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The examiners reviewed files drawn from the category of Closed Claims for the period March 1, 2002 through February 28, 2003, commonly referred to as the "review period". The examiners reviewed 157 Allied Property and Casualty Insurance Company, 319 AMCO Insurance Company, 37 Depositors Insurance Company, 29 Nationwide Mutual Fire Insurance Company, 572 Nationwide Mutual Insurance Company, and 17 Nationwide Property and Casualty Insurance Company claim files. The examiners cited 252 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 $13,069.86. Following the findings of the examination, closed claim surveys conducted by the Company resulted in additional payments of $37,700.00. As a result of the examination, the total amount of money returned to claimants within the scope of this report was $50,769.86.
1. The Company failed to properly document claim files. In 59 instances, the Companies' files failed to contain all documents, notes and work papers. Of the cited instances, 33 were the result of missing documents; 20 were the result of inadequate file notes or explanations and six were a combination of missing documents and inadequate file notes. The Department alleges these acts are in violation of CCR §2695.3(a).
Summary of Companies' Response: The Companies acknowledge these instances. Regarding the missing documents, it is the Companies' procedure to maintain all documents related to each claim file electronically and to provide adequate detail of pertinent events and dates relative to the claim in the claim file.
Regarding the instances in which there were inadequate file notes or explanations, it is the Companies' procedure to document all file activity as stated above.
Despite employing standards more stringent than Department of Insurance (DOI) regulations and California statutes, the Companies acknowledge that infrequently they failed to meet expectations of performance with regard to file documentation. While regrettable, these individual compliance errors were not part of a general business practice. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
2. The Company failed to accept or deny the claim within 40 calendar days. In 31 instances, the Companies failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days. In two of the cited claims, the files were closed without payment or denial when proof of claim had been presented. The remaining 29 claims were eventually accepted or denied appropriately but not within 40 calendar days. The Department alleges these acts are in violation of CCR §2695.7(b).
Summary of Companies' Response: As a result of the examination, payments totaling $3,978.28 were issued to policyholders on the two claims.
The Companies have adopted and implemented standards for prompt investigation and claims processing in compliance with CIC §790.03(h)(3). Despite employing standards more stringent than DOI regulations, the Companies acknowledge that infrequently they failed to meet the expectations of performance with respect to accepting or denying a claim within 40 calendar days. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
3. The Company failed to provide written notice of the need for additional time every 30 calendar days. In 19 instances, the Companies 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).
Summary of Companies' Response: The Companies have adopted and implemented standards for prompt investigation and claims processing in compliance with CIC §790.03(h)(3). Despite employing standards more stringent than DOI regulations, the Companies acknowledge that infrequently they failed to meet the expectations of performance with respect to providing written notice of the need for additional time or information every 30 calendar days. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
4. The Company attempted to settle a claim by making a settlement offer that was unreasonably low. In 17 instances, the Companies attempted to settle a claim by making a settlement offer that was unreasonably low. Of the instances cited, six were the result of errors in the application of the deductible. Of the errors that were the result of the application of the deductible, three were on commercial auto comprehensive claims on which the deductible should have been waived. Five instances were the result of an incomplete analysis of the proof of claim that had been presented. Four were the result of improper deductions taken from the claim for either depreciation or salvage. Two were the result of errors in total loss evaluations. The Department alleges these acts are in violation of CCR §2695.7(g).
Summary of Companies' Response: As a result of these findings, the Company issued payments totaling $7,880.84 to or on behalf of its policyholders. In the instances cited, the claims associates involved were counseled on the errors discovered.
Additionally, the Companies conducted a deductible waiver audit of the commercial auto comprehensive claims closed from September 1, 2000 through August 31, 2003, which resulted in payments to policyholders totaling $37,700.00.
Despite having adopted and implemented standards to comply with DOI regulations and California statutes regarding proper claim offers and payments, the Companies acknowledge that infrequently they failed to meet the expectations of performance with respect to equitable evaluation and settlement of the claim. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
5. The Company failed to begin investigation of the claim within 15 calendar days. In 16 instances, the Companies 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).
