Insurance Regulation - Chapter 9

Claim representative

Person responsible for investigating, evaluating and settling claims.

Consumer Fraud

1) Inventing a theft loss 2) staging an auto accident 3) saying injuries took place on someone's premises 4) claiming nonwork related injury as work related to collect workers comp 5) setting fire to property

1914 Brassil v Maryland Casualty Co

1st case to identify a covenant of good faith and fair dealing under contract law as the basis for providing remedy for an insured against its insurer for an excess verdict.

Attempting to settle under materially altered application

Assume claim rep advises insured they will receive $5000 or less for property loss, based on policy app. Insured denies she provided info. After investigation, claim rep discovers producer altered application without insureds knowledge. Insurer cannot penalize insured for producers action. If claim rep continues to offer settlement based on alteration, law would be violated. Insurer could then pursue legal action against the producer.

Malingering

Behavior characterized by symptoms for collecting benefits. (i.e. return-to-work resist by alleging illness or injury or leaving work after a return stating relapse.

1931 Hilker v Western Automobile Ins Co

Court allowed a tort cause of action against an insurer for an excess verdict.

1988 Moradi Shalal v Firemans Fund Insurance Co

Court overruled the Royal Globe case. Court ruled state legislature did not intend the CA Unfair Claims Settlement Practices Act to allow a private cause of action by a third party claimant against insurer.

Types of fraud

Fraudulent activities committed by insurance personnel or public can include planned or spur of the moment actions.

Policy Application Fraud

Insurance application must always be signed. If info is "willfully" omitted or in error, applicant can face fraud.

Special Investigative Units (SIUs)

Operate in companies with units located in each insurer branch to investigate fraud activities. DOIs also have SIUs which serve in investigative fraud. SIU staff at DOIs consists of law enforcement and special investigative personnel.

State Antifraud Efforts

Some states reduced fraud by more enforcement of existing laws and enacting new laws and funding antifraud activities.

Failing to adopt reasonable standards for repairs

Some states, insurers provide lists approved repair shops to insureds and claimants. Insurers typically choose shops that comply with their standards.

Timeliness of Response

State regulations set specific time frames which insurers must respond to claimants. They protect consumers and establish industry guidelines.

Evolution of Tort of Bad Faith

There are cases to illustrate how insurers standard care under the tort of bad faith has evolved. By violating good faith standards, insurer ca not only pay the claim but also for emotional distress, attorney's fees and other damages. Legal remedies for bad faith actions apply both to first party actions (involving insured) and 3rd party actions (involving the claimant).

Racketeer Influenced and Corrupt Organizations Act (RICO) 1970

combat racketeering and organized crime by imposing harsh penalties. RICO gave federal government right to sue and private party lawsuits.

Staff Claim Representative

insurer's employee who performs some or all of insurers claim handling activities. Work in insurer's offices. Handle claims start to finish but can have limited functions.

Language examples a regulation may use for time restrictions

1) Every insurer upon receipt of claim shall within 10 days acknowledge receipt 2) every insurer upon receipt of inquiry from Commissioner within 15 days furnish a response 3) a reply be made within 10 days on all communication from claimant. Regulations may differ between type of claims and time frames.

Fraud actions that suggest fraud

1) failing to state previous loss experience on application. 2) Listing young drivers ages on auto polcies as older to avoid high premiums 3) omitting hazards on premises that would increase premiums or policy rejection. When wrong information is deleted or misstated insurer can wind up payment more for claim than expected.

States that have mandatory reporting laws

CA, OR, NV, ID, UT, AZ, CO, NM, TX, OK, ND, MN, IA, MO, AR, LA, WI, MI, OH, KY, TN, FL, GA, SC, NC, VA, MD, DC, DE, PA, NJ, NY, MA, NH, ME. RI's mandatory reporting law only applies to Workers Comp.

Suits based on bad faith

Policies also contained implied good faith between insurer and insured not stated in policy. Breaching implied covenant may be violation of agreement. Courts claim good faith is based on mutual trust between insurer/insured from policy inception to payment of claims.

