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The examiners reviewed files drawn from the category of Closed Claims for the period June 1, 2003 through May 31, 2004, commonly referred to as the "review period". The examiners reviewed 40 Individual Guaranteed Issue Graded Benefit Life claims files, 40 Group Guaranteed Issue Graded Benefit Life claims files, one Annuity Death claim file, five Group Whole Life claims files, 16 Individual Whole Life claims files, 11 Group Term Life one Accidental Death claim file and eight Scheduled Accident claims files. The examiners cited two claims 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. There were no recoveries discovered within the scope of this report.

1. The Company persisted in seeking unnecessary information. In one instance, the Company persisted in seeking information not reasonably required for or material to the resolution of a claim dispute. The Department alleges this act was in violation of CCR §2695.7(d).

Summary of Company Response: The Company acknowledged this and advised their standard procedure of handling claims for all policies on a single life was not followed in this case. The separation occurred due to an oversight at the time of initial claim handling. The Company revised the initial claim filing instruction letters and conducted training sessions for the life claims staff and the contestable claims staff to reinforce the existing procedure.

2. The Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims. In one instance, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under its insurance policies. The Department alleges this act is in violation of CIC §790.03 (h)(3).

Summary of Company Response: The Company concedes that the examiner made a mistake in paying all of the proceeds to one beneficiary. The Company conducted an investigation on August 30, 2004 to verify the unpaid beneficiary received his share of the settlement. As a result of this claim examination, on August 30, 2004 Claim Representative training was conducted by the Company to ensure compliance with standard procedures of correcting and indemnifying appropriate beneficiaries.

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Last Revised - December 30, 2004
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