Consumer Assistance Training
Unfair Trade Practice Criteria
-Committed flagrantly and in conscious disregard -Committed with such frequency to indicate a general business practice for that insurer or producer
Consequences of Non-uniformity -- Negative -
-Lack Regulatory Effectiveness -Lack of Regulatory Efficiency -Increased Regulatory Costs -Failure to Coordinate Regulatory Efforts Focused on the same insurer.
Unfair Trade Practices Defined
-Misrepresentations and False Advertising of Insurance Policies -False Information and Advertising Generally -Defamation -Boycott, Coercion and Intimidation -False Statements and Entries -Stock Operations and Advisory Board Contracts -Unfair Discrimination -Rebates -Prohibited Group Enrollments -Failure to Maintain Marketing and Performance Records -Failure to Maintain Complaint Handling Procedures. -Misrepresentation in Insurance Applications -Unfair Financial Planning Practices -Failure to file or to certify information regarding the endorsement or sale of long-term care insurance -Failure to Provide Claims History
Interstate Compact
makes the regulatory system more efficient and enhances policyholder protection, while providing insurers valued uniformity and a central point of filing - that is important for insurers as it enables them to compete more efficiently and effectively in the modern financial services marketplace.
Complaints Database System (CDS)
o Closed Complaint Index Report o Closed Complaint Counts by State Report o Closed Complaint Counts by Code Report o Closed Complaint Trend Report
Sources that have communicated the need for greater uniformity and interstate collaboration for insurance market regulation (the Forces Driving Uniformity)
o Industry Trade Associations o The Federal Government o Consumers
1st level / 2nd tier
only one item at 1st tier up to 3 items or code at second level
Aggressive Consumer Behavior
• Remain Calm and Collected • Set Parameters • Don't Become Defensive • Don't Be A Doormat
Recognize Scope of Services Along with Limitations
• Scope of Services Offered by Agency • Legal Questions • Medical Expertise Limitations • Authority Over Regulated Entities
Keep Discussions on Track
• Some consumers will want to discuss more than is necessary o Listen Quietly o Gather Facts o Ask Questions Pertinent to the Complaint o Restate Facts Back to Consumer
Potential Areas of Non-Uniformity
• State Statutes • Interpretations of State Statutes • Staffing Levels and Complaint Load • Processing • Participation in NAIC Databases • Public Disclosure • Coding
Products and Tools of the NAIC
• System for Electronic Rate and Form Filing (SERFF) • Interstate Compact • State Producer Licensing Database (SPLD) • Complaints Database System (CDS) • Regulatory Information Retrieval System (RIRS) • Market Action Tracking System (MATS) • Market Analysis Review System (MARS) • Online Fraud Reporting System (OFRS) • Military Sales Online Reporting System (MSORS) • Model Laws, White Papers, Guidelines
Be prepared for a wide variety of situations and personalities
• Wide Variety of Situations - Complex and Simple • Wide Variety of Consumer Knowledge and Comprehension Levels • Wide Variety of Personalities • Reasonable Accommodations
Questions of Fact
.
Fully Insured Plans
-Plan Designed and Sold by Insurance Companies -Insurance Company Assumes Risk -Must be Filed with Dept of Insurance -Must Comply with State Mandates and Statutory Requirements -Dept of Insurance has Jurisdiction through ERISA and Handles Consumer Complaints -Impacted by the Market Cycle
Self Funded Plans
-Plan Designed by Employer -Employer Assumes Risk -Not filed with Dept of Insurance -Usually Do Not Have to Comply with State Mandates and Statutory Requirements -U.S. Dept of Labor has Jurisdiction through ERISA and Handles Consumer Complaints -Not impacted by the Market Cycle
Three important code sections on the NAIC Standard Complaint Data Form are
1. The product or policy type code, 2. The reason for the complaint code, and 3. The disposition code.
2 tier levels
1st level - policy type or product type e.g. personal auto 2nd level - Coverage type level e.g. collision or comprehensive
Interpretations of State Statutes
Although some states may have uniform or substantially similar laws, they may have different interpretations of those laws.