States that require SIUs

Require insurers maintain special investigative unit either in house or vendor provided. CA, CO, NM, AR, FL, KY, DC, NY, NH, ME. FL and NJ have specifics regarding mandate. In all other states, carriers are required to maintain SIU regardless premium or policy count. Most states require insurers report claims that raise suspicions fraud to law enforcement or authorities. Insurers may hesitate to report because may face civil suits if they can't prove allegations.

License Termination

States can revoke licenses of adjusters who fail with continuing education requirements. A DOI first issues warning advising adjuster of need to accumulate addtl credits. If adjuster does not comply, state proceeds with revocation. State laws dictate when licenses can be revoked. States can also revoke licenses for violations of law, fraud, unethical behavior. Formal complaints must be filed with DOI. State regulations dictate procedures for hearings before actual revocation.

1979 Royal Globe Insurance Co v Superior Court

a 3rd party claimant was given a right of direct action against the insurer. Court held that the CA Unfair Claims Settlement Practices Act permitted claimant to see insurer for the amount of excess verdict without 3rd party's first getting assignment from insured.

Fraudulent Consumer Claims

consumers commit fraud to make money through settlements. Consumer fraud falsifying info on claim to recover more money than entitlement. Many believe nothing wrong with inflating claims to recover deductibles.

Exaggerations

overstatements of values or types of losses. (i.e. adding nonexistent items to lists of stolen property; claiming pain and suffering on injury claim where there is no pain; claiming property value is higher than what it is; claiming preexisting damage as part of loss

Loyalty or Fidelity

person such as insurer employee is placed in position of trust.

Proof of Loss

statement of facts about a loss for which insured is making a claim. Contains insured's sworn detail description of loss, property value and interests in property. Courts decided insurers should not consistently send proof of loss forms for completion to delay settlement.

National Council on Compensation Insurance (NCCI)

uses RICO in combating corporate workers comp fraud. RICO is one of several federal aws that contain civil and criminal provisions. Perpetrators face indictment under RICO criminal provisions and also face civil lawsuits by insured parties.

Breach of Contract lawsuits occur frequently

Allegations against insurer include: not complying with policy conditions; misinterpreting policy language; interpreting policy language insurers favor. If insured prevails in court, will not be entitled to more than required by contract. Remedy does not include attorneys fees and emotions.

Claim adjusting

Insurer function that handles demands for claim payments. Claim reps can represent either insurers or insureds.

Failing to provide reasonable and accurate explanation of denial or compromise

WHen insured has insufficient information about policy provisions on which the denial is based.

Failing to promptly acknowledge communications

Consumer presenting a claim expects timely acknowledgment from insurer. Some states require contact within a certain time period and written responses within 10 days.

Claim Activities

Regulated by State Depts of Insurance under state laws based on NAIC model acts. Laws and regulations vary for different claim representatives and insurance producers involved in claim handling.

Arson for profit

and false claims are consumer frauds that lead to criminal investigation and prosecution. Sophisticated rings arrange many, complicated losses (i.e. auto damage, injuries).

Monoline claim representatives

handle one line of insurance (ie auto, property).

Racketeering Activity includes

mail and wire fraud.

International Association of Special Investigation Units (IASIU)

works with National Insurance Crime Bureau to create guidelines for state fraud plans for regulators. 2 types of state laws mandate fraud plans and those with SIU creation and operation. Fraud plan mandate educates consumers, producers and others about fraud and may include investigation. State regulations for SIUs vary from basic accountability to detail of # of staff and their expertise.

