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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

NATIONAL UNITY INSURANCE COMPANY NAIC # 19119 CDI # 4988-2

AS OF FEBRUARY 28, 2017

ADOPTED MAY 17, 2018

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’s 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).

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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:

National Unity Insurance Company NAIC # 19119

Group NAIC # 0000

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

NUIC, or the Company.

This examination covered the claim handling practices of the aforementioned

Company on private passenger automobile claims closed during the period from March

1, 2016 through February 28, 2017. 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.

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.

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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 March 1, 2016 through February 28, 2017, 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 California Department of Insurance in Los Angeles, California, and at the offices of

the Company in Newbury Park, California.

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EXECUTIVE SUMMARY

The Private Passenger Automobile claims reviewed were closed from March 1,

2016 through February 28, 2017, referred to as the “review period”. The examiners

randomly selected 142 NUIC claim files for examination. The examiners cited 72

alleged claims handling violations of the California Insurance Code and the California

Code of Regulations and other specified codes from this sample file review.

Findings of this examination included the failure to disclose in writing to the claimant

that notice of the salvage retention by the claimant must be provided to the Department

of Motor Vehicles and that this notice may affect the loss vehicle’s future resale and/or

insured value; the failure to inform the claimant of his or her right to seek a refund of the

unused license fees from the Department of Motor Vehicles; the failure to pay

reasonable towing and storage charges incurred by the claimant; the failure to provide

reasonable notice to a claimant before terminating payment for storage charges; the

failure to notify the Department of Motor Vehicles that the owner of a total loss salvage

vehicle retained possession of the vehicle; and the failure to provide written notice of

the need for additional time or information every 30 calendar days.

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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:

NUIC SAMPLE FILES REVIEW

LINE OF BUSINESS / CATEGORY CLAIMS IN

REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS

Private Passenger Auto / Collision 33 21 12

Private Passenger Auto / Comprehensive 5 3 0

Private Passenger Auto / Property Damage 894 49 33

Private Passenger Auto / Bodily Injury 381 21 4

Private Passenger Auto / Uninsured Motorist Bodily Injury

36 17 5

Private Passenger Auto / Uninsured Motorist Property Damage

39 19 15

Private Passenger Auto / Medical Payments 15 12 3

TOTALS 1403 142 72

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TABLE OF TOTAL ALLEGED VIOLATIONS

Citation Description of Allegation NUIC Number

of Alleged Violations

CCR §2695.8(b)(1)(A) *[CIC §790.03(h)(3)]

The Company failed to disclose in writing to the claimant that notice of the salvage retention by the claimant must be provided to the Department of Motor Vehicles and that this notice may affect the loss vehicle’s future resale and/or insured value.

11

The Company failed to inform the claimant of his or her right to seek a refund of the unused license fees from the Department of Motor Vehicles.

11

CCR §2695.8(k) *[CIC §790.03(h)(5)]

The Company failed to pay the reasonable towing charges incurred by the claimant

3

The Company failed to pay the reasonable storage charges incurred by the claimant.

2

The Company failed to provide reasonable notice to a claimant before terminating payment for storage charges.

1

CVC §11515(b) *[CIC §790.03(h)(3)]

The Company failed to notify the Department of Motor Vehicles that the owner of a total loss salvage vehicle retained possession of the vehicle.

5

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.

5

CIC §1876 *[CIC §790.03(h)(3)]

The Company failed, within 20 days of receipt of a bodily injury, medical payment or uninsured motorist bodily injury claim, to deposit the claims information with a licensed insurance claims analysis bureau.

5

CCR §2695.8(b)(4) *[CIC §790.03(h)(3)]

The Company failed to take reasonable steps to verify that the determination of the cost of a comparable vehicle was accurate and representative of the market value in the local market area.

1

The Company failed to fully itemize in writing the determination of the cost of a comparable vehicle at the time the settlement offer was made. Itemization of all components of the settlement was not provided.

1

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Citation Description of Allegation NUIC Number

of Alleged Violations

The Company failed to explain in writing the determination of the cost of a comparable vehicle at the time the settlement offer was made. Determination of the actual cash value (ACV) was not explained.

