Source: http://www20.insurance.ca.gov/epubacc/REPORT/86051.htm
Timestamp: 2017-01-19 15:02:26
Document Index: 282900719

Matched Legal Cases: ['art 2', '§11515', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695', '§2695']

PUBLIC REPORT OF THE MARKET CONDUCT EXAMINATION OF THE CLAIMS PRACTICES OF THE INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB NAIC # 15598 CDI # 0392-1 AS OF AUGUST 31, 2005 STATE OF CALIFORNIA DEPARTMENT OF INSURANCE MARKET CONDUCT DIVISION FIELD CLAIMS BUREAU TABLE OF CONTENTS SALUTATION.......................................................................................1 SCOPE OF THE EXAMINATION...............................................................2 CLAIMS SAMPLE REVIEWED AND OVERVIEW OF FINDINGS......................3 TABLE OF TOTAL CITATIONS.................................................................4 TABLE OF CITATIONS BY LINE OF BUSINESS...........................................5SUMMARY OF RESULTS.........................................................................7 STATE OF CALIFORNIA
May 11, 2006 The Honorable John Garamendi Insurance Commissioner State of California 45 Fremont Street San Francisco, California 94105 Honorable Commissioner: Pursuant to instructions, and under the authority granted under Part 2, Chapter 1, Article 4, Sections 730, 733, 736, and Article 6.5, Section 790.04 of the California Insurance Code; and Title 10, Chapter 5, Subchapter 7.5, Section 2695.3(a) of the California Code of Regulations, an examination was made of the claims practices and procedures in California of: Interinsurance Exchange of the Automobile Club NAIC # 15598 Group # 1318 Hereinafter referred to as the Company. This report is made available for public inspection and is published on the California Department of Insurance web site (
www.insurance.ca.gov) pursuant to California Insurance Code section 12938. SCOPE OF THE EXAMINATION The examination covered the claims handling practices of the aforementioned Company during the period September 1, 2004, through August 31, 2005. The examination was made to discover, in general, if these and other operating procedures of the Company conform with the contractual obligations in the policy forms, to provisions of the California Insurance Code (CIC), the California Code of Regulations (CCR), the California Vehicle Code (CVC) and case law. This report contains only alleged violations of Section 790.03 and Title 10, California Code of Regulations, Section 2695 et al. The alleged violations of other relevant laws which resulted from this examination are included in a separate report which will remain confidential subject to the provisions of CIC Section 735.5. To accomplish the foregoing, the examination included: 1. A review of the guidelines, procedures, training plans and forms adopted by the Company for use in California including any documentation maintained by the Company in support of positions or interpretations of fair claims settlement practices. 2. A review of the application of such guidelines, procedures, and forms, by means of an examination of claims files and related records. 3. A review of consumer complaints received by the California Department of Insurance (CDI) in the most recent year prior to the start of the examination. The examination was conducted primarily at the offices of the Company in Costa Mesa, California. The report is written in a "report by exception" format. The report does not present a comprehensive overview of the subject insurer's practices. The report contains only a summary of pertinent information about the lines of business examined and details of the non-compliant or problematic activities or results that were discovered during the course of the examination along with the insurer's proposals for correcting the deficiencies. When a violation is discovered that results in an underpayment to the claimant, the insurer corrects the underpayment and the additional amount paid is identified as a recovery in this report. All unacceptable or non-compliant activities may not have been discovered. Failure to identify, comment on or criticize activities does not constitute acceptance of such activities. Any alleged violations identified in this report and any criticisms of practices have not undergone a formal administrative or judicial process. CLAIM SAMPLE REVIEWED AND OVERVIEW OF FINDINGS 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. Interinsurance Exchange of the Automobile Club
Personal Automobile Collision 151,886
Fire and Allied Lines / Watercraft Property Damage
Fire and Allied Lines / Watercraft Medical Payment
Fire and Allied Lines / Watercraft Physical Damage
Fire and Allied Lines / Watercraft Motor/Trailer
Homeowners Dwelling Fire (HO3)
Homeowners Liability (HO4) 607
Homeowners First Party Property (HO6)
Earthquake Dwelling
Earthquake Personal Property
Description Interinsurance Exchange of the Automobile Club
The Company failed to include, in the settlement, all applicable taxes and one-time fees incident to transfer of evidence of ownership of a comparable automobile or the Company failed to notify the insured or owner of his or her responsibility to comply with CVC §11515.2(b).
CCR §2695.7(e)
The Company delayed or denied settlement of a first party claim on the basis that responsibility for payment should be assumed by others.
32 SUMMARY OF RESULTSThe 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). Summary of Company Response: It is the Company's policy and procedure to comply with the Fair Claims Practices Regulations. These instances involved inadvertent oversights on the part of the claims staff. The staff was reminded to comply with the regulation by Management in their March 16, 2006 Claims Staff Meeting. HOMEOWNERS5. 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). Summary of Company Response: It is the Company's policy and procedure to comply with the Fair Claims Practices Regulations. These instances involved inadvertent oversights on the part of the claims staff. The staff was reminded to comply with the regulation by Management in their March 16, 2006 Claims Staff Meeting. WATERCRAFT6. 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). Summary of Company Response: It is the Company's policy and procedure to comply with the Fair Claims Practices Regulations. These instances involved inadvertent oversights on the part of the claims staff. The claims staff was reminded to comply with the regulation by Management in their March 16, 2006 Claims Staff Meeting. EARTHQUAKEThere were no citations alleged or criticisms of insurer practices in this line of business within the scope of this report.
Last Revised - August 16, 2006