Summary of Companies' Response: The Companies have adopted and implemented standards for prompt investigation and claims processing in compliance with CIC §790.03(h)(3) and compliance with CCR §2695.5(e)(3). Despite employing time standards more stringent than DOI regulations, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to beginning a claim investigation. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
6. The Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. In 16 instances, the Companies 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 these acts are in violation of CCR §2695.8(i).
Summary of Companies' Response: The Companies acknowledge these instances stating that it is company practice to provide written notice of intent to pursue subrogation to policyholders. The specific errors were discussed with the claims associates involved. A new subrogation letter was introduced to address this issue. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
7. The Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies. In 15 instances, the Companies failed to adopt and implement reasonable standards to promptly investigate claims arising under insurance policies. Of the cited instances, nine were the result of significant gaps in file activity and/or reporting. Three instances were cited as it appeared the files reflected periods of inactivity when there were known issues requiring resolution. One instance was based on the inconsistent application of depreciation to the labor component of a structure repair. One instance was due to a lack of response to multiple inquiries from an insured. One instance was due to the failure to issue a payment to an insured for over five months once it had been recognized that it was due. The Department alleges these acts are in violation of CIC §790.03(h)(3).
Summary of Companies' Response: As a result of the examination, the Companies issued a payment of $1,141.74 to a policyholder. A number of the claims handlers involved in these instances were no longer employed by the Companies at the time the examination was conducted. The Companies, prior to, during and after the examination period had adopted and implemented standards for prompt investigation of claims investigation and processing in compliance with CIC §790.3(h)(3). Since the examination period but prior to receipt of this report, the Companies have taken extra steps to insure compliance as described below.
Despite employing standards for compliance, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to the prompt investigation and processing of claims. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
8. The Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days. In 12 instances, the Companies 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).
Summary of Companies' Response: Despite employing time standards more stringent than DOI regulations and assistance instruction, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to providing forms, instructions and reasonable assistance to claimants within 15 calendar days of notice of claim. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
9. The Company failed to provide written basis for the denial of the claim. In 11 instances, the Companies failed to provide written basis for the denial of the claim. The Department alleges these acts are in violation of CCR §2695.7(b)(1).
Summary of Companies' Response: Though having adopted and implemented standards for compliance with all Claims statutes and regulations, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to providing the written basis for a full or partial denial of a claim. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
10. Upon acceptance of the claim, the Company failed to tender payment within 30 calendar days. In nine instances, upon acceptance of the claim, the Companies failed to tender payment within 30 calendar days. The Department alleges these acts are in violation of CCR §2695.7(h).
Summary of Companies' Response: It is the established practice of the Companies to respond to requests for payment within five business days. In these instances, the employees involved were counseled on the importance of meeting the Companies' standards. Despite employing time standards more stringent than DOI regulations, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to making claim payments within the requirements of this regulation. At the time of this examination, the Company employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
11. The Company failed to respond to communications within 15 calendar days. In eight instances, the Companies failed to respond to communications within 15 calendar days. The Department alleges these acts are in violation of CCR §2695.5(b).
Summary of Companies' Response: Despite employing time standards more stringent than DOI regulations, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to responding to communications. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
12. The Company failed to acknowledge notice of claim within 15 calendar days. In eight instances, the Companies 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 Companies' Response: Though having adopted and implemented time standards more stringent than DOI regulations, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to acknowledging notice of claim within 15 calendar days. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
13. The Company failed to explain in writing for the claimant the basis of the fully itemized cost of the comparable automobile or 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 three instances, the Companies failed to explain in writing for the claimant the basis of the fully itemized cost of the comparable automobile. In five instances, the Companies 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 three of the five cited instances which involved owner-retained salvage, the salvage certificate fee was not included; in one of the instances, the salvage certificate fee and the transfer fee were not included. In the remaining instance, an incorrect amount was included in the calculation of the fees. The Department alleges these acts are in violation of CCR §2695.8(b)(1).
