everest national insurance company naic # 10120 cdi # … conduct exam... · 2019-09-11 · everest...

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[IN ACCORDANCE WITH CALIFORNIA INSURANCE CODE (CIC) SECTION 12938, THIS REPORT WILL BE MADE PUBLIC AND PUBLISHED ON THE

CALIFORNIA DEPARTMENT OF INSURANCE (CDI) WEBSITE]

WEBSITE PUBLISHED REPORT OF THE MARKET CONDUCT EXAMINATION OF THE CLAIMS PRACTICES OF

EVEREST NATIONAL INSURANCE COMPANY NAIC # 10120 CDI # 3138-5

AS OF NOVEMBER 30, 2018

ADOPTED AUGUST 13, 2019

STATE OF CALIFORNIA

CALIFORNIA DEPARTMENT OF INSURANCE MARKET CONDUCT DIVISION

FIELD CLAIMS BUREAU

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NOTICE

The provisions of Section 735.5(a) (b) and (c) of the California

Insurance Code (CIC) describe the Commissioner’s authority

and exercise of discretion in the use and/or publication of

any final or preliminary examination report or other

associated documents. The following examination report is

a report that is made public pursuant to California Insurance

Code Section 12938(b)(1) which requires the publication of

every adopted report on an examination of unfair or

deceptive practices in the business of insurance as defined

in Section 790.03 that is adopted as filed, or as modified or

corrected, by the Commissioner pursuant to Section 734.1.

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TABLE OF CONTENTS

FOREWORD ................................................................................................................... 1

SCOPE OF THE EXAMINATION ................................................................................... 2

EXECUTIVE SUMMARY ................................................................................................ 4

DETAILS OF THE CURRENT EXAMINATION .............................................................. 5

TABLE OF TOTAL ALLEGED VIOLATIONS ................................................................ 6

SUMMARY OF EXAMINATION RESULTS .................................................................. 11

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FOREWORD

This 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 a summary of pertinent information about the lines of business examined,

details of the non-compliant or problematic activities that were discovered during the

course of the examination and the insurer’s proposals for correcting the deficiencies.

When a violation that reflects an underpayment to the claimant is discovered and the

insurer corrects the underpayment, the additional amount paid is identified as a

recovery in this report.

While this report contains violations of law that were cited by the examiner,

additional violations of CIC § 790.03 or other laws not cited in this report may also apply

to any or all of the non-compliant or problematic activities that are described herein.

All unacceptable or non-compliant activities may not have been discovered.

Failure to identify, comment upon or criticize non-compliant practices in this state or

other jurisdictions does not constitute acceptance of such practices.

Alleged violations identified in this report, any criticisms of practices and the

Company responses, if any, have not undergone a formal administrative or judicial

process.

This report is made available for public inspection and is published on the

California Department of Insurance website (www.insurance.ca.gov) pursuant to

California Insurance Code section 12938(b)(1).

http://www.insurance.ca.gov/

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SCOPE OF THE EXAMINATION

Under the authority granted in Part 2, Chapter 1, Article 4, Sections 730, 733,

and 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 claim handling practices and procedures in California of:

Everest National Insurance Company NAIC # 10120

Group NAIC # 1120

Hereinafter, the Company listed above also will be referred to individually as

ENIC or the Company.

This examination covered the claim handling practices of the aforementioned

Company on private passenger automobile, commercial automobile, commercial

property and workers compensation claims closed during the period from December 1,

2017 through November 30, 2018, and workers compensation claims open as of

November 30, 2018. The examination was made to discover, in general, if these and

other operating procedures of the Company conform to the contractual obligations in the

policy forms, the California Insurance Code (CIC), the California Code of Regulations

(CCR) and case law.

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 the California Insurance Code, Fair

Claims Settlement Practices Regulations, and other related statutes, regulations and

case law used by the Company to ensure fair claims settlement practices.

