Timely Claims Processing A Top Compliance Challenge for Insurers: Analysis

Untimely claims handling and failure to provide required compliant claims, underwriting, and policyholder service disclosures are the U.S. insurance industry’s top compliance shortcomings. That’s according to a comprehensive review by Wolters Kluwer of U.S. insurers’ market conduct actions published by state insurance regulators during 2017 along with data compiled by the company in its most recent annual look at U.S. property and casualty, life, and health insurers’ market conduct actions.

Now in its 14th year, the review serves as a compliance checklist for insurers, providing them a good sense of the business areas that were not only examined by regulators, but also proved to be most challenging for the industry in terms of compliance.

“Effectively and sustainably embedding regulatory requirements into claims, underwriting and distribution processes continues to pose challenges for insurers,” said Kathy Donovan, Senior Compliance Counsel for Wolters Kluwer’s Insurance Compliance business. “As routine as many of these compliance challenges may appear, these findings underscore the need for a sound compliance program management system, where regulatory requirements and changes—along with compliance risks and controls—are consistently integrated into an insurer’s exam management program in ways that empower it to strengthen its enterprise controls and audit practices.”

Following is a summary of the top issues identified regarding examiners’ criticisms of insurance departments across the U.S., primarily impacting insurers’ claims and underwriting processes.

2017 Top 10 Market Conduct Actions for Property and Casualty Insurers

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

2017 Top 10 Market Conduct Actions for Life and Health Insurers

1. Failure to acknowledge, pay, investigate, or deny claims within specified time frames
2. Failure to adhere to required claims grievance and appeal processes, including timeframes and disclosures
3. Noncompliant claim denial notices
4. Failure to provide required and compliant claims, underwriting, and policyholder disclosures
5. Failure to pay claims properly in accordance with policy provisions and requirements
6. Failure to use licensed and/or appointed producers, provide proper notification of producer appointments or terminations, and maintain appropriate documentation
7. Use of unfiled/unapproved or noncompliant forms
8. Failure to adhere to replacement requirements
9. Failure to issue compliant Explanation Of Benefits notices
10. Failure to respond to regulatory requests for information