1

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 §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 §2695.8(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.

2

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

The Company failed to include, in the settlement, the license fee and other annual fees computed based upon the remaining term of the current registration.

2

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

The Company failed to include, in the settlement, fees incident to the transfer of the vehicle to salvage status.

2

CCR §2695.8(c) *[CIC §790.03(h)(3)]

The Company failed to notify the insured that the file will be reopened if the Company is notified within 35 days that the insured cannot purchase a comparable automobile for the settlement amount offered or paid.

2

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

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

2

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

The Company failed to ask if a child passenger restraint system was in use by a child during an accident or was in the vehicle at the time of a loss that was covered by the policy.

2

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.

1

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

The Company failed to acknowledge notice of claim within 15 calendar days

1

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

The Company failed to begin any necessary investigation of the claim within 15 calendar days.

1

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Citation Description of Allegation NUIC Number

of Alleged Violations

CCR §2695.4(a) *[CIC §790.03(h)(1)]

The Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy that may apply to the claim presented by the claimant. When additional benefits might reasonably be payable under an insured’s policy upon receipt of additional proofs of claim, the insured shall immediately communicate this fact to the insured and cooperate with and assist the insured in determining the extent of the insurer’s additional liability.

1

CCR §2695.5(b) *[CIC §790.03(h)(2)]

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

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 §2695.7(d) *[CIC §790.03(h)(3)]

The Company failed to conduct and diligently pursue a thorough, fair and objective investigation.

1

CCR §2695.7(g) *[CIC §790.03(h)(5)]

The Company attempted to settle a claim by making a settlement offer that was unreasonably low.

1

CIC §790.03(h)(1) The Company misrepresented to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.

1

Total Number of Alleged Violations 72

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*DESCRIPTIONS OF APPLICABLE UNFAIR CLAIMS SETTLEMENT PRACTICES

CIC §790.03(h)(1) The Company misrepresented to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.

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

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TABLE OF ALLEGED VIOLATIONS BY LINE OF BUSINESS

PRIVATE PASSENGER AUTOMOBILE

2016 Written Premium: $4,338,603 2017 Written Premium: $4,211,537

AMOUNT OF RECOVERIES $3,762.07

NUMBER OF ALLEGED VIOLATIONS

CCR §2695.8(b)(1)(A) [CIC §790.03(h)(3)] 22

CCR §2695.8(k) [CIC §790.03(h)(5)] 6

CVC §11515(b) [CIC §790.03(h)(3)] 5

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 5

CIC §1876 [CIC §790.03(h)(3)] 5

CCR §2695.8(b)(1) [CIC §790.03(h)(5)] 4

CCR §2695.8(b)(4) [CIC §790.03(h)(3)] 3

CCR §2695.8(f) [CIC §790.03(h)(3)] 3

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

CCR §2695.8(b)(1)(A) [CIC §790.03(h)(5)] 2

CCR §2695.8(c) [CIC §790.03(h)(3)] 2

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

CIC §11580.011(e) [CIC §790.03(h)(3)] 2

CIC §11580.011(e) [CIC §790.03(h)(5)] 1

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

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

CCR §2695.4(a) [CIC §790.03(h)(1)] 1

CCR §2695.5(b) [CIC §790.03(h)(2)] 1

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

CCR §2695.7(d) [CIC §790.03(h)(3)] 1

CCR §2695.7(g) [CIC §790.03(h)(5)] 1

CIC §790.03(h)(1) 1

TOTAL 72

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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 $1,582.07 as described in

section numbers 2, 6, 9, 10, 11, and 15 below. Following the findings of the

examination, a closed claims survey as described in section 2 below was conducted by

the Company resulting in additional payments of $2,180.00. As a result of the

examination, the total amount of money returned to claimants within the scope of this

report was $3,762.07.