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2. A review of the application of such guidelines, procedures, and forms, by

means of an examination of a sample of individual claim files and related records.

3. A review of the California Department of Insurance’s (CDI) market analysis

results; and if any, a review of consumer complaints and inquiries about this Company

closed by the CDI during the period December 1, 2017 through November 30, 2018, a

review of previous CDI market conduct claims examination reports on this Company;

and a review of prior CDI enforcement actions.

The review of the sample of individual claim files was conducted at the offices of

the Company in Orange, California.

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EXECUTIVE SUMMARY

The private passenger automobile, commercial automobile, commercial property

and workers compensation claims reviewed were closed from December 1, 2017

through November 30, 2018, and workers compensation claims open as of November

30, 2018, referred to as the “review period”. The examiner randomly selected 235 ENIC

claim files for examination. The examiner cited 40 alleged claims handling violations of

the California Insurance Code and the California Code of Regulations from this sample

file review.

The Company was the subject of 17 California consumer complaints and

inquiries closed between December 1, 2017 and November 30, 2018 in regard to the

lines of business reviewed in this examination. The review showed alleged non-

compliance with respect to the following: failure to provide written notice of the need for

additional time or information every 30 calendar days, failure to conduct and diligently

pursue a thorough, fair and objective investigation and a failure to apply standards when

evaluating auto total loss claims. The Examiner focused on these issues during the

course of the file review.

Findings of this examination included the failure upon acceptance of the claim, to

tender payment within 30 calendar days; the failure to supply the claimant with a copy of

the estimate upon which the settlement was based; the failure to include warranty

language on estimates in which non-original equipment manufacturer crash parts were

utilized; and the failure to conduct a thorough investigation to determine if the child

passenger restraint system that was in the vehicle unoccupied during the accident

sustained a covered loss and required replacement.

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DETAILS OF THE CURRENT EXAMINATION

Further details with respect to the examination and alleged violations are

provided in the following tables and summaries:

ENIC SAMPLE FILES REVIEW

LINE OF BUSINESS / CATEGORY CLAIMS IN

REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS

Private Passenger Automobile / Physical Damage

1,300 70 16

Private Passenger Automobile / Liability 3,508 70 6

Commercial Automobile / Physical Damage 330 30 6

Commercial Automobile / Liability 381 20 4

Commercial Property 103 10 6

Workers Compensation / Medical 4,158 10 0

Workers Compensation / Indemnity 3,545 10 0

Workers Compensation / Denied 1,125 10 0

Workers Compensation / Open 6,613 5 0

General --- --- 2

TOTALS 21,063 235 40

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TABLE OF TOTAL ALLEGED VIOLATIONS

Citation Description of Allegation ENIC Number of

Alleged Violations

CCR §2695.8(g)(3) *[CIC §790.03(h)(3)]

The Company required the use of non-original equipment manufacturer replacement crash parts and failed to disclose in writing, in any estimate prepared by or for the insurer, the fact that it warrants such parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance.

6

CCR §2695.7(h) *[CIC §790.03(h)(5)]

The Company failed, upon acceptance of the claim, to tender payment within 30 calendar days.

4

CCR §2695.8(f) *[CIC §790.03(h)(3)]

The Company failed to supply the claimant with a copy of the estimate upon which the settlement was based.

3

CCR §2695.7(c)(1) *[CIC §790.03(h)(3)]

The Company failed to provide written notice of the need for additional time or information every 30 calendar days.

3

CCR §2695.7(p) *[CIC §790.03(h)(3)]

The Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation.

3

CIC §11580.011(e) *[CIC §790.03(h)(5)]

The Company failed to replace the child passenger restraint system or failed to reimburse the claimant for the cost of purchasing a new child passenger restraint system that was in use by a child during the accident or if it sustained a covered loss while in the vehicle.

3

CCR §2632.13(e)(1) *[CIC §790.03(h)(3)]

The Company failed to properly advise the insured that the driver of the insured vehicle was principally at-fault for an accident.

