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The examiners reviewed files drawn from the category of Closed Claims for the period January 1, 2005, through December 31, 2005, commonly referred to as the "review period". The examiners reviewed 178 claim files. The examiners cited six 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 $147.50.
HOMEOWNERS
1. In two 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: 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 these instances which was the result of unintentional oversight. In each case, the Company sent a follow-up letter to the insured including the referral to the California Department of Insurance. A memo was sent to all claims staff on April 12, 2006 to remind them to comply with the regulation.

2. In one instance, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. The insured identified six similar personal property items. The adjuster paid for only one of the items instead of the six. The Department alleges this act is in violation of CCR §2695.7(g).

Summary of Company Response: As a result of the findings of the examination, the Company issued payment to the insured as compensation of the unpaid amount. It is the Company's procedure to make settlement offers that are fair and reasonable. This instance was an isolated error. The individual involved has been made aware of the compliance issue.

4. The Company failed to comply with the Fair Claims Practices Regulations. In one instance each, the Department alleges that the Company failed to comply with the following Fair Claims Practices Regulations: CCR §2695.4(a), CCR §2695.7(c)(1), CCR §2695.7(f).


ACCIDENT AND DISABILITY
There were no citations alleged or criticisms of insurer practices in this line of business within the scope of this report.
COMMERCIAL MULTIPLE PERIL
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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