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The examiners reviewed files drawn from the category of Closed Claims for the period March 1, 2005, through February 28, 2006, commonly referred to as the "review period". The examiners reviewed 162 AIC claim files, 5 AMIC claim files and 7 ASIC claim files. The examiners cited ten claim handling violations of the Fair Claims Settlement Practices Regulations and/or California Insurance Code Section 790.03 within the scope of this report. Further details with respect to the files reviewed and alleged violations are provided in the following tables and summaries.

The following is a brief summary of the criticisms that were developed during the course of this examination related to the violations alleged in this report. This report contains only alleged violations of Section 790.03 and Title 10, California Code of Regulations, Section 2695 et al. In response to each criticism, the Company is required to identify remedial or corrective action that has been or will be taken to correct the deficiency. Regardless of the remedial actions taken or proposed by the Company, it is the Company's obligation to ensure that compliance is achieved. Money recovered within the scope of this report was $336.10.

1. In nine instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under its insurance policies. Of the instances cited, five were the result of a failure by the Company to pay or object to medical bills within 60 days of receipt. In three of the instances cited, the claim files were not adequately documented. The DWC-1 claim forms were missing from these files. In the remaining instance, a delay in processing the claim occurred between 10/28/05 and 06/07/06. The Department alleges these acts are in violation of CIC §790.03(h)(3).

Summary of Company Response: Argonaut is committed to the highest standards of professional claims management. We believe that our Customers, Insured's, Producers and Claimants should expect Argonaut to treat them fairly and always deal with them honestly and in good faith. Argonaut will promptly and fully investigate every claim of which it is aware. We will carefully evaluate each claim, determine coverage and liability questions and, when appropriate, make fair and reasonable offers to settle as soon as practical. We will communicate with Insured's, Brokers and Claimants to keep them informed of our progress toward resolution of claims issues, frequently enlisting their help in the process. We are committed to applying the resources necessary to produce sound claims management results.

In addition, some states have enacted specific laws and regulations codifying fair claims management practices. Argonaut is committed to full compliance with all such standards and charges it's Divisional Management with direct responsibility for maintaining the ability and readiness of its employees and outside service providers to meet at least the mandatory levels of good faith and professionalism required by those laws in jurisdictions where they apply. We will conduct extensive training with our staff to insure a prompt and full investigation is completed on all files managed by our company. Training will also include identifying fraud and the referral process.

2. In one instance, the Company failed to effectuate prompt, fair and equitable settlements of claims in which liability had become reasonably clear. In the instance cited, the Company failed to pay interest and the penalty on a medical benefit that was paid late. The Department alleges that this act is in violation of CIC §790.03(h)(5).

Summary of Company Response: The Company states "Our normal business practice is to insure full compliance with prompt and fair payment of medical benefits. Should we fail to pay a medical benefit timely, upon recognition of this failure, we immediately assess and pay a self imposed penalty along with the interest due. We have reviewed the specific example outlined above. We have recognized that a late payment was issued on a medical benefit. A self imposed penalty, along with interest was paid to the vendor." As a result of the examination finding the Company issued a self imposed penalty and interest to the vendor in the amount of $336.10.

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Last Revised - August 10, 2007
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