PRIVATE PASSENGER AUTOMOBILE 1. In 22 instances, the Company failed to comply with the requirements of CCR §2695.8(b)(1)(A) as described below:

1(a). In 11 instances, the Company failed to disclose in writing to the claimant that notice of the salvage retention by the claimant must be provided to the Department of Motor Vehicles and that this notice may affect the loss vehicle’s future resale and/or insured value.

1(b). In 11 instances, the Company failed to inform the claimant of his or

her right to seek a refund of the unused license fees from the Department of Motor Vehicles.

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The Department alleges these acts are in violation of CCR §2695.8(b)(1)(A) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response to 1(a) and 1(b): The Company acknowledges these findings. The Company states this does not reflect its general business practice as adjusters are trained to properly handle this requirement and it is part of standard procedures for handling claims. Regarding owner-retained total losses, the Company states its procedures require adjusters to send the salvage retention notice to the claimant. To ensure regulatory compliance, on July 7, 2017, the Company built an alert in its claims system that triggers a salvage retention letter requirement for files that do not contain this notice. As a result of the exam, the Company re-opened these claims and issued salvage retention letters to these claimants. Additionally, the Company provided refresher training to all claims staff on August 15, 2017. The Company will continue to reinforce regulatory compliance through supervisor audits and unit meetings.

2. In six instances, the Company failed to comply with the requirements of CCR §2695.8(k) as described below:

2(a). In three instances, the Company failed to pay the reasonable towing charges incurred by the claimant. In two instances, the Company imposed a policy limit of $150.00 for towing charges and reduced the insureds’ settlement by the amounts paid in excess of this policy limit. In one instance, the claimant’s vehicle was lien sold seven days after being towed from the scene of the accident. The Company failed to provide reimbursement for these towing charges.

2(b). In two instances, the Company failed to pay the reasonable storage

charges incurred by the claimant. The Company failed to provide reimbursement for reasonable storage charges incurred on two total loss claims. In the first instance, the Company failed to pay seven days of storage incurred on the claimant’s vehicle after being towed from an accident. In the second instance, the claimant’s vehicle incurred 16 days of storage charges after a delay by the Company in arranging the vehicle inspection. The Company only paid four days of storage charges.

2(c). In one instance, the Company failed to provide reasonable notice to

a claimant before terminating payment for storage charges. The Company provided less than 24 hours’ notice that the claimant’s total loss vehicle had to be moved. The claimant incurred and paid 13 days of storage charges to move the vehicle. However, the Company paid for 10 days of storage.

CCR §2695.8(k) requires the insurer to pay reasonable tow and storage and to

provide reasonable notice to a claimant prior to disallowing storage charges. The Department alleges these acts are in violation of CCR §2695.8(k) and are unfair practices under CIC §790.03(h)(5).

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Summary of the Company’s Response to 2(a) and 2(b): The Company acknowledges that its practice and policy language to impose a limit on reasonable towing and storage charges is not in compliance with regulatory guidelines. Effective, July 28, 2017, the Company modified its procedures to comply with CCR §2695.8(k). Additionally, the Company’s contracts and new business written after December 8, 2017 do not contain limitations on towing and storage charges. Further, the Company also re-opened each of these claims and issued additional payments of $955.00 in towing and storage charges. All of these instances were identified in first party physical damage claims handled by one of the Company’s Third Party Administrators.

As a result of the examination, the Company conducted a closed claim self-

survey of physical damage claims involving towing and storage charges for the period of January 1, 2014 thru February 28, 2017. These findings were reported to the Department on March 19, 2018. The survey included a review of 80 physical damage claims of which the Company identified six that were underpaid towing and storage charges. The Company issued additional payments totaling $2,180.00 on March 16, 2018.

Summary of the Company’s Response to 2(c): The Company acknowledges

that it failed to provide reasonable notice to the claimant before terminating payment for storage charges. As a result of the examination, the Company issued an additional payment for the remaining balance in the amount of $189.00. To ensure compliance, the Company conducted refresher training for the claims staff on August 15, 2017.

