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The examiners reviewed files drawn from the category of Closed Claims for the period November 1, 2003 through October 30, 2004, commonly referred to as the "review period". The examiners reviewed 34 Phoenix Life Insurance Company claim files, 19 PHL Variable Insurance Company claim files and 2 Phoenix National Insurance Company claim files. The examiners cited four 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 failed to properly document claim files: In three instances, the Company files failed to contain all documents, notes and work papers. The Department alleges these acts are in violation of CCR §2695.3(a).

Summary of Company Response: The Company acknowledges that the files did not contain all documents, notes and work papers. As of March 31, 2005, the Company installed an image based claim system. As a result, all claim documentation will be maintained in an image format that is expected to greatly enhance the retrieval of claim files and information. For claims included in this system, the Company will be able to provide regulators with direct access to claim files. The Company anticipates this will eliminate the delay involved in locating, copying and delivering claim files to regulators.

2. The Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims. In one instance, the claim file had an unexplained gap of claim investigation activity of over 90 days. The Department alleges that this act is in violation of CIC §790.03(h)(3).

Summary of Company Response: The Company acknowledges that the employee handling the claim pended in error for 90 days instead of 30 days. As of March 31, 2005, the Company installed an image based claim system. One of the attributes of this system is the automatic generation of follow-up letters. Prior to the installation of this system, follow-up letters were produced manually. This practice was subject to error if a claims examiner did not timely complete and send a follow-up letter. Under the new system, follow-up letters are automatically created and are printed by the system on the network printer in the claims area. They are then placed directly in the outgoing mail. The letters are folded and placed into envelopes by machine in our mailroom. As the creation of these letters is now a system-generated activity, the opportunity for error occasioned by a human operator failing to produce the required follow-up letter has been eliminated.

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Last Revised - October 24, 2005
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