Claims, underwriting errors trip up insurers' compliance efforts: Analysis
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Errors in the claims and underwriting process dominate a list of the top 10 compliance risks faced by property/casualty insurers released Thursday by Wolters Kluwer Financial Services Inc.
To prepare the annual ranking, regulatory experts at the Waltham, Mass.-based technology provider analyze results from the market conduct exams filed with state insurance regulators from the previous year. This year's results indicated that insurers incur compliance risk primarily in the claims and underwriting processes.
The top 10 compliance risks for property/casualty insurers in 2012 are:
1. Failure to acknowledge, pay or deny claims within specified time frames
2. Using unapproved forms, unfiled rates and/or misapplication of rating factors
3. Failure to cancel policies or nonrenew policies in accordance with requirements
4. Failure to provide required compliant disclosures in underwriting processes
5. Failure to process total loss claims properly
6. Failure to provide required compliant disclosures in claims processing
7. Improper documentation of underwriting files
8. Failure to adhere to producer appointment, termination and/or licensing requirements and adjuster licensing requirements
9. Failure to pay the correct amount under a policy
10. Improper documentation of claim files
“Managing compliance risk is difficult at best, given all the regulatory requirements governing insurers' claims, underwriting and distribution processes,” Kathy Donovan, senior compliance counsel, insurance at Wolters Kluwer Financial Services, said in a statement. “However, understanding where the greatest problems exist can assist insurers in prioritizing audits of internal processes.”