Unfair Claim Practice

1)Misrepresenting claimants/insureds of facts relating to coverage at issue 2) Failure to acknowledge communications with respect to claim arising under its policies 3)Failure for prompt investigation and settlement of claim 4) not effectuating prompt, fair claim settlement which liability is very clear 5) Compel insureds/beneficiaries to institute suits to recover amounts due under policies by offering lesser amounts than what is fair. 6)Refusing to pay claim without reasonable investigation 7) Failing to affirm/deny coverage of claim after investigation. 8) Attempting to settle claim on basis of application altered without consent of insured. 9) Making claim payments to insured without indicating coverage under which payment was made 10) Delaying investigation or payment of claim by requiring both a formal proof of loss form and verification that would result in duplication and verification appearing in formal proof of loss form 11) Failing claimd enials or offers of compromise settlement to promptly provide explanation of basis for actions 11) Failing to provide forms to present claim within 15 days of request with reasonable explanations regarding use 12)Failing to implement standards to assure repairs of a repairer owned by or required to be used by insurer are done in workmanlike manner.

NAIC Insurance Fraud Prevention Model Act

13 sections - the following relating to claim regulation - Sec 3-Fraud Ins Acts, interference and participation of convicted felons prohibited Sec 4-Fraud Warning required; Sec 5- Investigative authority of commissioner Sec 6- Mandatory reporting of Fraud acts Sec 7- Immunity from Liability; Sec 9-Creation and purpose of Insurance Fraud unit; Sec 11 Insurer antifraud initiatives - Anyone who violates this act faces suspension or revocation of Professional's license or certificate of authority, civil penalties and be convicted of misdemeanor or felony. Under model act, fraud includes false, incomplete, misleading written or oral statements on claims. If one person conspires with another both are guilty. DOI's refer to guidelines when imposing penalties for fraud; States refer to NAIC model when determining own penalties.

Unfair Claim Settlement Practices Act

Affect claim handling practices more than any other laws. All persons handling claims must know development, purpose and specifics to these acts as they apply to claim territories and must comply with laws. Before unfair claim settlement practices acts, states enforced minimal regulations on claim activities through unfair trade practices model acts. Thes acts did not specify consumer relation claim activities. The NAIC developed own model law in 1972. Many states have adopted this model, other states have variations. Some states use language similar to NAIC model act and elaborate on certain processes (i.e. auto loss). Unfair claim practices acts can be subsections of state unfair trade practices acts which apply to certain activites by claim reps.

Draft Authority

Authority given to an agent by an insurer allowing the agent to settle and pay certain types of claims up to a specific limit. Allows for handling small uncomplicated claims by using insurer-issed drafts (i.e. glass, towing, minor property-non liability issues). If more complicated, insurer handles.

Breach of Contract Suits

Because insured understands less than insurer regarding policy language, courts may go insureds favor. Good faith claim handling needs to be aware of this. A dissatisfied insured may sue for breach of contract (i.e. insurer refuses to defend insured against liability claim, insurer does not settle a liability claim against insured within insureds policy limits. Case goes to trial and court awards damages higher than policy limits. Insured required to pay over insurers limits. if insured prevails the court may order insurer to fulfill terms and pay the excess over policy limits.

1967 Crisci v Security Ins Co

CA Supreme Court tuled insurer should be liable for excess judgment after settlement offer was rejected within policy limits. Court recognized insurers breach of duty to settle third party claims constituted tort, a breach of contract and allowed mental distress recovery. Court commented favorably on strict liability standard for insurers failure to settle within policy limits. By this standard, insurer would be liable for an excess verdict regardless of how reasonable or careful it had been.

Market Conduct Examination

Claim market conduct laws developed to enforce licensing regulations and ensure proper claim practices. During examination - examiner reviews claim files to determine whether violations to unfair claim practices have occurred. Review in conjunction with review insurers operations. Examination reveals violations. The DOI will impose fines and penalties on the insurer.

Public adjuster contract

Contains infro about public adjuster and client, type of loss, loss date, date of contract. Some states require maximum % of loss that can be charged as fee. Charge can be less than stated % to be competitive. Other states require contracts filed for approval before use. Required by law to explain responsibilities to policyholders (i.e. how to assist with claims, make clear policyholders are responsible for paying adjusters services).

1958 Comunale v Traders and General Insurance Co

Court ruling that insurer refused to defend its insured who had been sued. Court found insurers conduct a tortious breach of covenant. Court held insurer liable for the entire judgement amount including over the policy limits and other damages.

