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The examiners reviewed files drawn from the category of Closed Claims for the period June 1, 2003 through May 31, 2004, commonly referred to as the "review period". The examiners reviewed 452 Viking Insurance Company of Wisconsin claim files. The examiners cited 186 claim 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 $8,138.85. Following the findings of the examination, a closed claim survey conducted by the Company resulted in additional payments of $944.18. As a result of the examination, the total amount of money returned to claimants within the scope of this report was $9,083.03.
PERSONAL AUTOMOBILE
1. In 52 instances, 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 45 instances, the Company failed to explain in writing for the claimant the basis of the fully itemized cost of the comparable automobile. These claims files did not contain documentation that a written explanation of the basis of total loss settlement amount had been provided to the claimant. In seven 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. Four of the seven instances were the result of a failure to pay all the license fees; the three remaining instances were involved errors related to the payment of salvage certificate fees. One of the salvage fee errors was due to the payment of an incorrect amount. The Department alleges these acts are in violation of CCR §2695.8(b)(1).

Summary of Company Response: It is the Company's belief that the explanations provided to the vehicle owners on these files were sufficient to be compliant with this regulation. But, at the direction of the California Department of Insurance, the Company has agreed to revise its total loss letters and procedures to include more detail, including an explanation of the fully itemized cost of a comparable automobile. The Company implemented use of the revised letters on October 4, 2004.

Regarding the payment of fees, it is the Company's procedure to include all applicable license fees, taxes and other fees incident to the transfer of ownership when settling total loss claims. The errors involving the payment of the salvage certificate were the result of unintentional oversights by individual claims handlers. A claims office that does not normally handle California claims handled two of the claims in which the Company failed to pay all license fees. These errors occurred during that office's brief involvement in assisting with California claims and were isolated to one work unit. All staff in that office received additional training on September 27, 2004. This office also conducted a complete claim review of all California claims they handled to identify other potential errors. Any errors that were identified were rectified, and appropriate payments were made.

In addition, compliance with this regulation was addressed in training of the claims staff in other offices which handle California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

2. In 40 instances, the Company failed to properly document claim files. Of the cited instances, 32 were the result of a lack of documentation that claimants were supplied with copies of vehicle repair estimates on which settlements were based. Of the remaining instances, seven were the result of missing documents and one was the result of inadequate file notes. The Department alleges these acts are in violation of CCR §2695.3(a).

Summary of Company Response: It is the Company's practice to properly document claim files, including maintaining all relevant documents in files and properly explaining claim activity. Following the examination, the Company supplied the claimants with a copy of their repair estimates on the claims in which the file lacked documentation that this had been completed previously. The Company revised its material damage guidelines to be more specific regarding this issue. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

3. In 13 instances, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. Of the instances cited, nine were the result of a variety of errors in the calculation of the value of total loss vehicles. Two instances were the result of an incomplete analysis of the proof of claim presented. Two were the result of errors in the application of the deductible. The Department alleges these acts are in violation of CCR §2695.7(g).

Summary of Company Response: It is the Company's practice to settle claims fairly. With regard to the errors in the calculation of the value of total losses, the Company believes its practices for establishing the value of vehicles are in compliance; however it will use the examples noted in the examination to build a more robust control environment and assure that the evaluation is uniform. Any errors that were identified were rectified, and appropriate payments were made. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

4. In 11 instances, the Company failed to document the determination of value. Specifically, the Company applied an unsubstantiated condition adjustment to the value of total loss vehicles. The Company employs a service to establish the value of total loss vehicles. In these instances, a deduction was applied to the established value of the vehicle. The basis of the deduction was not documented. The Department alleges these acts are in violation of CCR §2695.8(b)(1)(C).

Summary of Company Response: The Company believes its practices for establishing the condition of vehicles were in compliance; however it will use the examples noted in the examination to build a more robust control environment and assure that documentation is uniform. In addition, the Company has communicated with the total loss evaluation service regarding the need to revise the evaluation process to comply with the changes in the California Claims Regulations that went into effect as of October 4, 2004. Also, compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in September 2004 and periodic follow up training continues.

5. In 10 instances, upon acceptance of the claim, the Company failed to tender payment within 30 calendar days. Eight of these instances involved a delay in payment of medical bills. The Department alleges these acts are in violation of CCR §2695.7(h).

6. In eight 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).


Summary of Company Response: It is the Company's practice to disclose the appropriate coverage information to claimants. These instances were the result of unintentional oversights by individual claims handlers. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.
7. In eight 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).