Confirmed Complaint Definition
A complaint in which the state department of insurance determines: a) The insurer, licensee, producer, or other regulated entity committed any violation of: • An applicable state insurance law or regulation • A federal requirement that the state has the authority to enforce • A term or condition of the insurance policy or certificate OR b) The complaint and the entity's response, considered together, indicate that the entity was in error
A "confirmed" complaint code indicates which of the following?
A potential violation of an insurance law or policy provision occurred.
Unfair Claims Practices Defined
A. Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue; B. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies; C. Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies; D. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; E. Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them; F. Refusing to pay claims without conducting a reasonable investigation; G. Failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims; H. Attempting to settle or settling claims for less than the amount that a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application; I. Attempting to settle or settling claims on the basis of an application that was materially altered without notice to, or knowledge or consent of, the insured; J. Making claims payments to an insured or beneficiary without indicating the coverage under which each payment is being made; K. Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form; L. Failing in the case of claims denials or offers of compromise settlement to promptly provide a reasonable and accurate explanation of the basis for such actions; M. Failing to provide forms necessary to present claims within fifteen (15) calendar days of a request with reasonable explanations regarding their use; N. Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by or required to be used by the insurer are performed in a workmanlike manner.
Definition of a Complaint
Any written communication that expresses dissatisfaction with a specific person or entity subject to regulation under the state's insurance laws. An oral communication, which is subsequently converted to a written form, will meet the definition of a complaint for this purpose.
Establishing a Complaint File - If DOI does have proper jurisdiction, then
Assign a Complaint Number Record Complaint in the State's Complaint Database Assign an Analyst Send Written Acknowledgement of Complaint and Include: − Complaint File Number − Analyst's Name, Phone Number, and Email − Process Description and Timeframes
Changes in the insurance marketplace will likely have an effect on
Both the type of complaints and the number of complaints a state's department of insurance receives
4 Reasons for Complaint Code
Categories • Underwriting • Policyholder Service • Claim Handling • Marketing and Sales May Select Up to 3 Items Per Category
On the NAIC Standard Complaint Data Form, the "Reason for Complaint" section is categorized into which four groups?
Claim Handling, Marketing & Sales, Policyholder Service, Underwriting
Unfair Claims Settlement Practice Criteria
Committed flagrantly and in conscious disregard Has been committed with such frequency to indicate a general business practice
Recognize Time-Sensitive Matters
Consider Adjusting Procedures to Expedite Emergency Situations • Review and Pre-Authorization for Urgent Medical Procedures • Temporary/Replacement Living Expense Situations
Mandates
Legislative initiatives that require certain policy provisions or coverage extensions Unless federally mandated, vary from state to state but may include: Financial Responsibility Laws Breast Reconstruction After a Mastectomy Chiropractic Visits PKU Formula Newborn Screenings
Characteristics of Hard Market
Decrease in Competition Rates Rise Underwriting Guidelines Tighten Increase in Profits Increase in Capital
Soft Market: Fewer Consumer Complaints
Marketing issues & sales tactics
The respondent should provide a substantive analysis of the complaint for proper consideration by the department of insurance. The complaint analyst should ask, and be able to answer, which of the following questions?
Do the respondent's actions comply with all applicable statutes, rules, and policy provisions? Are the respondent's actions appropriate from a business practice standpoint? Are any and all appropriate remedies for the consumer identified?
Be Professional
Don't share personal opinions. Don't take sides Stay focused
Set Consumer Expectations
Explain the Complaint Process to the Consumer Provide the Consumer with an Overview of What can be Expected
One of the requirements of a consumer complaint is that a state statute was violated by a person or entity subject to regulation under the laws of that state.
False
Other Sources
Federal Agencies • U.S. Department of Labor • Centers for Medicare and Medicaid Services • Securities and Exchange Commission • Federal Crop Insurance Program • National Flood Insurance Program State Agencies -DMV -Secretary of State
How insurers can manage the Market Cycle
Focus on Prudent, Risk Based Premiums (actuarial sound) Invest in Risk Management Tools Watch Surplus Capital and Underwriting Guidelines Balance Investment Returns with Underwriting Guidelines
Does a complaint need to be a statutory violation?