Licensing requirements

DOI licensing of claim adjusters protects consumers by requiring certain competence. Most states (including PR) require licensing adjusters. Several states exempt adjusters who work in insurer's office, others require only public adjusters to be licensed. Claim reps and independent adjusters required to be licensed in home states must still be licensed in states which they settle claims that require licensing.

Exaggeration and Malingering

Fraudulent extensions of legitimate losses. Can be difficult to prove. Similar to psycosomatic disorders.

States that require written fraud plans

Help organize and focus antifraud activities, justify funding and seek to prevent fraud. WA, CA, CO, MN, AR, FL, KY, OH PA, MD, DC, NY, NH, ME. NJ requires Fraud plans of insurers that write private passenger auto insurance and all health insurers. TN requires Fraud plans for only Workers Comp.

Independent adjuster

Independent claim rep who handles claims for insurers for a fee. Independent firms/insurers hire these on as needed basis to handle claims on insurers behalf. Responsibilties vary per claim. This adjuster is hired soley to determine value of insureds claim. Adjuster is hired for special expertise on single line of insurance. Some handle all functions except the issue of the check.

Arbitration history

Insurance industry has used this since 1929. 1944 - Nationwide Inter-Company Arbitration program was implemented to arbitrate auto and property disputes. Arbitration Forums (AF) administers this program today.

Fidelity and Insider Fraud

Insurance professionals/employees may accept bribes or illegal income in exchange for claim payments. (i.e. claim reps, management, auto appraisers, clerks). Insurers companies can have these activities occur with no outside involvement. Others (auto body workers, glass cos, lawyers, agents) not employed by insurer can be involved with insurer's employees.

Refusing to pay claims without reasonable investigation

Insurer cannot deny claim based on information reported on the first notice of loss. The first notice lacks sufficient facts to determine coverage/liability. Investigation is usually rquired. Claim rep should interview parties, review police reports, witnesses and gather evidence.

Field Claim representative

Insurer's employee who handles claims that are best handled in person. Visit loss scenes, interview witnesses, investigate damage, meet with insureds, claimants, lawyers, others involved in claim. Take photos, visit witnesses, take signed statements, draw diagrams. Inside staff do not does these things.

Failing to adopt and implement reasonable standards for prompt investigation and claim settlement

Insurers may include their own standards for conducting claim investigations in their policy and procedures manual.

Failing to provide necessary forms

Insurers must acknowledge requests for info from insureds and claimants timely. Insurers must provide forms to insureds and claimants for compliance with policy conditions.

Formal arbitration process

Involves submitting dispute to 1+ impartial arbitrators. They are usually former judges, lawyers, claim adjusters familiar with the law. Arbitration awards are legally binding and enforced in all states. State statutes grant authority to enforce arbitration awards. AAA has this authority. Arbitration forums administer programs for resolution of insurance-related disputes.

Claim Representative types

Many claim reps are employed by insurers, others work independently. Insurers hire 3rd party administrators (TPAs) to handle claim adjusting. May contract with other types of professionals to investigate claims. Claim reps employed by insurers may be staff claim representatives or field claim representatives.

Unfair Claim Practices

Most states incorporate guideline that for some unfair claim activities, they must occur as a business practice. (Section 3-NAIC Model Act). Unfair claim settlement practices statutes do not define "prompt" and "reasonable" leaving them to courts to define. This is reason why courts step into disputes to settle statute conflicts.

State laws provide guidelines for title transfer

NY typical - insurers must take possession of salvage, cert of title, endorsed to them when loss is total. Insurers must comply with section 429 of vehicle traffic law. Insurers shall not transfer any vehicle for salvage state to state and only purchase salvage vehicles from registered vehicle dismantler or auto dealer. Prior to payment of losses, insurers must comply with verification procedures. (This does not apply if insured is permitted to retain auto as part of claim settlement or vehicles recovered after theft loss has been paid).

