Tuesday, 06 October 2020 18:38

Report: Improper Documentation a Frequent Reason for Claims Handling Citations

Written by Jim Sams, Claims Journal


Claims errors continue to be the most frequent reason that property and casualty insurers are cited by regulators when responding to market conduct complaints or during routine examinations, according to a new report by Wolters Kluwer Compliance Solutions.

Failure to meet deadlines for acknowledging, investigating, paying or denying claims was the No. 1 “criticism” by regulators in approximately 375 enforcement actions, said Kathy Donovan, lead researcher for Wolters Kluwer.


Failure to pay the correct amount or send complaint denial notices was No. 2, failure to provide correct claims processing notices and disclosures was No. 3 and failure to properly process total-loss claims was No. 4.


The full list of the top 10 market conduct criticisms, using Wolters Kluwers’ exact terminology, will follow at the end of this article.


Donovan said during a telephone interview it should be no surprise that claims would be the most common reason that insurers get dinged by regulators, given the tight deadlines, numerous notices required and exacting standards established for the amounts that are paid on claims. She said most of the criticisms cited by regulators could have been resolved by more careful attention to proper documentation.


“A lot of it goes back to documentation that proves what they’ve done, when they’ve done it and how they’ve done it,” she said.


For example, Donovan said many states require claims to be paid or denied within specific timeframes, often 30 or 45 days. Insurers can extend those deadlines but they are required to send notices to the policyholders explaining why they are taking longer to resolve the claim. Sometimes delay notices are sent with no explanation, and sometimes no delay notice is sent at all.


Donovan said auto claims are frequently delayed because the collision repair shop uncovers additional damage after beginning work, requiring a supplemental report. In a homeowner’s claim, the adjuster may hold up on a file because an inventory of damaged personal items has not been received.

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