2

CCR §2695.7(b)(1) *[CIC §790.03(h)(13)]

The Company failed to provide in writing the reasons for the denial of the claim in whole or in part including the factual and legal bases for each reason given.

2

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Alleged Violations

CCR §2695.9(f) *[CIC §790.03(h)(3)]

The Company failed to document in the claim file all justification for the adjustment of the amount claimed because of betterment, depreciation, or salvage. Any adjustment for betterment or depreciation shall reflect a measurable difference in market value attributable to the condition and age of the property.

2

CCR §2695.9(f) *[CIC §790.03(h)(3)]

The Company failed to fully explain the basis for any adjustment to the claimant in writing.

2

CCR §2695.5(b) *[CIC §790.03(h)(2)]

The Company failed to respond to communications within 15 calendar days.

1

CCR §2695.5(e)(2) *[CIC §790.03(h)(3)]

The Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days.

1

CCR §2695.7(b) *[CIC §790.03(h)(4)]

The Company failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days.

1

CCR §2695.7(b)(1) *[CIC §790.03(h)(3)]

The Company failed to deny, dispute or reject a third party claim, in whole or in part, in writing.

1

CCR §2695.7(b)(3) *[CIC §790.03(h)(3)]

The Company failed to include a statement in its claim denial that, if the claimant believes all or part of the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance.

1

CCR §2695.8(b)(1) *[CIC §790.03(h)(5)]

The Company failed to include, in the settlement, the one-time fees incident to transfer of evidence of ownership of a comparable automobile.

1

CCR §2695.7(q) *[CIC §790.03(h)(5)]

The Company failed to share subrogation recoveries on a proportionate basis with the first party claimant.

1

CIC §1871.3(a)(1) *[CIC §790.03(h)(3)]

The Company failed to include the penalty of perjury warning on its theft affidavit.

1

CCR §2695.6(b)(3) *[CIC §790.03(h)(3)]

The Company failed to annually certify in a declaration executed under penalty of perjury that thorough and adequate training regarding the Fair Claims Settlement Practices Regulations was provided to all its claims agents.

1

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Alleged Violations

CCR §2695.6(b)(4) *[CIC §790.03(h)(3)]

The Company failed to maintain a copy of the certification required by CCR §2695.6(b)(1), (2) or (3) at the principal place of business.

1

Total Number of Alleged Violations 40

*DESCRIPTIONS OF APPLICABLE UNFAIR CLAIMS SETTLEMENT PRACTICES

CIC §790.03(h)(2) The Company failed to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.

CIC §790.03(h)(3) The Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.

CIC §790.03(h)(4) The Company failed to affirm or deny coverage of claims within a reasonable time after proof of loss requirements had been completed and submitted by the insured.

CIC §790.03(h)(5) The Company failed to effectuate prompt, fair, and equitable settlements of claims in which liability had become reasonably clear.

CIC §790.03(h)(13)

The Company failed to provide promptly a reasonable explanation of the bases relied upon in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.