Primary Purpose Claim Handling

Protect consumers while promoting good business practices in claim handling. Laws differ by state. Regulation of claims include adjuster licensing requirements, unfair claim settlement practices act, market conduct exams, arbitration requirements and appraisal procedures. Many states have antifraud laws relating to claims. State governments and ins industry cooperate in fraud detection and antifraud efforts to protect consumers.

Antifraud Efforts

Several states and fed govt have statutes designed to catching consumers in acts and penalize them. To protect assets, insurers are taking actions against consumers who present fraud claims and also protect those consumers not involved in acts that up premiums.

Prelicensing Programs

Some State statutes require adjusters to complete formal prelicensing program before taking licensing exam. Courses offered by schools, vendors, insurers, agent associations, national orgs that sell self-study programs. Some states list accredited schools that offer programs. States may grant exemptions from prelicensing educational requirements to applicants with experience in lines wishing licensing. Few states exempt adjusters who have obtained certain insurance professional designations. Some states require adjusters to have one year experiencing before taking the exam. Others approve entry-level courses for prelicensing training. Some states have no educational requirements.

Catastrophe Response

Some states are more susceptible. South - Hurricanes; Central - Tornedos; Blizzards and ice storms - Northeast and Wild fires in arid parts. Claim reps all over participate in CAT planning. Licensing regulations in other states may be relaxed to assist a state investigating and settling multiple losses.Insurers develop Cat plans at home office, send to branch offices for training. When cat loss is predicted claim reps/adjusters meet to discuss arrangements to handle workload.

Continuing Education

Some states require continuing education. Varies by state with some having no requirements. Other states may require adjusters and claim reps to acquire >30 hours of credits every 2 years. Some states only apply to specific claim reps (i.e. workers comp). States continuing education requirements apply to residents and non-residents. Agreements vary per state. To verify non-resident adjusters complying with home state requirements, states may request letters of certification from home states.

Nonregulatory influences on claims

State laws regulate claim activities. DOIs help enforce state regulation but not equipped to deal with complaint volume. DOIs do not make decisions regarding these. Insurers consider nonregulatory influences to ensure claim monitoring and good faith treatment to consumers. Insurers conduct self audits for compliance to their own policies and procedures. Maintain manuals. Nonregulatory influences on claim process are lawsuits, arbitraion and appraisal.

Service Standards

Unfair claim laws and insurance regulations include service standards insurers should meet. These include: timeliness of response, salvage title handling, catastrophe response. These are guideliness for insurers and promote prompt service to customers.

Failing to affirm or deny a claim within a reasonable time

When investigation is complete, coverage decision is to be made. If coverage is confirmed, insured should receive notification and payment promptly. If coverage does not apply, insured must receive timely notification denying claim.

Arbitration

alternative dispute resolution (ADR) procedure that takes a dispute to an impartial third party (arbitrator or arbitration panel) for a decision that the parties agree will be final and binding. Used to settle disputes to avoid long, expensive court proceedings. Each party presents its case at a hearing before arbitrator. Some contracts require arbitration while some courts order it for any unresolved contract disputes. State insurance statutes may require arbitration. (i.e. State law may require underinsured and uninsured motorists cases to be arbitrated rather than litigated. Courts refused to hear it so it goes to arbitration - DOI enforces). Arbitration can be used to resolve most claims regardless of dollar amounts and lines of insurance. Most proceedings address coverage, liability and settlement amount issues. Because decisions are final and binding, no costly appeal process is involved.

Complaint Record Format

examiner uses based on NAIC model forms and state adaptation. Column A - ID # of complaint, license # of agent, claim rep or adjuster involved. Column B - Claim Dept should be identified by function code for insurer involved. Reason portion would classify further complaints. (i.e. reason codes - violation of claim procedure, delays, denotes unsatisfactory settlements). Column C - line of insurance involved; Column D - disposition each states DOI has reached - if closed the last 4 columns are self explanatory.DOIs keep findings of record keeping violations for review by other state DOIs. Market conduct examiners findings can be filed bu records are not available to public.

