Navigating a California Claims or Rating and Underwriting Exam Association of Insurance Association of Insurance Compliance Professionals Compliance Professionals WELCOME! WELCOME!
Who Are We? Who Are We? Field Field Rating & Underwriting Rating & Underwriting Bureau Bureau (FRUB) (FRUB) (FRUB) (FRUB) Field Field Claims Bureau Claims Bureau (FCB) (FCB)
What Do We Do? What Do We Do? Statutory Examinations Statutory Examinations Routine Examinations Routine Examinations Data Data Data-Only Examinations Data-Only Examinations Only Examinations Only Examinations Target Examinations Target Examinations Reexaminations Reexaminations
How Are Exam Costs Recouped? How Are Exam Costs Recouped? Prop Prop 103 assessment 103 assessment (All FRUB P&C Exams) (All FRUB P&C Exams) Direct Billed to Insurer Direct Billed to Insurer (All FCB, and non (All FCB, and non- -Prop 103) Prop 103) Rate is $152 per hour Rate is $152 per hour Recalculated on an annual basis Recalculated on an annual basis Recalculated on an annual basis Recalculated on an annual basis
How are Companies Selected? How are Companies Selected? Statutory Requirements Statutory Requirements Market Analysis Market Analysis Complaints Complaints Market Conduct Annual Statement (MCAS) Market Conduct Annual Statement (MCAS) Financial Info Financial Info Financial Info Financial Info Info From Other Units (Investigations, Financial, etc.) Info From Other Units (Investigations, Financial, etc.) Premium Writings Premium Writings Lines of Business and Type of Exam Lines of Business and Type of Exam Marketplace Info Marketplace Info
How Do We Do It? How Do We Do It? Notification of Exam Notification of Exam Examiner In Charge Contact Examiner In Charge Contact Opening Meeting Opening Meeting File Review File Review File Review File Review Exit Meeting Exit Meeting Non Non- -Compliance Letter (FRUB) Compliance Letter (FRUB) Draft Report Draft Report Adopted Report Adopted Report
What Are We Looking For? What Are We Looking For? Statutory Compliance Statutory Compliance Internal Internal Compliance Compliance Unfair Discrimination Unfair Discrimination Documentation Documentation Notices to Policyholders Notices to Policyholders Notices to Policyholders Notices to Policyholders Compliance w/ New Laws or Changes in Law Compliance w/ New Laws or Changes in Law Compliance with Filed Rates Compliance with Filed Rates Eligibility Guidelines Eligibility Guidelines Advertising and Marketing Advertising and Marketing
What Happens From There? What Happens From There? Resolved Resolved Without Further Without Further Action Action Resolved With Ongoing Insurer Action Resolved With Ongoing Insurer Action Direct Direct Enforcement Action Enforcement Action Legal Legal Division Action Division Action
What Do We Commonly Find? What Do We Commonly Find?
Private Passenger Automobile Private Passenger Automobile At At- -Fault Regulations Fault Regulations CCR CCR § 2632.13 2632.13 51 51% of legal % of legal cause cause Bodily Bodily injury or injury or death death PD PD excess $1,000 excess $1,000 None of the statutory None of the statutory exceptions apply exceptions apply
POP POP QUIZ QUIZ How many points may an insurer charge How many points may an insurer charge for an accident if the insured fails to for an accident if the insured fails to respond to a request for additional respond to a request for additional information? information?
rd Party Designee Notice of 3 Notice of 3 rd Party Designee Auto, HO, Disability Income Auto, HO, Disability Income CIC CIC § § 396 396 Effective January 1, 2016 Effective January 1, 2016 Upon New Business Upon New Business Notification Notification at least at least Every 2 Years Every 2 Years
Loss Exchange Reports Loss Exchange Reports CCR CCR § § 2632.13(f)(2) 2632.13(f)(2) Policyholder’s address Policyholder’s address Driver’s Name Driver’s Name Date of Incident Date of Incident At At- -fault Indicator fault Indicator Property Damage Property Damage Bodily Injury/Death Bodily Injury/Death Statutory Exceptions Were Considered Statutory Exceptions Were Considered
Private Passenger Automobile Private Passenger Automobile Second Mandatory Rating Factor Second Mandatory Rating Factor Annual Mileage Annual Mileage – – CCR CCR § § 2632.5(c)(2) 2632.5(c)(2) Estimated vs. Verified Estimated vs. Verified Insured’s Estimate Insured’s Estimate New Business New Business New Business New Business Renewal Renewal Third Party Reports Third Party Reports
What do you think? What do you think? Is there a 60 day Is there a 60 day Is there a 60 day Is there a 60 day underwriting period in underwriting period in Private Passenger Private Passenger Automobile? Automobile?
