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The examiners reviewed files drawn from the category of Closed Claims for the period July 1, 2004, through June 30, 2005, commonly referred to as the "review period". The examiners reviewed 285 claim files. The examiners cited 33 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 $3,012.903
COMMERCIAL AUTOMOBILE

1. In five instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims. The files reflected long periods of time where no investigation or action was taken on the claim files The Department alleges these acts are in violation of CIC §790.03(h) (3).

Summary of Company Response: The Company acknowledges the above alleged violations. The Company has performed two claims training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.

2. In three instance, 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: The Company acknowledges the above alleged violations. The Company has performed two claims training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.

3. In three 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).

Summary of Company Response: The Company acknowledges the above alleged violations. The Company has performed two claim training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.


4. In three 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 this act is in violation of CCR §2695.7(b) (3).

Summary of Company Response: The Company acknowledges the above alleged violations. The Company has performed two claim training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.

5. In three instance, 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 the above alleged violations. The Company has performed two claim training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.


6. In three instances, the Company failed to properly document claim files. The Department alleges these acts are in violation of CCR §2695.3(a).

7. 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. The Company failed to include the Vehicle License Fees in the Total Loss Settlement. The Department alleges these acts are in violation of CCR §2695.8(b) (1).

Summary of Company Response: The Company acknowledges the above alleged violations. The Company has performed two claim training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions. The Company has paid the additional monies owed to the claimants.

8. In one instance each, the Company failed to comply with the following sections of the Fair Claims Settlement Practices Regulations. In one instance each the Company failed to comply with the following: CCR§ 2695.3(b) (2), CCR§ 2695.7(c) (1), CCR§ 2695.7(f), CCR§ 2695.5(e) (2), CCR§ 2695. 7(d), CCR§ 2695.7(b) (1), CCR§ 2695.8(f) The Department alleges these acts are in violation of the Fair Claims Settlement Practices Regulations.

Summary of Company Response: The Company acknowledges the above instances. The Company maintains these are isolated instances and not reflective of the Company's standard claims handling procedures in place at the time of the exam. In addition, the Company has performed two claim training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.


COMMERCIAL MULTI-PERIL

9. In two instances, the Company failed to acknowledge notice of claim within 15 calendar days. The Department alleges this act is in violation of CCR §2695.5(e) (1).

Summary of Company Response: The Company acknowledges the above alleged violations. The Company has performed two claims training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.


10. 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: The Company acknowledges the above alleged violations. The Company has performed two claims training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.

11. In one instance, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims. The Department alleges this act is in violation of CIC §790.03(h) (3).

Summary of Company Response: The Company acknowledges the above alleged violations. The Company has performed two claims training classes in 2005. Compliance to the Fair Claims Settlement Practices Regulations was reinforced at these training sessions.


SURETY
There were no citations alleged or criticisms of insurer practices in this line of business within the scope of this report.

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Last Revised - June 30, 2006
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