Insider fraud

fraud involving person working inside company who commits fraudulent transaction.

Multiline claim representatives

handle several lines of insurance (i.e. auto, property, liability, works comp)

Fictitious claims

insurer employees file these and deposit settlement checks in bank accounts. Can add him/herself as another claimant. A clerk may agree to issue check to additional person and the clerk splits the check with him/her. Can inflate cost of auto repairs. Extra money is split. Claim supervisor can invent claim creating false documentation, enters ficticious identity and devises methods to cash checks.

Appraisal

method of resolving disputes between insurers and insureds over amount owed on loss. Less time consuming than litigation. Can assist rep in reaching settlements. Many property ins policies require appraisal as a condition. Contrast to arbitration (coverage issues) is useful when claim is disputed.

Unreasonably delaying investigation or payment

most policies contain condition requiring insured to submit proof of loss before claim collection.

Title laws

protect consumers from fraud and ensure proper title handling. Claim reps are responsible for recording VINS on destroyed vehicles and filing info with state dept regulating motor vehicles. After settling claims with insureds/claimants insurers take possession of salvage titles.

American Arbitration Association (AAA)

public service non profit organization dedicated to resolution of disputes thru arbitration and other methods. Usually parties who want arbitration used, put it in their contracts. AAA has standard clause that can be used. Most insurers include.

Unfair claim settlement practices acts

require insurers to maintain records of complaints and claims. DOI reps may review these. A record review can see negative patterns. Insureds/claimants not happy with handling of claims can file complaints or hire lawyers. In most states, lawsuits cannot be used to enforce claim settlement practices acts. Frivolous claim lawsuits were common in 1900s. Claimants would sue if not settled within a few weeks. Many insurers did not resist suits or offered higher settlements to avoid litigation being careful not to violate laws. Soon Insurers could countersue claimants thus these became less common. To reduce lawsuits claim reps should be familiar with fair and unfair laws.

Appraisal procedures

states offer own regulations in the form of policy endorsements. Insurance Services Offices (ISO) homeowners form states. Each party chooses impartial appraiser and appraisers choose an umpire in the state of residence. Eacher appraiser sets amount of loss, okay if agree, if not goes to umpire. Decision by any 2 - will be set amount of loss. Each party pays its appraiser, their expenses and their share of umpire. This process has specific datelines. Another name by some states is reference proceeding.

RICO outlaws the following business activities

1) using income from racketeering to acquire oroperate enterprise engaged in interstate commerce 2) acquiring or maintaining interest or control of enterprise engaged in interstate commerce thru racketerring. 3)Conducing or participating in enterporise engaged in interstate commerce through racketeering activities 4) conspiring to do any acts in 1-3.

Regulatory time frames address following insurer actions

1)acknowledgement of first notices of claims 2) sending status letters to isureds and claimants during investigations 3) acceptance/rejection of workers compensation claims 4) payment of claim after form submission 5) payment of claim after receipt of proof of loss 6) response to DOI inquiries.

Bad Faith

A breach of the duty of good faith and fair dealing. Intentional act causing emotional distress resulting in physical injury. Courts rule insurers improper claim handling is breach of contract and an independent tort (civil wrong) of bad faith.

Rescission Clause

A clause required by state insurance law in public adjusters contracts allowing a policyholder to cancel a contract with a public adjuster withina legally prescribed time period.

Claimant

Anyone who submits claim to insurer. Can be insured or 3rd party - anyone not insured under the policy.

Claim Responsibilities

Claim reps handle claims from state to finish. Also Several claim representatives or adjusters representing different insurers may be involved in one claim. Claims can be settled (paid or denied) quickly or open for years. Claim reps verify coverage and investigate. Investigations take a few minutes or years. After investigation, A claim rep determines coverage or partial coverage or denial. If payment applies, should be handled immediately. Negotiation or litigation may be necessary. Claim reps should remain in contact with claimants informing them of claim status. States regulate timeliness of responses at various stages through unfair claim settlement practices acts.