NO
Characteristics of Soft Market
Increase in Competition Rates Stabilize or Fall Underwriting Guidelines Loosen & expanding coverage Decrease in Profits Decrease in Capital and policyholder surplus
Uniformity, in and of itself, is not the goal
Instead, uniformity is a tool or mechanism to achieve the goal of creating a more effective and efficient regulatory system
Phase 1 - Cheating
Insurers and re-insurers make aggressive and optimistic assumptions regarding claims reserves.
Phase 4 - Restoration
Insurers enjoy higher rates and restore the balance sheets.
Phase 3 - Fear
Insurers must make immediate changes; price increases are made, and underwriting guidelines tighten.
Key Complaint Issues to Resolve
Is there documentation supporting the respondent's position? Is position appropriate from a general business practice standpoint? Is position complaint with state laws, rules, and policy/contract provisions? Are appropriate remedies provided to consumer?
Closing a Complaint
Issue Final Disposition Code! Code! Code! • Type of Coverage • Reason for Complaint • Disposition Proper Coding is Important Because It Serves As The Basis For: • Further Market Analysis • Trending of Business Practices • Potential Regulatory Actions Share with other states through the NAIC's Complaint Database System. Such sharing is essential for: • Proper Identification of National Trends • Coordination of Collaborative Efforts with Other States Public Disclosure of Complaint Data Ongoing Analysis • Written Response to Consumer: o Via letter or email o Documentation of complaint itself, involved parties, investigation, and disposition
Four Phases of a Market Cycle
Phase 1 - Cheating Phase 2 - Pain Phase 3 - Fear Phase 4 - Restoration
Hard Market: More Consumer Complaints
Premium Increases Policy Non-renewals Coverage restrictions Claim Denials
Mission Statements and Division Operating Manuals
Priority Goals Focus of Efforts Further Specificity
Importance of Uniformity
Promoting effectiveness and efficiency among state insurance departments.
important code section on the NAIC Standard Complaint Data Form
Reason for Complaint Disposition Type of Coverage
Consequences of Non-uniformity -- Positive
Recognition of Varying Markets Understanding of Local Needs
Phase 2 - Pain
Reserve strengthening will occur with insurers and the capacity to write insurance lowers
Some individuals may have special needs or language barriers. Certain reasonable accommodations may need to be made in order to serve all individuals effectively
Some examples of reasonable accommodations could include: • Arranging for the use of an interpreter, • Assisting a consumer with putting a complaint in writing, • Providing TTD devices for the hearing impaired.
Consumers Protections in states are presented by
Statutes - provides enforcement authority. Regulations (rule issued by State of Insurance - also provide enforcement authority) Bulletins are issued to discuss at statute or regulation but do not have endorsement authority under the law.
Unfair Claims Settlement Practices Act
The Act sets forth standards for the investigation and disposition of claims arising under policies or certificates of insurance issued to residents of a state.
Once closed, a complaint must be properly coded identifying which of the following?
The Disposition
The National Association of Insurance Commissioners
The NAIC's website allows consumers to: • File a complaint • Report fraud • Learn about insurance through its online consumer education materials • Read and search consumer alerts • View NAIC products and data available for free, or for purchase • Order materials online • View and register for non-regulator training events • Take part in NAIC National Meetings in its Consumer Participation program
The "Disposition" code identifies which of the following?
The Outcome or Resolution of the Complaint
To assure that closed-complaint data can be successfully transferred to the NAIC's Complaints Database System, it is extremely important that which one of the following be done?
The initial recording of a complaint into the state's complaint database should be done accurately.
Three common areas for coding errors and inconsistencies are:
Three common areas for coding errors and inconsistencies are: 1. Assigning the Wrong Product Code 2. Assigning the Wrong Reason for Complaint Code 3. Assigning the Wrong Disposition Code
Unfair Trade Practices Act purpose
To regulate trade practices in the business of insurance by defining or providing for the determination of, practices in a state constitute: Unfair Methods of Competition Unfair or Deceptive Acts or Practices
An "unconfirmed" complaint can sometimes be a complaint filed by a consumer out of spite for no valid reason.