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TABLE OF ALLEGED VIOLATIONS BY LINE OF BUSINESS

PRIVATE PASSENGER AUTOMOBILE

ENIC 2017 Written Premium: $17,292,116 ENIC 2018 Written Premium: $3,759,171

AMOUNT OF RECOVERIES $369.89

NUMBER OF ALLEGED VIOLATIONS

CCR §2695.8(g)(3) [CIC §790.03(h)(3)] 5

CCR §2695.7(b)(1) [CIC §790.03(h)(3)] 3

CCR §2695.8(f) [CIC §790.03(h)(3)] 3

CIC §11580.011(e) [CIC §790.03(h)(5)] 3

CCR §2695.7(h) [CIC §790.03(h)(5)] 2

CCR §2695.7(p) [CIC §790.03(h)(3)] 2

CCR §2632.13(e)(1) [CIC §790.03(h)(3)] 2

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 1

CCR §2695.8(b)(1) [CIC §790.03(h)(5)] 1

SUBTOTAL 22

COMMERCIAL AUTOMOBILE


AMOUNT OF RECOVERIES $500.00


CCR §2695.7(h) [CIC §790.03(h)(5)] 2

CIC §1871.3(a)(1) [CIC §790.03(h)(3)] 1

CCR §2695.8(g)(3) [CIC §790.03(h)(3)] 1

CCR §2695.7(p) [CIC §790.03(h)(3)] 1

CCR §2695.7(q) [CIC §790.03(h)(5)] 1

CCR §2695.7(b)(3) [CIC §790.03(h)(3)] 1

CCR §2695.5(b) [CIC §790.03(h)(2)] 1

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 1

CCR §2695.5(e)(2) [CIC §790.03(h)(3)] 1

SUBTOTAL 10

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COMMERCIAL PROPERTY


AMOUNT OF RECOVERIES $0


CCR §2695.9(f) [CIC §790.03(h)(3)] 4

CCR §2695.7(b) [CIC §790.03(h)(4)] 1

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 1

SUBTOTAL 6

GENERAL


CCR §2695.6(b)(3) [CIC §790.03(h)(3)] 1

CCR §2695.6(b)(4) [CIC §790.03(h)(3)] 1

SUBTOTAL 2

WORKERS COMPENSATION


AMOUNT OF RECOVERIES $0


SUBTOTAL 0

TOTAL 40

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SUMMARY OF EXAMINATION RESULTS

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.

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. The Company

is obligated to ensure that compliance is achieved.

Any noncompliant practices identified in this report may extend to other

jurisdictions. The Company should address corrective action for other jurisdictions

when applicable.

Money recovered within the scope of this report was $869.89 as described in

section numbers 3, 9, and 15 below. As a result of the examination, the total amount of

money returned to claimants within the scope of this report was $869.89. Pursuant to

the findings of the examination as described in sections 3, 4 and 11 below, the

Company is conducting a closed claims survey. The results of the survey and additional

payments, if any, shall be reported to the Department by August 9, 2019.

PRIVATE PASSENGER AUTOMOBILE 1. In five instances, the Company required the use of non-original equipment manufacturer replacement crash parts and failed to disclose in writing, in any estimate prepared by or for the insurer, the fact that it warrants such parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance. The Department alleges these acts are in violation of CCR §2695.8(g)(3) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the findings and has notified all of its TPAs, vendors and claim staff in California regarding the required written warranty language that must be disclosed on estimates on the use of non-original equipment manufacturer replacement crash parts.

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2. In three instances, the Company failed to supply the claimant with a copy of the estimate upon which the settlement was based. The Department alleges these acts are in violation of CCR §2695.8(f) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the findings and has delivered a written training communication on February 26, 2019 to claim staff reminding them about supplying the vehicle damage repair appraisal to the vehicle owner. 3. In three instances, the Company failed to replace the child passenger restraint system or failed to reimburse the claimant for the cost of purchasing a new child passenger restraint system that was in use by a child during the accident or if it sustained a covered loss while in the vehicle. In these instances, the child passenger restraint systems (CPRS) that were in the vehicles unoccupied during the accident were not inspected or examined to determine if the child passenger restraint systems sustained a covered loss that required replacement. The Department alleges these acts are in violation of CIC §11580.011(e) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees that the child passenger restraint systems that were in the vehicles unoccupied during these accidents were not inspected or examined to determine whether they sustained a covered loss. With regard to car seats that were not occupied during a collision, the Company has issued new instructions to its adjusters and Third Party Administrators (TPAs) to have the car seats examined by a knowledgeable inspection service or to simply pay for a new car seat in this situation.

