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The examiners reviewed files drawn from the category of Closed Claims for the period December 1, 2003 through November 30, 2004, commonly referred to as the "review period". The examiners reviewed 293 SNIC claims files. The examiners cited 18 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. Money recovered within the scope of this report was $3,238.00. Pursuant to the findings of the examination referenced in Item 4 below, the Company is conducting a closed claim survey. The results of the survey and additional payments, if any, shall be reported to the Department and recoveries verified by the examiners.

1. The Company failed to document the determination of value. In five instances, the Company failed to document the determination of value. Any deductions from value, including deduction for salvage, must be discernible, measurable, itemized, and specified as well as be appropriate in dollar amount. The automobile total loss evaluation reports deducted an amount known as a "condition adjustment". This deduction varied from file to file and was not supported by documentation. The Department alleges these acts are in violation of CCR §2695.8(b)(1)(C).

Summary of Company Response: The Company acknowledges these findings and states that the individual evaluation reports for each of these vehicles equated comparable vehicles for purposes of the valuation to one of two possible baseline condition levels (i.e. "normal wear" or "dealer ready"). In each case the level of dealer ready was selected. If comparable vehicles were not in this condition a baseline adjustment or deduction was subtracted from the value of the loss vehicle. With the adoption of new CDI regulations effective in October 2004, this deduction will no longer be allowed unless the loss vehicle is in documented below average condition. The company issued drafts to each of the individual vehicle owners for the amounts that were previously deducted and verification was sent to the Department. The total amount of these refunds came to $2,163.00.

2. The Company failed to provide written notice of the need for additional time every 30 calendar days. In four instances, the Company failed to provide written notice of the need for additional time every 30 calendar days. The Department alleges these acts are in violation of CCR §2695.7(c) (1).

3. The Company failed to accept or deny the claim within 40 calendar days. In two instances, the Company failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days. The Department alleges these acts are in violation of CCR §2695.7(b).

Summary of Company Response: The Company acknowledges these findings and states they have a new administrator to work with their adjusters to ensure full compliance with Department regulations. In addition, Supervisors have been instructed to closely monitor adjuster file pending levels to make certain that all claims are handled in compliance with regulation requirements.

4. The Company failed to include, in the settlement, all applicable taxes, license fees and other fees incident to transfer of evidence of ownership of the comparable automobile. In two instances, the Company failed to include in the settlement, all applicable taxes, license fees and other fees incident to transfer of evidence of ownership of the comparable automobile. The Department alleges these acts are in violation of CCR §2695.8(b) (1).

Summary of Company Response: The Company acknowledges these findings and states that in one instance, the Company obtained a Vehicle Registration Inquiry Report which reported that registration had expired prior to the loss date. A copy of the registration was obtained from the insured which did show the registration was current for the date of loss. It was on this basis that the prorated registration fees were paid to the insured during the examination. In the other instance the fees were not paid due to an oversight by the adjuster. The amount was calculated and paid during the examination. The Company will conduct a closed claim survey of its total loss files and report the results to the Department.

5. The Company failed to settle a claim by making a settlement offer that was unreasonably low. In two instances, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. The Company failed to waive a collision deductible under UMPD coverage and deducted storage charges from a total loss settlement. The Department alleges these acts are in violation of CCR §2695.7(g).

Summary of Company Response: The Company acknowledges these findings and states in the one instance, the deductible has been refunded to the insured in the amount of $500.00. In the other instance, storage fees deducted from the total loss settlement were reimbursed as a result of the examination. Additionally, Company claims management will closely monitor adjusters to ensure correct calculation of payments.

6. The Company failed to properly document claim files. In one instance, the Company's files failed to contain all documents, notes and work papers. There was no documentation confirming if a copy of the repair estimate was provided. The Department alleges these acts are in violation of CCR §2695.3(a).

Summary of Company Response: The Company acknowledges these findings and states that it is their procedure to provide claimants with copies of repair estimates upon which the settlement is based. In this instance, the file was not documented. Procedures were reinforced with adjusters to ensure full compliance.

7. The Company failed to acknowledge notice of claim within 15 calendar days. In one instance, the Company failed to acknowledge notice of claim within 15 calendar days. The Department alleges these acts are in violation of CCR §2695.5(e) (1).

Summary of Company Response: The Company acknowledges these findings and states the delay was due to adjuster error. This adjuster is no longer handling claims for the Company. As a result of this examination, this regulation requirement has been reviewed with claims handling staff.

8. 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 these acts are in violation of CCR §2695.7(d).

Summary of Company Response: The Company acknowledges these findings and states that a form letter requesting information from the claimant was sent in error. The file was reviewed for compliance with the adjuster.

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Last Revised - July 13, 2005
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