Claims Settlement Regulations (28.7)

Duties of the Agent

Acknowledge receipt of such notice to the claimant unless payment is made within that period of time. If the acknowledgment is not in writing, a notation of acknowledgment must be made in the insurer's claim file and dated. Failure of an insurance agent or claims agent to promptly transmit notice of claim to the insurer must be imputed to the insurer except where the subject policy was issued pursuant to the California Automobile Assigned Risk Program Provide to the claimant necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the claimant must provide for proof of claim Begin any necessary investigation of the claim

Penalties for and fraudulent claims

Anyone found to be in violation shall be punished by imprisonment in a county jail for one year, or for two (2), three (3), or five (5) years, or by a fine not exceeding one hundred fifty thousand dollars ($150,000) or double the value of the fraud, whichever is greater, or by both that imprisonment and fine.

Arson

Arson Information Reporting System permits insurers, law enforcement agencies, fire investigative agencies and district attorneys to deposit arson case information in a common database within the Department of Justice.

Auto Theft and Salvage

Every insurer conducting business in California must report covered private passenger automobiles and motorcycles involved in theft and salvage total losses to the National Automobile Theft Bureau or a similar central organization engaged in automobile loss prevention approved by the commissioner, in accordance with regulations promulgated by the commissioner.

Claims Analysis Bureau

FIGHTS FRAUD Collect and compile information and data from members or subscribers concerning insurance claims Disseminate information to members or subscribers relating to insurance claims for the purpose of preventing and suppressing insurance fraud Promote training and education to further insurer investigation, suppression, and prosecution of insurance fraud Provide, without fee or charge, to the commissioner, all California data and information contained in the records of the insurance claims analysis bureau in furtherance of the prevention and prosecution of insurance fraud

Unfair Claims Methods and Practices

Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies and failing to adopt and implement reasonable standards for the prompt investigation of claims constitute unfair claim settlement practices.

Efforts to Combat Insurance Fraud

In addition to health and life insurance, California's Fraud Division and Claims Analysis Bureau are responsible for combating automobile theft insurance, home arson insurance and worker's compensation insurance fraud.

Unreasonably Low Settlement Offers

No insurer shall attempt to settle a claim by making a settlement offer that is unreasonably low.

Standards for Prompt, Fair and Equitable Settlements

Notice of Claim - respond in 15 days Proof of Claim - accept or deny in 40 days Payment of Claim - If accepted, pay within 30 days

Insurance Fraud Regulation

Such crime is punishable upon a first conviction by imprisonment in the county jail for not more than one (1) year or by imprisonment for 16 months, two (2) years, or three (3) years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater, or by both that imprisonment and fine. A second or subsequent conviction is punishable by imprisonment or by that imprisonment and a fine of fifty thousand dollars ($50,000).

File and Record Documentation

To assist in such examination all insurers must: Maintain claim data that are accessible, legible and retrievable for examination so that an insurer shall be able to provide the claim number, line of coverage, date of loss and date of payment of the claim, date of acceptance, denial or date closed without payment. This data must be available for all open and closed files for the current year and the four preceding years; Record in the file the date the insurer received, date(s) the insurer processed and date the insurer transmitted or mailed every material and relevant document in the file; and Maintain hard copy files or maintain claim files that are accessible, legible and capable of duplication to hard copy; files must be maintained for the current year and the preceding four years

Communications from a Claimant

Upon receiving any communication from a claimant regarding a claim that reasonably suggests that a response is expected, every insurer must immediately, but in no event more than fifteen (15) calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the insurer. This shall not apply to require communication with a claimant subsequent to receipt by the insurer of a notice of legal action by that claimant.

Inquiries from the Department of Insurance

Upon receiving any written or oral inquiry from the Department of Insurance concerning a claim, every insurer must immediately, but in no event more than twenty-one (21) days of receipt of that inquiry, furnish the Department of Insurance with a complete written response based on the facts as then known by the insurer.

Notice of Legal Action

a notice of an action commenced against the insurer with respect to a claim, or notice of action against the insured received by the insurer, and includes any arbitration proceeding.

Proof of Claim

any evidence or documentation in the possession of the insurer, whether as a result of its having been submitted by the claimant or obtained by the insurer in the course of its investigation, that provides any evidence of the claim and that reasonably supports the magnitude or the amount of the claimed loss

Claimant (first or third party claimant)

any person who asserts a right of recovery under a surety bond, an attorney, any person authorized by operation of law to represent the claimant, or any of the following persons properly designated by the claimant: an insurance adjuster, a public adjuster, or any member of the claimant's family

Workers' Compensation Fraud

claim must notify the local district attorney's office and the Fraud Division of the Department of Insurance and must state in its notice the basis of the suspected fraud

Penalties for insurance fraud

nine hundred fifty dollars ($950) or less, the offense is punishable by imprisonment in a county jail not to exceed six (6) months, or by a fine of not more than one thousand dollars ($1,000) exceeds nine hundred fifty dollars ($950), the offense is punishable by imprisonment for two (2), three (3), or five (5) years, or by a fine not exceeding fifty thousand dollars ($50,000) or double the amount of the fraud

Post-Claims Underwriting

rescinding, canceling, or limiting of a policy or certificate due to the insurer's failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the policy or certificate.