The U.S. insurance industry’s top compliance shortcomings relate to claims handling noncompliance, including timeliness, required disclosures, benefit payments and grievance processes, as well as underwriting, rating and insurance producer issues. 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 from 2019 and looks at U.S. property and casualty, life, and health insurers’ market conduct actions, including exams and other enforcement actions.
Now in its sixteenth year, the Top 10 market conduct actions 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.
“While technology has helped to streamline and automate some processes, our annual Top 10 market conduct action results continue to show the ongoing challenges insurers face in managing their regulatory requirements,” said Steven Meirink, Executive Vice President and General Manager for the Compliance Solutions business. “However, a robust compliance program management approach that includes a strong risks and controls framework can be key to helping improve insurers’ success rate in market conduct compliance.”
The following are listings of the top compliance issues determined in market conduct actions across the U.S. by state insurance regulators. These are primarily found in insurers’ claims and underwriting processes.
2019 Top 10 Market Conduct Criticisms for Property and Casualty Insurers
- Failure to acknowledge, pay, investigate or deny claims within specified timeframes
- Failure to issue correct payments and/or compliant denial notices
- Failure to provide required compliant notices and disclosures in claims processing
- Failure to process total loss claims properly
- Improper/incomplete documentation of underwriting files
- Using unapproved/unfiled rates and rules or misapplying rating factors
- Failure to cancel, non-renew, decline policies in accordance with requirements
- Failure to adhere to producer appointment, termination, records, reporting and/or licensing requirements
- Improper/incomplete documentation of claim files
- Failure to provide required compliant notices and disclosures in underwriting processes
2019 Top 10 Market Conduct Criticisms 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 replacement requirements
- Failure to adhere to required claims utilization review, grievance and appeal processes, including timeframes and disclosures
- 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 provide required and compliant claims, underwriting and policyholder disclosures and notices
- Failure to issue compliant EOBs
- Failure to maintain adequate/complete claims and underwriting documentation
- Failure to adhere to advertising requirements
To learn more, access Wolters Kluwer’s September 2020 webinar focused on Top 10 property and casualty market conduct actions or the webinar on Top 10 life and health market conduct actions. The market conduct examination process for insurance companies is complex, time-consuming and costly. Wolters Kluwer’s Exam & Management solutions help insurance companies in managing these compliance challenges.
Wolters Kluwer Compliance Solutions 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, which sits within Wolters Kluwer’s Governance, Risk & Compliance (GRC) division, helps these financial institutions efficiently manage risk and regulatory compliance obligations, and gain the insights needed to focus on better serving their customers and growing their business.
Wolters Kluwer’s GRC division provides an array of expert solutions to help U.S financial institutions manage regulatory and risk obligations, including customized offerings to address COVID-19 challenges. Compliance Solution’s Paycheck Protection Program Supported by TSoftPlus™ helps lenders’ customers access critical stimulus funding, and its COVID-19 Noteworthy Developments Bulletins aggregate COVID-19 related, global regulatory updates for the financial services industry. In addition, Wolters Kluwer Lien Solutions’ iLien for Main Street helps lenders optimize their due diligence and lien management efforts when securing loans for small and medium-sized businesses under the Main Street Lending Program.
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 help 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 2019 annual revenues of €4.6 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 19,000 people worldwide.