8. In eight instances, 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. Four of these instances involved a lack of documentation and explanation of the salvage value in which the owner retained the total loss salvage. Two instances involved settlements based on repair estimates on which there was no explanation of the betterment that was taken on a component of the repairs. Two instances were third party total loss claims that were not thoroughly explained to the claimant. The Department alleges these acts are in violation of CCR §2695.8(k).

Summary of Company Response: It is the Company's procedure to document and explain in writing any adjustments taken from the settlement amount. The Company acknowledges these instances which were the result of unintentional oversights by individual claims handlers. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

9.In seven instances, the Company failed to provide the written basis for the denial of the claim. The claims in which these errors were noted were in the comprehensive and uninsured motorist property damage categories. Four of the claims involved partial denials. Two of the partial denials were orally issued. The Department alleges these acts are in violation of CCR §2695.7(b)(1).

Summary of Company Response: The Company respectfully states that these were unintentional errors and that the Company strives to comply with California insurance law whenever handling claims. Regarding the two claims, which were partially denied orally, the Company supposed its oral denial was accepted and sufficient. These were the result of unintentional oversights by individual claims handlers. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

10. In five instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims. These instances, which were noted in the medical payments and uninsured motorist categories, were the result of a failure to pursue investigations timely, and demonstrated a lack of recognition of the exposure and the need to maintain a diary system. The Department alleges these acts are in violation of CIC §790.03(h)(3).


11. In five 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).

12. 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).

Summary of Company Response: It is the Company's practice to provide instruction, assistance and forms to claimants promptly. The Company acknowledges that in these five instances there were unintentional oversights by individual claim handlers. As suggested by the examiners, revisions were made to the theft affidavit to make it more comprehensive. In addition to these revisions, it should be noted that the Company also has a process in place to provide all necessary forms and documents as appropriate. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow-up training continues.

13. In four instances, the Company failed to accept or deny the claim within 40 calendar days. Two of the instances were medical payments claims. Two of the instances were uninsured motorist property damage claims. The Department alleges these acts are in violation of CCR §2695.7(b).

Summary of Company Response: It is the Company's practice to accept or deny claims within 40 calendar days. The Company acknowledges these instances which were the result of individual file handler errors. Any errors that were identified were rectified, and appropriate payments were made. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

14. In three 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).

Summary of Company Response: It is the Company's practice to begin the investigation of claims promptly. The Company acknowledges these instances which were the result of individual file handler oversight. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.


15. In two instances, the Company failed to provide written notice of any statute of limitation 60 days prior to the expiration date. The Department alleges these acts are in violation of CCR §2695.7(f).

Summary of Company Response: It is the Company's practice to provide written notice of the statute of limitations. The Company acknowledges these instances in which the claim file did not contain sufficient documentation. These were the result of unintentional oversights of individual claim handlers. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

16. In two instances, the Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. The Department alleges these acts are in violation of CCR §2695.8(i).

Summary of Company Response: It is the Company's practice to provide written notice of its intent to pursue subrogation to policyholders. The Company acknowledges these two instances in which the claim file did not contain sufficient documentation. These were the result of unintentional oversights by individual claim handlers. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

17. In one instance, the Company failed to record claim data in the file. This instance is the result of a failure to record the date the Company received medical bills from a first party claimant. The Department alleges this act is in violation of CCR §2695.3(b)(2).


Summary of Company Response: It is the Company's practice to record the date documents are received. The Company acknowledges this instance, which was the result of an unintentional oversight by a mail clerk. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.
18. In one instance, 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 this act is in violation of CCR §2695.7(b)(3).

Summary of Company Response: It is the Company's procedure to include a statement in a claim denial regarding a review by the California Department of Insurance. The Company acknowledges this instance, which was the result of an unintentional oversight by the claim handler. Management has reviewed the standard format of its California declination letters to ensure that the appropriate California Department of Insurance language is included as well as appropriate claim specific language. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

19. In one instance, the Company failed to represent correctly to claimants, pertinent facts or insurance policy provisions. The letter sent to the insured advised that there was no medical payments coverage available on the automobile policy when there was coverage available. The Department alleges this act is in violation of CIC §790.03(h)(1).

Summary of Company Response: The Company states that this was an isolated incident and was the result of an unintentional and inadvertent error by an individual adjuster. This was the only error of this nature found in the sample reviewed. As such it does not reflect a frequency of acts nor does it represent a general business practice, therefore the Company does not believe that it rises to the level of a violation of CIC §790.03(h)(1). Once the Company identified the error, it was rectified and the appropriate medical payments were made. Compliance with this regulation was addressed in training of the claims staff handling California claims. Training was conducted in August and September 2004, and periodic follow up training continues.

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Last Revised - January 12, 2006
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