Effective January 1, 2013, CIC Effective January 1, 2013, CIC § § 661(b) was removed from the 661(b) was removed from the California Insurance Code. California Insurance Code.
Allowable Reasons For Cancellation Allowable Reasons For Cancellation Substantial Increase in Substantial Increase in Hazard Insured Against Hazard Insured Against Fraud or Material Fraud or Material Fraud or Material Fraud or Material Misrepresentation Misrepresentation Non Non- -payment of Premium payment of Premium
Homeowners Losses Homeowners Losses Substantial Relationship to Loss Substantial Relationship to Loss Exposure Exposure Underwriting Underwriting Underwriting Underwriting Rating Rating
POP QUIZ #2! POP QUIZ #2! Can an insurer have a rule that any Can an insurer have a rule that any additional or return premiums due additional or return premiums due less than $10 may be waived? less than $10 may be waived? less than $10 may be waived? less than $10 may be waived?
CIC § 481.5 requires that all unearned premium be returned to the premium be returned to the policyholder upon termination or if there is a reduction in coverage.
Commercial Lines Commercial Lines DOCUMENT, DOCUMENT, DOCUMENT!!! DOCUMENT, DOCUMENT, DOCUMENT!!!
Schedule Rating Plan Schedule Rating Plan DOCUMENT, DOCUMENT, DOCUMENT!!! DOCUMENT, DOCUMENT, DOCUMENT!!! Subjective vs. Objective Subjective vs. Objective Criteria Criteria Characteristics of a risk not otherwise Characteristics of a risk not otherwise contemplated in the rating plan contemplated in the rating plan contemplated in the rating plan contemplated in the rating plan
Prior Approval of Rates Prior Approval of Rates Adhere to filed rating plan Adhere to filed rating plan “a” rating “a” rating Rate Ranges Rate Ranges Document! Document!
Required Mail Time Required Mail Time Additional Mail Time Based on Location Additional Mail Time Based on Location Code of Civil Procedures Code of Civil Procedures § § 1013(a 1013(a) ) – – Add 5/10/20 Days Add 5/10/20 Days Private Passenger Automobile Private Passenger Automobile CIC CIC § § 662 662 – – Cancellations Cancellations CIC CIC § § 663 663 – – Notice of Renewal/Non Notice of Renewal/Non- -Renewal Renewal Homeowners Homeowners CIC CIC § § 677.4 677.4 – – Cancellations Cancellations CIC CIC CIC § 678 CIC § 678 678 – Notice of Renewal/Non 678 – Notice of Renewal/Non Notice of Renewal/Non-Renewal Notice of Renewal/Non-Renewal Renewal Renewal Commercial Insurance Commercial Insurance CIC CIC § § 677.2(c) 677.2(c) – – Cancellations Cancellations CIC CIC § §678.1 678.1 – – Non Non- -renewal renewal ( (Commercial/Excess Umbrella) Commercial/Excess Umbrella) CIC CIC § § 676.2(c)(1) 676.2(c)(1) – – Midterm premium change, Reduction in Coverage, Change in Midterm premium change, Reduction in Coverage, Change in conditions conditions Workers’ Compensation Workers’ Compensation CIC CIC § § 676.8 676.8 – – Cancellations Cancellations CIC CIC § § 11664(c) 11664(c) – – Non Non- -renewal renewal
Annuity Sales Annuity Sales - - Suitability Suitability CIC CIC § § 10509.914 10509.914
Life & Annuity Life & Annuity Free Look Notices Free Look Notices What are the required timeframes? What are the required timeframes? • 30 30 DAYS for Group DAYS for Group Life Seniors age 65 Life Seniors age 65 + [CIC + [CIC § § 786] 786] • 10 10- -30 DAYS 30 DAYS for Ind. Life/Annuities [CIC for Ind. Life/Annuities [CIC § § 10127.9] 10127.9] • 30 DAYS for Ind. Life/Annuities age 60+ [ 30 DAYS for Ind. Life/Annuities age 60+ [CIC CIC § § 10127.9 10127.9] ] • 30 DAYS for Replacements [ • 30 DAYS for Replacements [ 30 DAYS for Replacements [CIC 30 DAYS for Replacements [CIC CIC § 10509.6] CIC § 10509.6] 10509.6] 10509.6]
Life Insurance Life Insurance rd Party Designee 3 rd Party Designee CIC CIC § § 10113.72 10113.72 Upon New Business Upon New Business Annual Notification Annual Notification
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