Many issues certainly appear to be perennial in nature, reflecting the multiple and detailed compliance requirements.

Are carriers typically reluctant to utilize self-audits?

A specific self-audit privilege actually exists in a limited number of states. However, regardless of that limited provision, insurers can and do perform compliance audits to assess their controls on the state multiple requirements. Generally, I believe it is reasonable to expect that the scope and frequency of such audits vary among insurers.

In this report, you mention criticisms about how insurers handle complaints. Would you be more specific?

Insurers are generally required to maintain complete complaint registers (refer to NAIC Model 884.) The register's data elements, among others, include line of business, date received, date closed and company disposition.

• Two Insurance Department complaints were not logged on the company complaint log. 
• Four complaint files were in violation of 215 ILCS 5/143d. Two responses were sent after 21 days and two responses were not in a written format as required.
• Initially failed to fully co-operate with the Department in their investigation of the complaint

What about the alleged 'failure to provide requested data to market conduct examiners'? Could there be a plausible explanation as to why carriers are sluggish in responding or otherwise non-compliant?

The primary reason for this type of criticism appears to be difficulties in locating, and therefore producing, the documents which were requested during the exam process. This underlying reason ties in with compliance challenges associated with overall file documentation and record retention processes. 

What exactly does 'failure to conduct business in their own name' connote?

This situation most often occurs when another company's letterhead and/or identifying logo, typically from another company in the group, appears on a policy or other document provided to a policyholder or claimant. Examples of "own name" violations follow:

• The Companies are subsidiaries and/or affiliates of a larger insurance group. The Companies failed to properly identify the correct underwriting name in their claims communications.
• The Companies are subsidiaries of a larger insurance group. The Companies mailed correspondence in these instances that failed to identify the underwriting Company handling the claim.
• The Company representative chose the wrong letterhead for a form letter that was sent to the named insured
• Correspondence sent after {date} referenced the underwriting Company as {Name} rather than the new legal name of the Company which is {Legal Name of Company}.

A good deal of these complaints pertain to claims handling. What is happening here?

The claims function in an insurance company involves many and varied compliance elements, with each one each one presenting challenges concerning identification and implementation, as well as monitoring for changes. Meeting the timely claim handling and the notice and disclosure requirements, although seemingly straight-forward and clear, require consistent adherence to policies and procedures. The criticisms that are included in these recent exams demonstrate that sometimes there are problems—such as lack of adherence—with either the existing processes and/or that the processes are not up to date in terms of current state requirements.

What can chief claims officers and supervisors do to mitigate exposure and ensure compliance? 

Managing claims compliance risk compliance requires a comprehensive database of all claims requirements applicable to specific lines of business, along with a reliable source delivering updates to those state requirements. Additionally, regular audits of the claims function can greatly assist in identifying problems before an exam commences or a consumer complaint is filed.

Does 'failure to pay total loss claims properly' imply that carriers are underestimating the value of totaled vehicles?

Many of these criticisms involve a failure on the part of insurers to include all applicable fees and taxes that comprise a total loss payment.

What about proper claims documentation?

Claims files should contain evidence of all communication to and from the insurer. This includes documents such as required disclosures and proof of loss forms.