As a result of the findings of the examination, the Company paid a total of

$354.89 for the CPRS in these instances. In response to a concern that the Company may have overlooked CPRS that were unoccupied during an accident that sustained a covered loss, the Company is conducting an internal survey of claims that were closed from April 1, 2016 through March 31, 2019. The results of the survey and additional payments, if any, shall be reported to the Department by August 9, 2019.

4. In two instances, the Company failed, upon acceptance of the claim, to tender payment within 30 calendar days. Specifically, the Company withheld payment of the insured’s vehicle damages solely because the insured had not selected a repair shop. Once a repair shop was selected by the insured, the claim was paid. In one instance, the claim was not paid until 104 days after acceptance of the claim. In the second instance, the claim was not paid until 69 days after acceptance of the claim. The Department alleges these acts are in violation of CCR §2695.7(h) and are unfair practices under CIC §790.03(h)(5).

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Summary of the Company’s Response: The Company acknowledges these findings. The Company is aware of its obligation to tender payment within 30 calendar days of acceptance of the claim even if a repair shop has not been selected. In the future, the Company will issue payment to the insured directly if there is no lienholder or will issue the payment to the insured and lienholder when there is a lienholder within 30 calendar days from acceptance of the claim.

In response to a concern that the Company may have closed without payment

some claims in which the insured did not select a repair facility, the Company is conducting an internal survey of claims that were closed from April 1, 2016 through March 31, 2019 to determine if there are any claims that were closed without payment for not selecting a repair shop. The results of the survey and additional payments, if any, shall be reported to the Department by August 9, 2019. 5. In two instances, the Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. The Department alleges these acts are in violation of CCR §2695.7(p) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges these findings. It is the Company’s standard practice to provide written notification to a first party claimant as to whether the Company intends to pursue subrogation. To ensure future compliance, the Company sent a Training Memorandum on March 3, 2019 on this requirement to all claims staff. 6. In two instances, the Company failed to properly advise the insured that the driver of the insured vehicle was principally at-fault for an accident. These two instances involved the failure to send the determination of fault notice. The Department alleges these acts are in violation of CCR §2632.13(e)(1) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges these findings. It is the Company’s standard practice to advise the insured in writing of the determination of fault. To ensure future compliance, the Company sent a Training Memorandum on March 3, 2019 on this requirement to all claims staff.

7. In two instances, the Company failed to provide in writing the reasons for the denial of the claim in whole or in part including the factual and legal bases for each reason given. In these instances, no written denial was provided to the insureds. The Department alleges these acts are in violation of CCR §2695.7(b)(1) and are unfair practices under CIC §790.03(h)(13).

Summary of the Company’s Response: The Company acknowledges these findings. It is the Company’s standard practice to send written notice to the claimant when their claim is being denied. The adjusters involved mistakenly failed to send the

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required notices. To ensure future compliance, the Company sent a Training Communication to all claims staff on February 28, 2019 and March 14, 2019 to reinforce this requirement. 8. In one instance, the Company failed to provide written notice of the need for additional time or information every 30 calendar days. The Company did not send the required status letter. The Department alleges this act is in violation of CCR §2695.7(c)(1) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: It is the Company’s standard practice to provide written notice of the need for additional time or information every 30 calendar days as required. In this instance, the Company agrees that the status letter was not sent due to an unintentional oversight by the adjuster. The adjuster involved was counseled of this requirement. 9. In one instance, the Company failed to include, in the settlement, the one-time fees incident to transfer of evidence of ownership of a comparable vehicle. In this instance, the one-time DMV transfer fee was not paid. The Department alleges this act is in violation of CCR §2695.8(b)(1) and is an unfair practice under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees that the one-time DMV transfer fee was not included in the claim settlement due to an unintentional oversight by the adjuster. Additional training was conducted regarding this regulation. The Company reopened the claim and issued payment of $15.00 to the insured with an explanation letter.

