comprise the top 10 lists for property and casualty, and life and health insurance.

The company’s Insurance compliance business reviewed and analyzed the content in last year’s market conduct exams to give insurers insight into what regulators are looking for during compliance audits. Claims-handling, licensing and underwriting issues continued to dominate the lists of examination criticisms by insurance departments across the U.S.

“Day-to-day regulatory compliance issues can slip insurers up if they’re not careful,” said Kathy Donovan, senior compliance counsel, Insurance, at Wolters Kluwer Financial Services, in a press release. “Paying attention to market conduct activity, as well as states’ adoption of National Association of Insurance Commissioners (NAIC) model rules, can help insurers anticipate potential problems. This is key in building an effective program to maintain regulatory compliance.”

This is the sixth year Wolters Kluwer Financial Services’ insurance compliance experts have compiled market conduct exam content for the lists. The data can help serve as a compliance checklist for insurers.

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 pay the appropriate claim amount
2. Failure to acknowledge, to pay, or deny claims within specified time frames
3. Failure to non-renew policies in accordance with requirements
4. Using unapproved forms, unfiled rates and/or misapplication of rating factors
5. Failure to provide required disclosures in the claims process
6. Failure to adhere to producer appointment, termination and/or licensing requirements and adjuster licensing requirements
7. Failure to cancel policies in accordance with requirements
8. Failure to respond to the Department of Insurance and/or produce records requested during the exam process
9. Failure to adhere to underwriting rules and/or provide required disclosures
10. Improper documentation of claim files

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

1. Failure to acknowledge, to pay, or deny claims within specified time frames
2. Using unapproved or unfiled forms
3. Failure to adhere to advertising requirements
4. Failure to adhere to replacement requirements
5. Failure to adhere to producer appointment, termination, and/or licensing requirements
6. Failure to adhere to grievance and appeals requirements
7. Failure to provide required disclosures
8. Failure to include required provisions in insured’s contract
9. Failure to follow enrollment procedures
10. Claim payments inconsistent with benefit plans

“It’s important for insurers to have the resources and systems in place to keep up with the pace of regulatory change,” said David Evans, vice president and general manager, Insurance, at Wolters Kluwer Financial Services. “Our comprehensive market conduct research, regulatory intelligence and workflow management solutions can help insurers assess and minimize their compliance risk exposure.”

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