3. In five instances, the Company failed to notify the Department of Motor Vehicles that the owner of a total loss salvage vehicle retained possession of the vehicle. The Department alleges these acts are in violation of CVC §11515(b) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges these findings as it could not locate verification that the DMV had been notified that the owner retained possession of the salvaged vehicle. The Company states these requirements are incorporated into its standard business practices. As a result of the examination, the Company re-opened these claims and issued the salvage retention notices to the DMV. To ensure compliance, the Company conducted refresher training for the claims staff on August 15, 2017.

4. In five instances, the Company failed to provide written notice of the need for additional time or information every 30 calendar days. The Department alleges these acts are in violation of CCR §2695.7(c)(1) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges it failed to provide a written notice of the need for additional time every 30 days. The Company states this does not reflect the general business practice of the Company as its

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adjusters are trained to properly handle this requirement and it is part of the Company’s standard procedures for handling claims. Effective July 7, 2017, to ensure compliance with this regulation, the Company implemented an alert in its claims system that triggers a 30-day notice for claim files that do not contain a status letter. The Company provided refresher training to its claims staff on August 15, 2017 which incorporated the general audit findings into claim handling procedures. Additional compliance reinforcement will continue through supervisor audits and weekly unit meetings.

5. In five instances, the Company failed, within 20 days of receipt of a bodily injury, medical payment or uninsured motorist bodily injury claim, to deposit the claims information with a licensed insurance claims analysis bureau. The Department alleges these acts are in violation of CIC §1876 and are unfair practices under CIC §790.03(h)(3). Summary of the Company’s Response: The Company acknowledges these findings and believes this was caused by an adjuster oversight as this requirement is incorporated into the Company’s standard business practices. Effective October 31, 2015, the Company implemented a data feed within its claims program and its analysis bureau vendor that automatically submits the Company’s claim system data to the claims analysis bureau. The Company also has additional safeguards which include daily alerts to adjusters and supervisors to update missing claim data, monthly audits, and added features to confirm matches and /or related issues. As a result of the audit examination, the Company has deposited applicable information with the claims analysis bureau. Further, to reinforce statutory compliance, the Company held refresher training for staff on August 15, 2017.

6. In three instances, the Company failed to comply with CCR §2695.8(b)(4) as follows: 6(a). In one instance, the Company failed to take reasonable steps to verify that the determination of the cost of a comparable vehicle was accurate and representative of the market value in the local market area. The claim file included two vehicle valuation reports. The Company selected the valuation report and settled the claim using the report with the lower actual cash value. The claim file did not support a rationale for using the valuation report that resulted in the lower actual cash value settlement. The Department alleges this act is in violation of CCR §2695.8(b)(4) and is an unfair practice under CIC §790.03(h)(3).

6(b). In one instance, the Company failed to fully itemize in writing the

determination of the cost of a comparable vehicle at the time the settlement offer was made. Itemization of all components of the settlement was not provided. The Company failed to provide the claimant with an itemized report for all of the components of the total loss settlement offer. The Department alleges this act is in violation of CCR §2695.8(b)(4) and is an unfair practice under CIC §790.03(h)(3).

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6(c). In one instance, the Company failed to explain in writing the determination of the cost of a comparable vehicle at the time the settlement offer was made. Determination of the actual cash value (ACV) was not explained. The Company failed to provide the claimant with a copy of the Actual Cash Value (ACV) comparable vehicle reports used in the total loss settlement. The Department alleges this act is in violation of CCR §2695.8(b)(4) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response to 6(a): The Company

acknowledges this finding and states the handling adjuster made an error by selecting the wrong vehicle valuation report. The Company recalculated the ACV using the higher valuation report and issued an additional payment to the claimant for $130.07. As a remedial measure and to reinforce regulatory compliance, the Company held refresher training for staff on August 15, 2017.

Summary of the Company’s Response to 6(b): The Company acknowledges

the adjuster failed to attach a written notice of the total loss settlement offer to the claim file. The Company states this is an isolated incident that does not reflect its general business practice. In this instance, the handling adjuster is no longer with the Company. As a remedial measure to ensure regulatory compliance, the Company held refresher training for staff on August 15, 2017. The Company will continue to reinforce regulatory compliance through supervisor audits and unit meetings.

