PUBLIC REPORT OF THE MARKET CONDUCT EXAMINATION

OF THE CLAIMS PRACTICES OF THE


PHOENIX LIFE INSURANCE COMPANY
NAIC # 67814 CDI # 0173-5
PHL VARIABLE INSURANCE COMPANY
NAIC # 93548 CDI # 4327-3
PHOENIX NATIONAL INSURANCE COMPANY
NAIC # 69647 CDI # 3276-3

AS OF OCTOBER 30, 2004


STATE OF CALIFORNIA


DEPARTMENT OF INSURANCE

MARKET CONDUCT DIVISION

FIELD CLAIMS BUREAU

TABLE OF CONTENTS

SALUTATION.......................................................................................1


SCOPE OF THE EXAMINATION................................................................2
CLAIMS SAMPLE REVIEWED AND OVERVIEW OF FINDINGS.......................3
TABLE OF TOTAL CITATIONS.................................................................5

SUMMARY OF CRITICISMS, INSURER COMPLIANCE ACTIONS


AND TOTAL RECOVERIES........................................................................6

STATE OF CALIFORNIA	JOHN GARAMENDI,	Insurance Commissioner
DEPARTMENT OF INSURANCE
Consumer Services and Market Conduct Branch Field Claims Bureau, 11th Floor 300 South Spring Street Los Angeles, CA 90013

July 29, 2005

The Honorable John Garamendi

Insurance Commissioner

State of California

45 Fremont Street

San Francisco, California 94105


Honorable Commissioner:
Pursuant to instructions, and under the authority granted under Part 2, Chapter 1, Article 4, Sections 730, 733, 736, and Article 6.5, Section 790.04 of the California Insurance Code; and Title 10, Chapter 5, Subchapter 7.5, Section 2695.3(a) of the California Code of Regulations, an examination was made of the claims practices and procedures in California of:

Phoenix Life Insurance Company
NAIC #67814
PHL Variable Insurance Corporation
NAIC #93548
Phoenix National Insurance Company
NAIC #69647

Hereinafter referred to as the Company or collectively as the Companies.

This report is made available for public inspection and is published on the California Department of Insurance web site ( www.insurance.ca.gov) pursuant to California Insurance Code section 12938.

SCOPE OF THE EXAMINATION


The examination covered the claims handling practices of the aforementioned Companies during the period November 1, 2003 through October 30, 2004. The examination was made to discover, in general, if these and other operating procedures of the Companies conform with the contractual obligations in the policy forms, to provisions of the California Insurance Code (CIC), the California Code of Regulations (CCR) and case law. This report contains only alleged violations of Section 790.03 and Title 10, California Code of Regulations, Section 2695 et al.

To accomplish the foregoing, the examination included:

1. A review of the guidelines, procedures, training plans and forms adopted by the Companies for use in California including any documentation maintained by the Companies in support of positions or interpretations of fair claims settlement practices.
2. A review of the application of such guidelines, procedures, and forms, by means of an examination of claims files and related records.
3. A review of consumer complaints received by the California Department of Insurance (CDI) in the most recent year prior to the start of the examination.
The examination was conducted primarily at the offices of the California Department of Insurance in San Francisco, California.
The report is written in a "report by exception" format. The report does not present a comprehensive overview of the subject insurer's practices. The report contains only a summary of pertinent information about the lines of business examined and details of the non-compliant or problematic activities or results that were discovered during the course of the examination along with the insurer's proposals for correcting the deficiencies. When a violation is discovered that results in an underpayment to the claimant, the insurer corrects the underpayment and the additional amount paid is identified as a recovery in this report. All unacceptable or non-compliant activities may not have been discovered, however, and failure to identify, comment on or criticize activities does not constitute acceptance of such activities.
Any alleged violations identified in this report and any criticisms of practices have not undergone a formal administrative or judicial process.

CLAIM SAMPLE REVIEWED AND OVERVIEW OF FINDINGS

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.

Phoenix Life Insurance Company
CATEGORY	CLAIMS FOR REVIEW PERIOD	REVIEWED	CITATIONS
Individual Life	158	31	3
Individual Annuity	11	3	0
TOTALS	169	34	3

PHL Variable Insurance Company
CATEGORY	CLAIMS FOR REVIEW PERIOD	REVIEWED	CITATIONS
Individual Annuity	37	19	1
TOTALS	37	19	1

Phoenix National Insurance Company
CATEGORY	CLAIMS FOR REVIEW PERIOD	REVIEWED	CITATIONS
Individual Life	9	2	0
TOTALS	9	2	0

TABLE OF TOTAL CITATIONS
Citation	Description	Phoenix Life Insurance Company	PHL Variable Insurance Company
CCR §2695.3(a)	The Company's files failed to contain all documents, notes and work papers.	3	0
CIC §790.03(h)(3)	The claim file had an unexplained gap of claim investigation activity of over 90 days	0	1
Total Citations		3	1

SUMMARY OF CRITICISMS, INSURER

COMPLIANCE ACTIONS AND TOTAL RECOVERIES

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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