10. In one instance, the Company failed to deny, dispute or reject a third party claim, in whole or in part, in writing. In this instance, no denial letter was sent to the third party claimant. The Department alleges this act is in violation of CCR §2695.7(b)(1) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: It is the Company’s practice to send a written notice to the claimant when a claim is denied. The Company agrees with this finding and indicates that the pertinent adjuster did not send the required letter. The Company sent a Training Memorandum to the claim staff on March 14, 2019 on this requirement.

COMMERCIAL AUTOMOBILE 11. In two instances, the Company failed, upon acceptance of the claim, to tender payment within 30 calendar days. In the first instance, the Company withheld payment of the insured’s vehicle damages solely because the insured had not selected a repair shop. The claim was subsequently closed without payment as the insured did

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not choose a repair shop. The Company reopened the claim to contact the insured who advised the Company that they are no longer interested in pursuing the claim. In the second instance, the Company failed to pay the subrogation demand that was received timely. The Department alleges these acts are in violation of CCR §2695.7(h) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company acknowledges these findings. In the first instance, the Company is aware of its obligation to tender payment within 30 calendar days of acceptance of the claim even if a repair shop has not been selected. In the future, the Company will issue payment to the insured directly if there is no lienholder, or will issue the payment to the insured and lienholder when there is a lienholder interest within 30 calendar days from acceptance of the claim.

In response to a concern that the Company may have closed eligible claims without payment when an insured did not select a repair facility, the Company is conducting an internal survey of claims that were closed from April 1, 2016 through March 31, 2019. The results of the survey and additional payments, if any, shall be reported to the Department by August 9, 2019

In the second instance, the Company agrees that the handling adjuster missed

the opportunity to respond to the subrogation demand timely. The pertinent adjusters were counseled and required to maintain shorter diaries for regulatory compliance. The Team Leader will also maintain a 30-day diary to ensure the adjusters provide a timely response to any requests for payments.

12. In one instance, the Company failed to include a warning on its theft affidavit that false representations subject the insured to a penalty of perjury. The Department alleges this act is in violation of CIC §1871.3(a)(1) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with this finding. The Company revised the language on its Theft Affidavit for statutory compliance.

13. In one instance, the Company required the use of non-original equipment manufacturer replacement crash parts and failed to disclose in writing, in any estimate prepared by or for the insurer, the fact that it warrants such parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance. The Department alleges this act is in violation of CCR §2695.8(g)(3) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees and has notified all of its TPAs, vendors and claim staff in California regarding the required written warranty language that must be disclosed on estimates for the use of non-original equipment manufacturer replacement crash parts.

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14. In one instance, the Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. The Department alleges this act is in violation of CCR §2695.7(p) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges the finding. It is the Company’s standard practice to provide written notification to a first party claimant as to whether the Company intends to pursue subrogation. To ensure future compliance, the Company will advise the insured in writing that subrogation has been referred for recovery and provide the recovery vendor’s contact information. The adjusters have been counseled of this requirement. 15. In one instance, the Company failed to share subrogation recoveries on a proportionate basis with the first party claimant. In this instance, the subrogation recovery was not shared with the insured. The Department alleges this act is in violation of CCR §2695.7(q) and is an unfair practice under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with this finding. The Company indicates that this was an isolated instance of non-compliance as it is their standard practice to share subrogation recoveries with their insureds. As a result of the examination, the file was re-opened and the insured’s pro-rata portion of the subrogation recovery was reimbursed in the amount $500.00. 16. In one instance, the Company failed to include a statement in its claim denial that, if the claimant believes all or part of the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance. In this instance, the denial letter sent to the insured did not contain the required language. The Department alleges this act is in violation of CCR §2695.7(b)(3) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges this finding and indicates this was an isolated incident. Additional training was conducted for regulatory compliance.

17. In one instance, the Company failed to respond to communications within 15 calendar days. In this instance, the Company responded to the adverse carrier’s letter and subrogation demand 93 days after it was received. The Department alleges this act is in violation of CCR §2695.5(b) and is an unfair practice under CIC §790.03(h)(2).