True
Once a complaint investigation is completed, the department of insurance should send out a final communication to the complainant explaining the department's concluding disposition and the legal options available to appeal the final disposition.
True
The NAIC Standard Complaint Data Form allows for the standardization of codes and promotes uniformity among the states when it comes to providing data that is consistent to analyze.
True
The first step upon receipt of a complaint is to assess whether the department of insurance has proper jurisdiction to resolve the complaint.
True
The lack of a consumer's signature should not preclude the initial investigation of a complaint.
True
Consumer Protections
Unfair Trade Practices Act Unfair Claims Settlement Practices Act Mandates (policy provisions required by the state)
Model Insurance Laws and Regulations Unfair
Unfair Trade Practices Act Unfair Claims Settlement Practices Act and Associated Regulations Property and Casualty Cancellation Laws Privacy of Personal Information Laws, Regulations, and Bulletins Unfair Discrimination Against Subjects of Abuse Medicare Supplement Insurance Minimum Standards Act and Associated Regulations Long-Term Care & Limited Long-Term Care Insurance Acts and Associated Regulations Producer Licensing Model Act Applicable Accident & Health Insurance Model Laws Insurance Data Security Model Law Suitability in Annuity Transactions Model Regulation Military Sales Practices Model Regulation General Laws Relating to the Lines of Insurance which are Analyzed.
Reference and Information Resources
Useful for Consumers and Consumer Service Representatives: • Your Department of Insurance • Other States' Insurance Departments • The NAIC • Trade Organizations and Associations • Insurance Laws and Regulations • Other Sources
State Statutes
While the NAIC has developed model acts, state insurance departments DO NOT have the ability to unilaterally adopt and implement these models to provide uniform laws and consumer protections.
Elements of a Complaint:
Written Communication Expresses Dissatisfaction Directed at a Specific Person or Entity Subject to Regulation under the States Insurance Laws
Can some uniformity in consumer service activities be of tremendous benefit to consumers?
Yes, while the lack of regulatory uniformity among states is most often viewed as a negative, some non-uniformity in consumer service activities can actually be of tremendous benefit to consumers.
Department of Insurance
Your Department of Insurance (or even the insurance department of another state): • Brochures • Website • Outreach • Other Divisions Within Your Insurance Department
A soft market is considered a...
buyers market
The CIS can provide complaint:
count by state, complaint count by code, complaint ratio, and complaint trend.
A hard market is considered a........
sellers market
On the NAIC Standard Complaint Data Form, under the "Type of Coverage" section, you can identify the policy type, and in most cases:
the specific coverage type under that policy.
If one or more element of a complaint is missing
then it is an inquiry
Establishing a Complaint File - If DOI does not have proper jurisdiction,
then refer to the proper regulatory agency
Gather the Right Information
• A Word Can Mean Different Things • Different Words Can Mean The Same Thing • Define The Information You're Questioning • Request Information From Multiple Divisions Within An Insurance Company
To ensure adequate and efficient consumer complaint handling processes, an insurance department may want to
• Audit the complaint handling area to determine whether or not it is understaffed, • Restructure an understaffed department to achieve maximum efficiency, • Analyze patterns by looking at incoming consumer complaints to identify peaks and drops in number and types of complaints, and • Better manage complaint department resources - review daily routines and complaint handling processes to make sure that complaint handling staff have the tools and procedures needed to process complaints as efficiently and effectively as possible
Disposition codes
• Compromise Settlement/Resolution • Claim Reopened • Claim Settled • No Action Requested/Required • Referred to Another State's Department of Insurance • Referred to Outside Agency/Department • Fine Assessed • Referred to Other Division for Possible Disciplinary Action • Question of Fact/Contract/Provision/Legal Issue • Company Position Substantiated • No Jurisdiction • Insufficient Information • State Specific • Company Position Overturned • Complaint Withdrawn
15 Disposition Codes
• Compromise Settlement/Resolution • Claim Reopened • Claim Settled • No Action Requested/Required • Referred to Another State's Department of Insurance • Referred to Outside Agency/Department • Fine Assessed • Referred to Other Division for Possible Disciplinary Action • Question of Fact/Contract/Provision/Legal Issue • Company Position Substantiated • No Jurisdiction • Insufficient Information • State Specific • Company Position Overturned • Complaint Withdrawn • Up to 3 Disposition Codes May Be Selected • State Departments of Insurance are to submit a confirmed complaint indicator, either Y or N, if a complaint is considered confirmed or not, based upon the state's analysis of the consumer complaint.