Knowingly misrepresenting facts or provisions

Claim reps must explain insurance facts and policy language to consumers honesty and clearly and refer to language.

Making Claim payments without indicating coverage

Claim reps must explain to insureds coverage under paid claims and settlement details so they are aware of entitlement.

Attempting to settle for less than reasonable amount

Claim reps must offer fair settlements to claimants. Insurers promotional materials describe likely value of extent of coverage. If insured expects payment for loss, or coverage described in promotional materials, insurer cannot claim the advertisement was simply and illustration not based on fact.

Public Ajuster

Independent organization/person hired by insured to represent the insured in claim. Estimate extent of damage. Provide interpretation of policy language for policyholder. Very trustworthy. Most work with all types of claims, some specialize. Some state laws prohibit approaching policyholders after a loss just to seek business. Some statutes place limits on when they can contact policyholders.

Void policies

Property and liability policy provisions allow insurers to void policies declaring them non-existant. Insurance producers may be involved with these fraudulent activities. Producers may advise applicant to omit certain information. A producer may even sign an application which could prevent insuirer from penalizing applicant for misrepresentation.

Not attempting a good faith settlement

What constitutes good faith is subjective. Prompt, fair, equitable, reasonably clear have different meanings. Good faith means promptness in paying claims when investigations are complete and liability is clear. Also making settlement offers that are not low.

Parts only

When claim rep declairs vehicle a total loss, vehicle must be desinated as repairable or available for "parts only" and that must appear on title. Prevents getting into consumers hands as repaired, but defective vehicle.

Salvage title handling

When damage to vehicle is more than car value - the vehicle is totaled. State issues salvage title for vehicle indicated unsafe for operation.

Compelling insureds to institute lawsuits

When insurer's settlement offer is inadequate that claimand seeks legal assistance and sue the insurer, unfair claim practices act may have occurred. Claim reps must offer fair settlements and avoid any actions that a claimant may perceive to be pressure relating to settlement.

Fidelity fraud

dishonest act when employee violate trust.

Insured who files an insurance claim

expects the insurer to determine liability as well as amount to be paid for claim.

License Filing

to become licensed, Adjuster submits application to DOI or state licensing agency. Claim reps - insurer handles their paperwork. Claim reps who handle claims in more than one state may need to meet more licensing requirements. Some states have reciprical agreements when accepting licensing requirements of claim reps resident state. With catastrophies, adjusters can obtain emergency licenses so they can go quickly to the affected area.

Insurers Cat plan includes following provisions

1) Designated places to meet if office is destroyed 2) designated locations where policyholders can meet with claim reps and adjusters 3) plans for borrowing insurer employees from other fields to assist insurer's property adjusting dept 4) extended work hours 5) authorization of agents to complete forms on insurers behalf 6) relaxed insurer requirements for obtaining estimates for repairs 7) draft authority to claim reps and adjusters in field 8) relaxed insurer procedures for taking statements, gathering proof of loss. 9) state laws require claim reps/adjusters to file forms for liens on damaged property before paying claims. Requirements may appear in state endorsements to ensurancew policies but dois also work with insurers in relaxing certain regulations to avoid undue delays in settling claims that occur after a catastrophe.

Lawsuits

Claims may happen because breach of contract or bad faith. Insurance statutes and regulaions do not address these. Handled through courts.

RICO is basis for frequent legal remedy for civil liability

against professionals (i.e. lawyers, accountants). Malpractice claim handlers see RICO complaints against their insureds increasing potential exposure to professional malpractice actions. Liable parties face penalties (i.e. mandatory multiple damages and attorney fees).

Fraud

intentional misrepresentation resulting in harm to a person or organization. Those affected: people involved fraudulent activities, victimsof fraud and general public. Insurance personnel and consumers can commit fraud. Fraud can involve officer/director misconduct, agent sales misconduct, anyone's unauthorized activity, healthcare provider fraud related to personal injury claims, and workers comp fraud. Also fraud by insurance claimants. Regulators and insurance industry use regulatory and non-regulatory methods to combat fraud.