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The examiners reviewed files drawn from the category of Closed Claims for the period September 1, 2004, through August 31, 2005, commonly referred to as the "review period". The examiners reviewed 629 claim files. The examiners cited 32 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 $326.97. Following the findings of the examination, a closed claim survey conducted by the Company resulted in additional payments of $9,020.81. As a result of the examination, the total amount of money returned to claimants within the scope of this report was $9,347.78. Pursuant to the findings of the examination referenced in item two below, the Company is conducting a closed claim survey. The results of the survey and additional payments, if any, shall be reported to the Department by May 8, 2006.
PERSONAL AUTOMOBILE

1. In 13 instances, the Company failed to include, in the settlement, all applicable taxes and one-time fees incident to the transfer of ownership or the Company failed to notify the insured or owner of his or her responsibility to notify the Department of Motor Vehicles of the salvage retention. In seven instances, the Company failed to pay the salvage certificate fee on uninsured motorist property damage total loss claims in which the owner retained salvage, and in six instances, the Company failed to advise the insured that notice of the salvage retention by the owner must be provided to the Department of Motor Vehicles. The Department alleges these acts are in violation of CCR §2695.8(b)(1)(A).

Summary of Company Response: As a result of the findings of the examination, the Company completed a self-review of uninsured motorist property damage total loss claims and issued payments of unpaid fees. It is the Company's procedure to pay all applicable taxes and one-time fees on total loss claims as well as to advise the insured of the requirement to report any owner retained salvage vehicles according to the California Vehicle Code. On February 8, 2006 the Company issued a memo to their claim staff reminding them of the regulation in order to insure future compliance.

2. In three instances, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. In these instances the settlement of total loss property damage claims did not include all applicable taxes, one-time fees, or salvage certificate fees, which is not following standard Company policy and procedure. The Department alleges these acts are in violation of CCR §2695.7(g).

Summary of Company Response: It has been the Company's procedure since October 4, 2004 to include in the settlement of third party total loss claims, all applicable taxes, one-time fees, or salvage certificate fees. As a result of the examination, the Company are conducting a self-review of third party total loss property damage claims since October 4, 2004 and compensating the claimants any unpaid fees owed. These instances are specific to two claims offices only and they have been made aware of this compliance issue. The results of the self-review will be provided to the Department by May 8, 2006.

3. In two instances, the Company failed to include, in the settlement, all applicable taxes and one-time fees incident to the transfer of ownership. In these instances, the Company failed to pay the transfer fee on uninsured motorist property damage total loss claims in which the Company retained salvage. The Department alleges these acts are in violation of CCR §2695.8(b)(1).

Summary of Company Response: As a result of the findings of the examination, the Company completed a self-review of uninsured motorist property damage total loss claims and issued payments of unpaid fees. It is the Company's procedure to pay all applicable taxes and one-time fees on total loss claims. On February 8, 2006 the Company issued a memo to their claim staff reminding them of the regulation in order to insure future compliance.

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 §2695.7(b), CCR §2695.7(b)(1), CCR §2695.7(c)(1), CCR §2695.7(d), CCR §2695.7(e), CCR §2695.7(h), CCR §2695.8(i).

HOMEOWNERS

5. 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 §2695.3(a), CCR §2695.7(c)(1), CCR §2695.7(g).


WATERCRAFT

6. In two 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).

Summary of Company Response: It is the Company's procedure to provide written notice of the need for additional time every 30 calendar days. The Company acknowledges these instances which were the result of unintentional oversight. The claims staff was reminded to comply with the regulation by Management in their March 16, 2006 Claims Staff Meeting.

7. 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 §2695.3(a), CCR §2695.7(b).

EARTHQUAKE


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 - August 16, 2006
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