Summary of the Company’s Response: The Company agrees that the

handling adjuster failed to respond to the subrogation demand timely. All examiners have been counseled and required to maintain shorter diaries to ensure compliance.

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18. In one instance, the Company failed to provide written notice of the need for additional time or information every 30 calendar days. The Company did not send the required status letter. The Department alleges this act is in violation of CCR §2695.7(c)(1) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees that the status letter was not provided due to an unintentional oversight by the adjuster. Additional training has been conducted on the requirement to send status letters every 30 calendar days as required.

19. In one instance, the Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days. The Department alleges this act is in violation of CCR §2695.5(e)(2) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with this finding. It is the Company’s standard practice to provide necessary forms, instructions, and reasonable assistance within 15 calendar days. The adjuster involved has been counseled regarding this requirement to ensure future compliance.

COMMERCIAL PROPERTY 20. In two instances, the Company failed to document in the claim file all justification for the adjustment of the amount claimed because of betterment, depreciation, or salvage. Any adjustment for betterment or depreciation shall reflect a measurable difference in market value attributable to the condition and age of the property. In these instances, the claim files did not document the basis for the depreciation taken regarding the age and condition of the items. The Department alleges these acts are in violation of CIC §§ 2051 and 2051.5 / CCR §2695.9(f) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with these findings. The Company has conducted training with claims staff to include appropriate documentation to support the condition and age of the items depreciated.

21. In two instances, the Company failed to fully explain the basis for any adjustment to the claimant in writing. The Department alleges these acts are in violation of CCR §2695.9(f) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with these findings. The Company has conducted additional compliance training with claims staff to ensure that claimants are provided with a written explanation of the basis for any depreciation adjustment.

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22. In one instance, the Company failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days. The Department alleges this act is in violation of CCR §2695.7(b) and is an unfair practice under CIC §790.03(h)(4).

Summary of the Company’s Response: The Company agrees with this finding. The Company indicates it is their standard practice upon receiving proof of claim, to accept or deny a claim within 40 calendar days. The Company indicates a TPA adjudicated this claim, and this TPA no longer works for the Company.

23. In one instance, the Company failed to provide written notice of the need for additional time or information every 30 calendar days. The Company did not send the required status letter. The Department alleges this act is in violation of CCR §2695.7(c)(1) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees that the status letter was not provided in this instance due to an unintentional oversight by the adjuster. Additional training has been conducted to send status letters every 30 calendar days for regulatory compliance. GENERAL 24. In one instance, the Company failed to annually certify in a declaration executed under penalty of perjury that thorough and adequate training regarding the Fair Claims Settlement Practices Regulations was provided to all its claims agents. The annual certification was not completed for calendar year 2018. The Department alleges this act is in violation of CCR §2695.6(b)(3) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees that an annual certification signed by a principal of the Company was not completed for Year 2018. The Company indicates all required training will be completed prior to September 1st of each calendar year and will be certified as required by this regulation. For Year 2019, the Company completed its annual Fair Claims Settlement Practices training on June 4, 2019 at its principal place of business located in Liberty Corner, New Jersey.

25. In one instance, the Company failed to maintain a copy of the certification required by §2695.6(b)(1), (2) or (3) at the principal place of business. The annual certification for calendar year 2018 was not maintained as required. The Department alleges this act is a violation of CCR §2695.6(b)(4) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees that a copy of the certification was not maintained as required. To ensure future compliance a certification form has been created and will be maintained at the principal place of

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business as required by this regulation. For 2019, the Company completed its annual Fair Claims Settlement Practices training on June 4, 2019 and is maintaining the annual certification at its principal place of business located in Liberty Corner, New Jersey.

WORKERS COMPENSATION There were no citations alleged or criticisms of insurer practices in this line of business within the scope of this report.

everest national insurance company naic # 10120 cdi # … conduct exam... · 2019-09-11 · everest...

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