Summary of the Company’s Response to 6(c): The Company acknowledges

the vehicle valuation reports used to determine the ACV were not provided to the claimant. The Company states adjusters are required to include a copy of the vehicle valuation report with the written total loss settlement offer. As a result of the examination, the Company provided the claimant with a copy of the vehicle valuation reports used to determine the ACV of the vehicle. As a remedial measure to ensure regulatory compliance, the Company held refresher training for staff on August 15, 2017. The Company will continue to reinforce regulatory compliance through supervisor audits and unit meetings.

7. In three instances, the Company failed to supply the claimant with a copy of the estimate upon which the settlement was based. In two instances, the Company failed to provide the claimants with a copy of the supplemental estimates for repair. In one instance, the Company failed to provide the claimant with a copy of the initial estimate for repair. 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 acknowledges these findings. The Company states these were isolated incidents as its adjusters are trained to properly handle this requirement and it is part of standard procedures for auto losses. As a result of the audit examination, the Company implemented a process to disallow a collision, comprehensive or property damage payment if an estimate is attached to that

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feature and a copy of the estimate letter is missing. As a remedial measure to ensure regulatory compliance, the Company held refresher training for staff on August 15, 2017. The Company will continue to reinforce regulatory compliance through supervisor audits and unit meetings.

8. 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. In one instance, the Company failed to send a fault determination letter to the insured. In the second instance, the Company failed to advise the insured that the determination of fault was based on a finding that the driver was 51% or more responsible, and did not specify the reason for the determination of fault. 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 and states these were isolated incidents that do not reflect its general business practice. The Company states its adjusters are trained to properly handle this requirement and it is part of standard procedures for handling auto claims. Effective July 7, 2017, the Company implemented an alert in its claims system that triggers a fault determination notice requirement to adjusters and supervisors for files that do not contain this notice. The Company re-opened these claims and issued the applicable fault determination notices to each insured. The Company also conducted refresher training for staff on August 15, 2017.

9. In two instances, the Company failed to include, in the settlement, the one-time fees incident to transfer of evidence of ownership of a comparable vehicle. The Company failed to include the one-time vehicle transfer fee in the total loss settlement. The Department alleges these acts are in violation of CCR §2695.8(b)(1) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company acknowledges the findings and states these were isolated incidents that do not reflect its general business practice. The Company states claims adjusters are trained to include the vehicle transfer fee in all total loss settlements. The Company re-opened these claims and issued additional payments of $30.00. To ensure regulatory compliance, the Company also conducted refresher training for staff on August 15, 2017.

10. 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 Company failed to compensate the registered owner for the pro-rated unused license fees and other applicable fees due at the time of the total loss settlement. In the first instance, the Company initially failed to issue payment of unused license fees and subsequently deducted a DMV administrative fee upon payment. In the second instance, the Company reimbursed the unused license fees after receipt from the DMV, but deducted an administrative fee from the payment. The Department

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alleges these acts are in violation of CCR §2695.8(b)(1) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company acknowledges the unused vehicle license fees were not paid accurately in the total loss settlement. The Company agrees it is not allowed to reduce the pro-rated amount by the DMV administrative fee charged to the company for its reports. The Company re-opened these claims and issued additional payments of $108.00. To ensure regulatory compliance, the Company also conducted refresher training for staff on August 15, 2017. The Company will continue to reinforce regulatory compliance through supervisor audits and unit meetings

11. In two instances, the Company failed to include, in the settlement, fees incident to the transfer of the vehicle to salvage status. The Company failed to include the salvage certificate fee in the total loss settlement of an owner retained vehicle. The Department alleges these acts are in violation of CCR §2695.8(b)(1)(A) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company acknowledges the

adjusters inadvertently failed to include the salvage certificate fee in the total loss settlement. The Company states these were isolated incidents and do not reflect its general business practice as adjusters are trained to handle these requirements that are part of standard procedures for handling total loss claims. The Company re-opened these claims and issued additional payments of $70.00 to the vehicle owners for fees associated with the transfer of the vehicle to salvage status.

