A review of state insurance regulators’ examinations of U.S. property/casualty insurers shows that claims-handling, underwriting and producer requirements continue to be the top criticisms.

According to compliance and risk management firm Wolters Kluwer Financial Services, the data compiled for its annual “top 10” list shows that insurers are also frequently criticized for complaint handling processes and failure to adhere to policy replacement requirements.

Beyond Market Conduct Exams: How to Establish a Compliance Culture at a P/C Carrier

This is the tenth year the company has released the data to the insurance industry, based on its annual review and analysis of results from the previous year’s state exams.

Companies that regularly evaluate their regulatory compliance controls can use this information to help ensure that existing processes are adequate, the firm said.

“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. “However, conducting internal audits is an excellent way to monitor the effectiveness of regulatory implementation in company systems and help ensure consistently compliant results.”

Top 10 Most Common Market Conduct Compliance Criticisms of U.S. P/C Insurers

  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

Source: Wolters Kluwer Financial Services