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The examiners reviewed files drawn from the category of Closed Claims for the period May 1, 2005, through April 30, 2006, commonly referred to as the "review period". The examiners reviewed 339 Anchor General claim files. The examiners cited 22 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.


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 $10,220.85. Pursuant to the findings of the examination referenced in item number one below, the Companies are conducting a closed claim survey. The results of the survey and additional payments, if any, shall be reported to the Department by June 30, 2007.
PRIVATE PASSENGER AUTOMOBILE

1. In seven instances, the Company failed to effectuate prompt, fair and equitable settlements of claims in which liability had become reasonably clear. These instances involved the Company's failure to settle claims in situations involving an insured who was unable to effect repairs immediately. In lieu of issuing payment, the Company provided the insured with a two party Release that required the signature of both the insured and the loss payee (lien holder). If the executed Release was not returned, the claim was closed without payment. The Department alleges these acts are in violation of CIC §790.03(h)(5).

Summary of Company Response: The Company has, at the CDI's request, discontinued the use of a release form in cases in which the insured does not have the vehicle repaired. For future claims, the Company will elect to repair the vehicle, but if the insured fails to choose a repair shop or to bring the vehicle to a shop, the Company will issue a cash settlement to the insured, or to the insured and the loss payee, within the timeframes specified in the applicable regulations. These seven claims have been reopened and payments issued totaling $8,653.22. In addition, the Company will perform an audit of past claims that previously had been closed without payment from January 1, 2005 to the present to ensure that all such claims have been paid as appropriate.

2. In four instances, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. Two instances involved storage charges that were inadvertently limited. Another instance involved a calculation error that resulted in a lower total loss settlement. The fourth instance involved the underpayment of a supplemental subrogation demand. The Department alleges these acts are in violation of CCR §2695.7(g).

Summary of Company Response: "In response to the examiners findings, the Company has reopened the four claims, and payments have been made totaling $1,486.63. These instances have been discussed with the handling claim representatives, and the issue will be revisited on a regular basis."

3. In two instances, the Company failed to maintain all documents, notes and work papers in the claims file. One instance involved the failure to document that a copy of the appraisal was provided to the claimant. The other instance involved a letter that was sent but a copy was not maintained. The Department alleges these acts are in violation of CCR §2695.3(a).

4. In two instances, the Company failed to include, in the settlement, the license fee and other annual fees, computed based upon the remaining term of the registration. The Department alleges these acts are in violation of CCR §2695.8(b)(1).

Summary of Company Response: "In response to the examiners findings, both claims have been reopened and payments totaling $81.00 have been made. The requirement of the code has been discussed with the handling claim representatives, and the issue will be reinforced on a regular basis."

5. In two instances, the Company failed to represent correctly to claimants pertinent facts or insurance policy provisions relating to a coverage at issue. One instance involved advice to the insured that a police report was required to trigger coverage when this was not a requirement of the policy contract. The other instance involved correspondence to the insured indicating that the policy only carried liability coverage, and the insured was not informed of the applicable Uninsured Motorist Property Damage coverage. The Department alleges these acts are in violation of CIC §790.03(h)(1).

Summary of Company Response: "In response to the examiners findings, the Company has reinforced with the handling claim representatives the importance of being extremely careful when providing the insured with instruction or information."


6. In two instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under its insurance policies. Both instances involved unnecessary gaps in activity. The Department alleges these acts are in violation of CIC §790.03(h)(3).

7. In one instance, the Company failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days. The Department alleges these acts are in violation of CCR §2695.7(b).

8. In one instance, the Company failed to provide written notice of any statute of limitation or other time period requirement not less than 60 days prior to the expiration date. The insured's passengers were not advised of the applicable statute of limitations. The Department alleges this act is in violation of CCR §2695.7(f).

Summary of Company Response: "In response to the examiners findings, the requirement of the code has been discussed with the handling claim representatives and the issue will be reinforced on a regular basis."


9. In one instance, the Company failed, upon acceptance of the claim, to tender payment within 30 calendar days. Proof of claim was received but the claim was not paid until nine months later. The Department alleges this act is in violation of CCR §2695.7(h).

Summary of Company Response: "In response to the examiners findings, the matter was discussed with the claims handling representative and will be reinforced on a regular basis."

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Last Revised - July 11, 2007
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