Market Regulation - section 1

unfair trade practices (should not be done)

1) misrepresenting to claimant pertinent facts or insurance policy provisions relating to any coverage at issue 2) failing to acknowledge and act reasonably promptly upon communications with respect to claims 3) failing to affirm or deny coverage within a reasonable time after proof of loss requirements have been submitted by insured 4) failing to implement reasonable standards for the prompt investigation and procession of claims 5) not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear 6) attempting to settle a claim for less than what a reasonable person would have believed he was entitled to reference to written or printed advertising material accompanying or made part of an application 7) compelling insured to pursue litigation to recover amounts due under a policy by offering substantially less than the amounts unlimitedly recovered 8) attempting to settle claims on the basis of an application that was altered without notice to, to knowledge or consent or, the insured, his or her representative, agent, or broker. 9) directly advising a claimant not to obtain the service of an attorney 10) failing, after payment of claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made 11) failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the fact or applicable law, for the denial of a claim or for the offer of a compromise settlement 12) failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under the other portions of the insurance policy coverage 13) misleading a claimant as to the applicable statute of limitations 14) Delaying the payment or provision of hospital,medical, or surgical benefits for services provided with respect to acquired immune deficiency syndrome (aids) or aids-related complex for more than 60 days after the insurer has received a claim for those benefits , where the delay in claim payment is for the purpose of investigating whether the condition preexisted the coverage. however this 60 day period shall not include anytime during which the insurer is awaiting a response for relevant medical information from a healthcare provider.

CA life & Health insurance Guarantee association (CLHIGA)

Statutory entity to which admitted insurers must belong created to provide protection for life, annuity and health policyholders of member insurers that become insolvent LIFE lesser of: -80%;OR -$300K (DB);OR -$100K(CSV) ANNUITIES lesser of: -80%;OR -$250K HEALTH lesser of: actually covered claims OR $200k -------- Covered -life (ind. &group) -annuties (ind. & group -health (ind. & group) -disability income -accident & sickness -long-term care NOT Covered -self-funded plans -stop-loss group plans -admin. services only contract -HMOs

Adverse U/W Decision rules

adverse UW decision CANNOT be bases on: - precious adverse UW decision -info gathering from support organization (e.g. MIB) -inquiry regarding possible coverage for a claim

Proof of Claim

any evidence or documentation that provides evidence of a claim and that reasonably supports the magnitude or the amount of the claimed loss

First Party Claimant

any person asserting a right under an insurance policy as a named insured. example: Julie files a claim under her abc auto policy collision coverage for the collision damage to her car.

Third Party Claim

any person asserting aa claim against any person or the interests insured under an insurance policy. example: Pedro files a claim BI and PD against Julie's auto policy with abc insurance

Claimant

any person who makes a claim in an attempt to recover damages sustained. (can include someone acting on behalf of injured party, such as an attorney, adjuster, or family member).

penalties(cic 790.035)

any violation of the unfair trade practices is a misdemeanor and subject to the following penalties -5k each act -10k each act if willful -license revoked when the issuance amendment, renewing or servicing of a policy is inadvertent (unintentional), all of those acts shall be considered a single act for the purpose of determining the number of violations.

National Association of Insurance Commissioners (NAIC)

association made up of all state insurance commissioners Mission -protect public interest -promote competitive markets -promote reliability of insurers -support and improve state regulation of insurance

fair discrimination

charging different rates based on sex and life expectancy (legal)

unfair discrimination

charging different rates to someone for a reason other then sex or life expectancy

insurance commissioner

dave jones commissioner = dos = department of insurance

Insurance information & Privacy Protection Act

establishes guidelines that insurers must follow regarding the collection usage and disclosures of any information that is obtained about an insured for an insurance transaction.

coercion

forcing a person to act or think in a certain way as the result of actual or threatened physical or mental force or persuasion

intimidation

inflicting fear upon a person as the result of actual or threatened bodily injury or property damage

standard for promo, fair & equitable settlements

insurer must accept or deny claim within 40 days of receiving proof of loss. if more time needed to process claim, written update must be provided every 30 days. claims must be paid within 30 days of acceptance.

pretext interview

interview in which the party gathering information: -refuses to reveal identity -pretend to represent someone else -misrepresents true purpose of interview insurers NOT allowed to use!

ceased & desist oder

issued by the DOI ordering to refrain from an activity by the 1st time someone is found guilty of violating the insurance code. -Non Willful = $5,000 - Willful= $55,000

Policy provision interpretation

known that the interpretation of policy provision is NOT a primary objective of insurance regulation judicial branch renders decisions on meaning policy provisions

unfair Trade practices

laws and regulations that define and regulate insurance trade practices that are considered to be unfair, deceptive or misleading

Gramm-Leach-Bliley Act (GLBA)

made it legal for banks and insurance companies to consolidate starting 1999 Financial Privacy Rules -------------------------- requires consumer Privacy Notice explaining what consumer info is collected, where shared, how used, and how protected. Must disclose right to 'Opt-Out" if consumer choose to not allow info to be shared Safeguards Rule ------------------ requires financial institutions to develop written security plan that describes how consumers nonpublic personal information will be protected Pretexing Protection ---------------------- Encourages financial institutions implement safeguards against PRETEXTING (i.e. when someone tries to gain access to a consumers personal information without authority to do so.)

false financial statement

making false statement of the financial condition of an insurer with the intent to deceive

shall

mandatory

Notice of Legal Action

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

may

permissive = allowed but not obligatory, optional

Glass-Steagail Act

prohibited banks from offering - investment services -commercial banking -insurance services

deceptive information

publicizing untrue or deceptive information about a person engaged in insurance

Adverse U/W Decision

refers to any of the following actions taken by an insurer: -declining an application -terminating coverage -increasing a premium based on info NOT provided by applicant

market conduct regulation

refers to the laws that regulate insurer practices regarding -sales -underwriting -rate-making -claims handling

Cal-GLBA

refers to updated privacy regulations made to the CIC in 2003 in order to incorporate regulations required by the GBLA '

Boycotting

refusal to enter into a business transaction with someone until he complies with certain requirements, conditions or grants specific concessions

CA Code or Regulations (CCR)

rules and regulations instituted by state agencies to administer law, including those adopted by the commissioner in order to administer the CIC

CA Insurance Code (CIC)

the primary body of laws that regulates the business of insurance in California