Summary of Companies' Response: While it is the Companies' procedure to provide a written explanation of the basis of the fully itemized cost of a comparable automobile, the Companies acknowledge that infrequently this procedure was not met in these instances. Regarding the errors on the payment of fees, it is the Companies' procedure to include all fees, but there were inadvertent errors in these cases. The Companies issued payments on the claims involved totaling $69.00. In addition, the Companies conducted an audit of claims in which the salvage was retained by the owner. A Company audit over a period beginning March 1, 2002 revealed that the salvage certificate fee had been properly included in the claims reviewed.
At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
14. The Company failed to represent correctly to claimants, pertinent facts or insurance policy provisions. In seven instances, the Company failed to represent correctly to claimants, pertinent facts or insurance policy provisions relating to a coverage at issue. The instances cited were the result of a letter explaining medical coverage that included information on a general provision that was not a part of the policy involved. The Department alleges these acts are in violation of CIC §790.03(h)(1).
Summary of Company Response: The Company acknowledges that the letters sent in these instances were incorrect. After these instances were brought to its attention, the Company immediately sent letters with the correct information on the claims involved. The individual claims associates involved were instructed on use of the correct letter.
Despite having adopted and implemented standards for prompt investigation and processing of claims the Company acknowledges that infrequently it failed to meet expectations of performance. At the time of this examination, the Company employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
15. The Company failed to disclose all policy provisions. In seven instances, the Companies 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).
Summary of Companies' Response: While it is the Companies' established procedure to disclose all policy benefits, coverage, time limits and provisions, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to this procedure. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
16. The Company failed to advise the claimant that he or she may have the claim denial reviewed by the California Department of Insurance. In four instances, the Companies 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 Companies' Response: While it is the Companies' established procedure to advise claimants of their right have their claim denial reviewed by the California Department of Insurance the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to this regulation. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
17. The Company failed to record claim data in the file. In two instances, the Companies failed to record the date the Companies received every relevant document in the file. The Department alleges these acts are in violation of CCR §2695.3(b)(2).
Summary of Companies' Response: While it is the Companies' established procedure to record the date all relevant documents are received, the Companies acknowledge that infrequently they failed to meet expectations of performance with respect to this requirement. At the time of this examination, the Companies employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Companies have recently added professional staff to assist in compliance efforts in California and have begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
18. The Company failed to provide written notice of any statute of limitation 60 days prior to the expiration date. In two 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).
Summary of Company Response: While it is the Company's established procedure to provide written notice of the relevant statute of limitation, the Company acknowledges that infrequently it failed to meet expectations of performance with respect to the requirements of this regulation. At the time of this examination, the Company employed procedures to ensure compliance, including file reviews by individual managers with the results reported to claims associates on a continual basis. While regrettable, these individual compliance errors were not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Company has recently added professional staff to assist in compliance efforts in California and has begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.
19. The Company failed to attempt in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear. In one instance, the Company failed to effectuate a prompt, fair and equitable settlement. When settling a total loss, an incorrect deduction for salvage value was taken from the settlement amount. The Department alleges this act is in violation of CIC §790.03(h)(5).
Summary of Company Response: The Company acknowledges this error stating that it is not a Company business practice to take a deduction of this type, and that this was the result of an employee error. At the time of this examination, the Company employed procedures to ensure compliance, including file reviews by individual managers with results reported to claims associates on a continual basis. While regrettable, this individual compliance error was not part of a general business practice. In addition to the adopted standards and manager reviews, regularly scheduled reviews by home office personnel were conducted to review claims performance including compliance with California statutes and regulations. In an effort to improve claims quality and compliance, prior to receipt of this report, additional reviews are conducted by a dedicated team on a monthly basis. A second group has also been established to measure file quality. As a result of these programs, a number of action plans have been developed. The action plans have led to improved overall performance in the area of compliance since the examination period. In addition to the foregoing, the Company has recently added professional staff to assist in compliance efforts in California and has begun meeting with all claims representatives to again discuss proper claims handling and statutory/regulatory compliance.

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Last Revised - October 11, 2005
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