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Wolters Kluwer analysis reveals timely and accurate claims processing as top compliance challenge for U.S. insurers

Annual review of Top 10 market conduct issues provides vital checklist for insurers

The U.S. insurance industry’s top compliance shortcomings relate to claims handling noncompliance, including timeliness, required disclosures, payments and grievance and appeal processes—as well as underwriting, rating and insurance producer and sales issues. That’s according to a comprehensive review by Wolters Kluwer Compliance Solutions of U.S. insurers’ market conduct actions. The annual review uses public data from 2020 and examines U.S. property and casualty, life, and health insurers’ market conduct actions, including exams and other enforcement actions.

Now in its 17th year, the Top 10 market conduct actions review continues to assist insurers by demonstrating not only the continuity of challenges, but also providing a compliance checklist of operational areas within their own companies that may warrant additional audits to check for adherence to regulatory requirements.

“While technology has helped to streamline and automate some processes, our annual Top 10 market conduct action findings continue to show the ongoing challenges that insurers face in managing their regulatory requirements,” said Steven Meirink, Executive Vice President and General Manager for the Compliance Solutions business. “However, a robust compliance program management approach that includes a strong risk and controls framework can be key to helping improve insurer success rates in market conduct compliance.”

The following are listings of the top compliance issues determined in market conduct actions across the U.S. by state insurance regulators. These issues are primarily found in insurers’ claims, underwriting, and sales processes.

Top 10 Market Conduct Criticisms for Property and Casualty Insurers

  1. Failure to acknowledge, pay, investigate or deny claims within specified timeframes
  2. Failure to issue correct payments and/or compliant denial notices
  3. Using unapproved/unfiled rates and rules or misapplying rating factors
  4. Failure to process total loss claims properly
  5. Failure to cancel, non-renew, or decline policies in accordance with requirements
  6. Failure to adhere to producer appointment, termination, records, reporting and/or licensing requirements
  7. Failure to provide required compliant notices and disclosures in claims processing
  8. Improper/incomplete documentation of claim files
  9. Improper/incomplete documentation of underwriting files
  10. Failure to provide required compliant notices and disclosures in underwriting processes

Top 10 Market Conduct Criticisms for Life and Health Insurers

  1. Failure to adhere to required claims utilization review, grievance and appeal processes, including timeframes and disclosures
  2. Failure to pay claims properly in accordance with policy provisions and comply with claim denial requirements
  3. Failure to acknowledge, pay, investigate, or deny claims within specified timeframes
  4. Use of unfiled/unapproved or noncompliant forms; unfiled/unapproved rates
  5. Failure to provide required and compliant claims, EOBs, underwriting and policyholder disclosures and notices
  6. Failure to use licensed and/or appointed producers, provide proper notification of producer appointments or terminations and maintain appropriate documentation
  7. Failure to adhere to suitability requirements
  8. Failure to adhere to replacement requirements
  9. Failure to adhere to advertising requirements
  10. Failure to maintain adequate/complete claims, underwriting and complaint documentation

While these Top 10 lists provide insight into insurers’ ongoing compliance risk challenges, other findings regularly surface as well. Routine determinations by examiners include the failure to consistently identify the legal name of the insurer, as well as failures to adhere to certain state-specific mandates that range from the annual claims training requirement in California to the approval process required to use a different fraud warning statement in New York.

The market conduct examination process for insurance companies is complex, time-consuming and costly. To learn more, access Wolters Kluwer’s September 2021 webinar focused on Top 10 property and casualty market conduct actions or the webinar on Top 10 life and health market conduct actions. Wolters Kluwer’s Exam & Management solutions help insurance companies in managing these compliance challenges.

Wolters Kluwer Compliance Solutions is a market leader and trusted provider of risk management and regulatory compliance solutions and services to U.S. banks and credit unions, insurers and securities firms. The business, which sits within Wolters Kluwer’s Governance, Risk & Compliance (GRC) division, helps these financial institutions efficiently manage risk and regulatory compliance obligations, and gain the insights needed to focus on better serving their customers and growing their business.

Wolters Kluwer’s GRC division provides an array of expert solutions to help financial institutions manage regulatory and risk obligations. The other regulatory compliance business is Wolters Kluwer Finance, Risk & Regulatory Reporting (FRR), and its legal solutions business are Wolters Kluwer CT Corporation and Wolters Kluwer ELM Solutions.

About Wolters Kluwer Governance, Risk & Compliance

Governance, Risk & Compliance (GRC) is a division of Wolters Kluwer, which provides legal and banking professionals with solutions to help ensure compliance with ever-changing regulatory and legal obligations, manage risk, increase efficiency, and produce better business outcomes. GRC offers a portfolio of technology-enabled expert services and solutions focused on legal entity compliance, legal operations management, banking product compliance, and banking regulatory compliance.

Wolters Kluwer (AEX: WKL) is a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. Wolters Kluwer reported 2020 annual revenues of €4.6 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,200 people worldwide.


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