12. In two instances, the Company failed to notify the insured that the file will be reopened if a comparable automobile cannot be purchased for the amount offered or paid. The Department alleges these acts are in violation of CCR §2695.8(c) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the findings and states these were isolated incidents. The Company’s total loss offer template contains the language required by CCR §2695.8(c). In both instances, the Company contacted the registered owners and confirmed they were able to purchase a comparable vehicle at that time. The Company counseled the handling adjusters to reinforce regulatory compliance. The Company also conducted refresher training with all adjusters on August 15, 2017.

13. In two instances, the Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days. In one instance, the Company did not provide instructions and reasonable assistance until 20 days after the first notice of loss. In the second instance, the Company did not send a medical payments letter with medical payments forms to the insured’s passenger. The

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Department alleges these acts are in violation of CCR §2695.5(e)(2) and are unfair practices under CIC §790.03(h)(3). Summary of the Company’s Response: The Company acknowledges these findings. With regard to the notification of medical payments, the Company states the adjuster attempted to send a letter to the passenger, but a systems glitch misdirected the letter to the insured. The Company’s letters automatically pull relevant information from its system (such as name, address, coverages). In this case, the information was pulled for the driver rather than the passenger. As a remedial measure, on July 7, 2017, the Company implemented an alert in its claims system that triggers an acknowledgement letter requirement for claim files. Additionally, on July 28, 2017, the Company corrected its systems glitch by modifying the method in which letters and notifications are structured and formatted in the claims systems. 14. In two instances, the Company failed to ask if a child passenger restraint system was in use by a child during an accident or was in the vehicle at the time of a loss that was covered by the policy. The Department alleges these acts are in violation of CIC §11580.011(e) and are unfair practices under CIC §790.03(h) (3).

Summary of the Company’s Response: The Company acknowledges the findings and states these were isolated incidents as its adjusters are trained to ask if a child passenger restraint system (CPRS) was in use or in the vehicle and damaged at the time of the accident. To ensure compliance with CIC §11580.011(e), and prior to the audit examination, the Company updated its initial claim intake script to directly inquire about child passenger restraint systems in all vehicle accidents. The Company also updated its initial acknowledgement notice to ask claimants if a child passenger restraint system was present at the time of the covered loss.

As a result of the audit examination, on July 7, 2017, the Company contacted the

claimants in each of these instances to determine if a CPRS was in use and damaged at the time of loss. The Company verified that a child restraint system was not in the vehicle at the time of the accident. Further, the Company conducted training with its claims staff on August 15, 2017. The Company will continue to reinforce statutory compliance through supervisor audits and unit meetings. 15. In one instance, 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. The Company failed to replace a child passenger restraint system in a third party liability claim. The Department alleges this act in violation of CIC §11580.011(e) and is an unfair practice under CIC §790.03(h)(5). Summary of the Company’s Response: The Company acknowledges this finding. The Company re-opened the claim and issued a payment of $100.00 for

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replacement of the child passenger restraint system. If the claimant advises the system cost more and provides supporting documents, the Company will consider the claim for additional reimbursement. To ensure statutory compliance, the Company conducted training with its claims staff on August 15, 2017. The Company will continue to reinforce statutory guidelines through supervisor audit and weekly unit meetings. 16. In one instance, the Company failed to acknowledge notice of claim within 15 calendar days. The Company acknowledged notice of claim 20 days after the first notice of loss. The Department alleges this act in violation of CCR §2695.5(e)(1) and is an unfair practice under CIC §790.03(h)(2).

Summary of the Company’s Response: The Company acknowledges this finding and states this was an isolated incident that does not reflect the general business practice of the Company. As a remedial measure to ensure regulatory compliance, on July 7, 2017, the Company built an alert in its claims system that triggers an Acknowledgment Letter on claim files that do not contain this notice.

