As the federal government prepares to audit taxpayers across the nation, CCH Insurance Services is giving insurance companies some advice about market conduct exams. These exams, which investigate an insurance company's business practices and noncompliance violations, have the potential to cost companies millions of dollars in fines and lost business.

According to CCH, three of the top 10 reasons property and casualty insurers are found to be out of compliance during a market conduct exam relate directly to the handling of claims. This includes failure to pay or deny claims within specified time frames, failure to communicate a delay in the settlement of a claim in writing, and improperly documenting claim policies. Other violations the company cited included using unapproved forms and rates, failing to notify of producer appointments or terminations, neglecting to maintain complaints, improperly terminating a policy, and incorrectly documenting underwriting policies.

“Nearly every department is affected by compliance regulations, including claims, customer service, human resources, and sales,” said Joe Bieniek, manager of regulatory compliance for CCH Insurance Services. “With the dramatic impact market conduct exams can have on a company's reputation and revenues, understanding the importance of staying in compliance and ensuring that all employees are educated is more important than ever.”