Regulators impatient with bad claims-handling practices
We all make mistakes. Many times we don’t realize it until someone else points it out to us. If we make a mistake on our tax return, say, the IRS lets us know. If we make too many mistakes, the IRS is going to do a lot more than just let us know. We’re going to be audited.
Florida law requires that insurers doing business here file financial statements quarterly and annually. If something doesn’t seem right, the Office of Insurance Regulation will let that company know. And if too many things don’t seem right, the OIR will launch into a full-scale examination.
An insurance compliance consulting company reviews state examinations every year. The analysts look at data from across the country and identify the most common areas of non-compliance for insurance companies. This year’s results show that following rules regarding claims handling is apparently a problem for many property and casualty insurers.
The results are national, not state-specific, but a South Florida newspaper looked at examinations conducted by the OIR over the last few years. The paper found that claims handling was an issue for one insurer in 2010, four in 2009 and one in 2008.
Consumers may not be surprised by this. Examinations can be triggered by an abundance of consumer complaints as well.
States have rules about how much notice a company must give before dropping a policyholder. According to the study, U.S. property and casualty insurers have the most trouble following the rules when it comes to policy cancellation and nonrenewal.
We said claims handling was the most common, but it’s a little more detailed than that. We’ll discuss the rest of the list in our next post.
Source: Sun Sentinel, “Claims-handling among top 10 beefs regulators have with insurers,” Julie Patel, Aug. 19, 2011
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