17. In one instance, the Company failed to begin any necessary investigation of the claim within 15 calendar days. The Company did not begin its investigation until 20 calendar days after the first notice of loss. The Department alleges this act in violation of CCR §2695.5(e)(3) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges this

finding and states this was an isolated incident that does not reflect its general business practice. As a remedial measure to ensure regulatory compliance, on July 7, 2017, the Company built a series of alerts in its claims system that notify adjusters and supervisors when files do not contain certain requirements. These include alerts for missing acknowledgment letters, initial contact notepads, and coverage reviews.

18. In one instance, the Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy. The Company failed to explain the medical payments benefit to the insured passenger. The Department alleges this act is in violation of CCR §2695.4(a) and is an unfair practice under CIC §790.03(h)(1).

Summary of the Company’s Response: The Company acknowledges this

finding and states the adjuster attempted to provide disclosure of benefits; however, a systems error caused that letter to go to the insured. On July 7, 2017, the Company modified its claims system to correct this error. 19. In one instance, the Company failed to respond to communications within 15 calendar days. The Company failed to respond to the claimant’s attorney regarding an uninsured motorist bodily injury settlement demand within regulatory timelines. The Department alleges this act is in violation of CCR §2695.5(b) and is an unfair practice under CIC §790.03(h)(2).

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Summary of the Company’s Response: The Company acknowledges this finding. The Company states it notified the claimant’s attorney and requested an extension upon receipt of the demand notice from its Third Party Administrator (TPA). The Company also states claim handling activities were removed from this TPA after discovering many claim handling deficiencies. 20. In one instance, the Company failed to include a statement in its claim denial that, if the claimant believes the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance. 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 its claim denial notice failed to reference the California Department of Insurance. The Company states it no longer uses this Third Party Administrator (TPA) for claim handling activities. Further, the Company conducted training with its claims staff on August 15, 2017. The Company will continue to reinforce regulatory compliance through supervisor audits and unit meetings.

21. In one instance, the Company failed to conduct and diligently pursue a thorough, fair and objective investigation. The Company conducted a limited investigative review and concluded the insured was 100% at-fault for the accident. However, after the insured’s attorney demanded arbitration, the Company escalated its efforts to acquire the insured’s formal statement, attempt to obtain the witness’ statement, and solicit the services of an engineer to obtain an expert opinion regarding the accident. The Department alleges this act is in violation of CCR §2695.7(d) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges this finding and agrees that its investigation was not handled in a timely and thorough manner. The Company states claims were inherited in “closed” file status, or incomplete status when they were transferred to a new Third Party Administrator (TPA). The new TPA rehabilitated and remediated files initially handled by the former vendor in a timely manner. In this instance, the new TPA was able to re-evaluate this exposure and offer an immediate settlement for the maximum policy limits.

22. In one instance, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. The Company’s valuation report failed to include an accurate odometer reading or consider the navigation system in the total loss vehicle. This resulted in a low total loss settlement offer to the insured. The Department alleges this act is in violation of CCR §2695.7(g) and is an unfair practice under CIC §790.03(h) (5).

Summary of the Company’s Response: The Company acknowledges this

finding and states the mileage total in the initial valuation report was based on the

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odometer reading in the estimate provided by an independent appraiser. The estimate did not include actual photos of the odometer from the vehicle. The Company states it corrected the valuation report based upon verification it received from the insured for the actual mileage and navigation feature on the vehicle. The Company notes these corrections were made prior to the audit examination.

23. In one instance, the Company misrepresented to claimants pertinent facts or insurance policy provisions relating to any coverages at issue. The Company directed the insured passenger to present bills to the adverse carrier and wait for payment under a third-party bodily injury settlement rather than offering to pay benefits under the insured’s medical payments coverage at that time. The Department alleges this act is in violation of CIC §790.03(h)(1). Summary of the Company’s Response: The Company acknowledges medical payments coverage is primary. The Company agrees the adjuster errored in suggesting the insured passenger must first submit medical bills to the adverse carrier or Medi-Cal. The Company conducted refresher training on August 15, 2017. In this training adjusters were advised that medical payments coverage should be made as soon as proof of loss is received. The Company will continue to reinforce statutory guidelines through supervisor audit and weekly unit meetings.