The U.S. insurance industry’s top compliance shortcomings relate to claims handling noncompliance, including timeliness, required disclosures, benefit payments, underwriting and rating. That’s according to a comprehensive review by Wolters Kluwer’s Compliance Solutions business of U.S. insurers’ market conduct actions. The annual review uses public data published during 2018 and looks at U.S. property and casualty, life, and health insurers’ market conduct actions, including exams and other enforcement actions.
Now in its 15th year, the review continues to assist insurers by providing a compliance checklist of operational areas within their own companies that may warrant additional audits to check for adherence to regulatory requirements.
“Effectively and sustainably embedding regulatory requirements into claims, underwriting and distribution processes continues to pose challenges for insurers,” says Steven Meirink, Executive Vice President and General Manager for the Compliance Solutions business. “Our annual review results help to confirm the importance of implementing a sound compliance program management process. The Top 10 market conduct issues for all lines of insurance reflect the ongoing nature of these compliance challenges and can be used as informative input to such a process. A robust compliance management program that includes dynamically determining regulatory requirements and a strong risks and controls framework is key to improving the success rate in market conduct compliance.”
The following are listings of the top compliance issues determined in market conduct actions by state insurance regulators across the U.S., primarily found in insurers’ claims and underwriting processes.
2018 Top 10 Market Conduct Actions for Property and Casualty Insurers
- Failure to acknowledge, pay, investigate or deny claims within specified timeframes
- Failure to provide required compliant disclosures in claims processing
- Using unapproved/unfiled rates and rules or misapplying rating factors
- Failure to cancel, non-renew, or renew policies in accordance with requirements
- Failure to issue correct payments and/or compliant denial notices
- Failure to adhere to producer appointment, termination, records and/or licensing requirements
- Failure to process total loss claims properly
- Improper/Incomplete documentation of claim files
- Failure to provide required compliant disclosures in underwriting processes
- Improper/Incomplete documentation of underwriting files
2018 Top 10 Market Conduct Actions for Life and Health Insurers
- Failure to acknowledge, pay, investigate, or deny claims within specified time frames
- Failure to pay claims properly in accordance with policy provisions and requirements/noncompliant claim denials
- Failure to adhere to required claims utilization review, grievance and appeal processes, including timeframes and disclosures
- Failure to provide required and compliant claims, underwriting and policyholder disclosures and notices
- Failure to adhere to replacement requirements
- Failure to issue compliant EOBs
- Use of unfiled/unapproved or noncompliant forms
- Failure to use licensed and/or appointed producers, provide proper notification of producer appointments or terminations and maintain appropriate documentation
- Failure to maintain adequate/complete claims and underwriting documentation
- Failure to report/respond to regulatory requests for information
To access Wolters Kluwer’s September 2019 webinar focused on property and casualty market conduct actions, listen here; for the webinar on life and health market conduct actions, listen here. Learn more about Wolters Kluwer’s insurance compliance expertise and solutions.
Compliance Solutions, part of Wolters Kluwer’s Governance, Risk & Compliance division, is a market leader and trusted provider of risk management and regulatory compliance solutions and services to U.S. banks and credit unions, insurers and securities firms. The business helps these financial institutions efficiently manage compliance obligations tied to loan and deposit origination transactions and workflows, manage risk and other regulatory compliance obligations, and gain the insights needed to focus on better serving their customers and growing their business.
About Wolters Kluwer Governance, Risk & Compliance
Governance, Risk & Compliance (GRC) is a division of Wolters Kluwer, which provides legal and banking professionals with solutions to ensure compliance with ever-changing regulatory and legal obligations, manage risk, increase efficiency, and produce better business outcomes. GRC offers a portfolio of technology-enabled expert services and solutions focused on legal entity compliance, legal operations management, banking product compliance, and banking regulatory compliance.
Wolters Kluwer (AEX: WKL) is a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. Wolters Kluwer reported 2018 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 18,600 people worldwide.