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The examiners reviewed files drawn from the category of Closed Claims for the period April 1, 2001 through March 31, 2002, commonly referred to as the "review period". The examiners reviewed 662 TIG Insurance Company claim files. The examiners cited 193 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 $7,097.12.

1. The Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims. In 36 instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under its insurance policies. Specifically, files fell off diary with long periods of inactivity. The Department alleges these acts are in violation of CIC §790.03(h)(3).

Summary of Company Response: The Company acknowledges there were instances in which the files do not reflect that the claims staff properly employed the Company procedure to promptly investigate and process claims arising under insurance policies. The Company states the findings were a result of improper diary maintenance and file documentation. The Company has reviewed with its claims staff the importance of and need for proper diary control and file documentation. Compliance will be measured through supervisor review and the company self-audit process.

2. The Company failed to properly document claim files. In 24 instances, the Company's files failed to contain all documents, notes and work papers. The Department alleges these acts are in violation of CCR §2695.3(a).

3. The Company failed to provide written notice of the need for additional time every 30 calendar days. In 22 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).

4. The Company failed to advise the claimant that he or she may have the claim denial reviewed by the California Department of Insurance. In 13 instances, the Company failed to include a statement in its claim denial that, if the claimant believes the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance. The Department alleges these acts are in violation of CCR §2695.7(b)(3).

Summary of Company Response: The Company acknowledges that some denial letters did not advise the claimants of their right to have the Department of Insurance review denied claims. To ensure future compliance, the Company has reviewed with its staff the proper language to be included in denial letters. Additionally, supervisors will monitor compliance on over-diary and through the self-audit process.

5. The Company failed to accept or deny the claim within 40 calendar days. In 12 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 that there were instances in which the files do not reflect that, upon receiving proof of claim, the claim was accepted or denied within forty calendar days. The Company states that these instances were a result of improper diary maintenance and documentation by the claims staff. The Company has reviewed with its claims staff the importance of and need for proper diary control and file documentation. Compliance will be monitored through the supervisory review and self-audit process.

6. The Company failed to acknowledge notice of claim within 15 calendar days. In 11 instances, 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 that there were instances in which the files do not reflect that the claim was acknowledged within fifteen calendar days from receipt of notice. In order to assure compliance with this regulation, the Company procedures have been reiterated to the claims staff to make sure timely initial contact is made and documented in the file. Supervisory file review will be employed to verify that Company procedures are being followed.

7. The Company failed to provide the written basis for the denial of the claim. In 11 instances, the Company failed to provide the written basis for the denial of the claim. The Department alleges these acts are in violation of CCR §2695.7(b)(1).

8. The Company failed to respond to communications within 15 calendar days. In eight instances, the Company failed to respond to communications within 15 calendar days. The Department alleges these acts are in violation of CCR §2695.5(b).

9. The Company failed to provide written notice of any statute of limitation 60 days prior to the expiration date. In eight instances, the Company failed to provide written notice of any statute of limitation or other time period requirement not less than 60 days prior to the expiration date. The Department alleges these acts are in violation of CCR §2695.7(f).

10. The Company failed to begin investigation of the claim within 15 calendar days. In seven instances, the Company failed to begin investigation of the claim within 15 calendar days. The Department alleges these acts are in violation of CCR §2695.5(e)(3).

11. The Company failed to record claim data in the file. In six instances, the Company failed to record the date the Company received, date the Company processed and date the Company transmitted or mailed every relevant document in the file. The Department alleges these acts are in violation of CCR §2695.3(b)(2).

12. Upon acceptance of the claim the Company failed to tender payment within 30 calendar days. In six instances, upon acceptance of the claim, the Company failed to tender payment within 30 calendar days. The Department alleges these acts are in violation of CCR §2695.7(h).

13. The Company's claims agent failed to immediately transmit notice of claim to the insurer. In six instances, the Company's claims agent failed to immediately transmit notice of claim to the insurer. The Department alleges these acts are in violation of CCR §2695.5(d).

14. The Company failed to disclose all policy provisions. In five instances, the Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy. The Department alleges these acts are in violation of CCR §2695.4(a).

15. The Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days. In five instances, the Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days. The Department alleges these acts are in violation of CCR §2695.5(e)(2).

16. 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 or the Company failed to explain in writing for the claimant the basis of the fully itemized cost 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 and in three instances, the Company failed to explain in writing for the claimant the basis of the fully itemized cost of the comparable automobile. The Department alleges these acts are in violation of CCR §2695.8(b)(1).

The Company acknowledges the two instances in which it unintentionally overlooked the additional fees due to the insured. The Company has issued the additional payments due to the claimants. The proper procedure for payments of the required additional fees has been reviewed with the claim handlers. Compliance will be measured through supervisor review and the self-audit process.

17. The Company attempted to settle a claim by making a settlement offer that was unreasonably low. In three instances, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. In one instance, the Company failed to cover an item purchased to provide security for the business owner's business; in another instance, there were two bills, a hospital bill ($14,666.00) and a physician treatment bill ($2,000.00). The maximum coverage available for both bills was $2,000.00. On the first bill submitted ($2,000.00), the Company paid only $500.00 rather than pay the $2,000.00 maximum benefit. In the last instance, the Company verified a loss amount of one amount but issued payment on a smaller amount. The Department alleges these acts are in violation of CCR §2695.7(g).

18. The Company failed to represent correctly to claimants, pertinent facts or insurance policy provisions. In two instances, the Company failed to represent correctly to claimants, pertinent facts or insurance policy provisions relating to a coverage at issue. In one instance, the adjuster told an insured the loss was less than the deductible, when, in fact, the deductible had already been met. In the other instance, the Company misrepresented the term of medical payments in the acknowledgement letter. The Department alleges these acts are in violation of CIC §790.03 (h)(1).

19. The Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. In one instance, the Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation of the claim. The Department alleges this act is in violation of CCR §2695.8(i).

20. The Company failed to supply the claimant with a copy of the estimate upon which the settlement is based. The Company failed to document the basis of betterment, depreciation, or salvage. The basis for any adjustment shall be fully explained to the claimant in writing. In one instance each, the Company failed to: supply the claimant with a copy of the estimate upon which the settlement is based; and document the basis of betterment, depreciation, or salvage. The basis for any adjustment shall be fully explained to the claimant in writing. The Department alleges these acts are in violation of CCR §2695.8(f) and CCR §2695.8(k).









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