Your Correspondence
• Creates a Strong Impression of Your Professionalism and Capabilities • Customize Letters Whenever Possible • Use Spell Check • Be Accurate and Clear • Keep It Short • Second Set of Eyes to Review
Hone Your Expertise
• Draw on Experience • Continuing Education • Make Use of Reference Materials and Research • Learn from Co-Workers
Proper coding is extremely important since the complaint coding process serves as the basis for:
• Further Market Analysis • Trending of Business Practices • Potential Regulatory Actions
Substantive Complaint Analysis
• Identify Issue or Issues • Identify Any Statutory Violations • Request Pertinent Documentation o From Complainant o From Insurance Company and/or Agent • Is a Question of Fact Involved? • Work with Other Functional Areas
Complaints should be given high priority and handled out of sequence when they touch upon one of the following issues:
• Imminent harm to the public, • Critical or emergency situations, • Time-sensitive issues such as cancellations or terminations of coverage, or • General urgency of the complaint.
Recognize Real Consumers
• Information Phishing Attempts • Identity Theft • Matters in Litigation • Insurance Fraudsters • Opinion Shoppers • Opinion Manipulators
Interstate Compact filngs
• Life Insurance, • Annuities, • Disability Income Insurance, and • Long-Term Care Insurance.
From Whom May Insurance Departments Accept Complaints?
• Limitations Set by Individual Insurance Departments o Medical Providers and Other Providers? o Vendors? o Insurance Producers Against Other Producers? • Information Valuable for Market Analysis
Reports of Complaints
• Methods of Receipt o Telephone o Mail, Email, Fax o Walk-Ins o Referrals • Transcribe Verbal Complaints • Obtain Consumer's Signature • Establish the Complaint's Priority
The NAIC (Non-Regulator Resources)
• NAIC Website • Consumer Insurance Search (CIS) (includes how to file a complaint) • File a Complaint • Report Fraud (OFRS) • Consumer Home Page (glossary of insurance terms, learning resources, Life Insurance Policy Locator, etc.) • NAIC Newsroom (search capability for NAIC consumer alerts and news releases, daily insurance news, etc.) • NAIC Store • Education and Training Department • Consumer Participation Program
Be Mindful of Resources
• Only Ask for Information Necessary to Complete Your Task • Too Much Information is Costly • Relevance is the Key
Quality Control
• Peer Reviews • Supervisory Reviews • Random Telephone Call Monitoring • Customer Surveys • Workload Monitoring and Management • Service Benchmarks
Once a complaint is properly coded, it should be shared with other states through the NAIC's Complaints Database System (CDS). Such sharing of complaint data is essential for:
• Proper Identification of National Trends • Coordination of Collaborative Efforts with Other States
Confirmed/Unconfirmed Complaint Codes
• iSite+ (Regulator Only Data) o Includes both confirmed and unconfirmed complaint codes in complaint counts & ratios • Consumer Insurance Search (CIS) (Publicly Available Data) o Includes only confirmed complaint codes in complaint counts & ratios • If the confirmed indicator selected by a state should be changed to unconfirmed (or vice versa), the state should contact NAIC staff
The NAIC (Regulator Resources)
• myNAIC o iSite+ o StateNet • Consumer services/advocacy relating to inappropriate insurance marketing & sales to military service members o Contact NAIC Market Regulation Department staff
