ADOPTED OCTOBER 31, 2018 STATE OF CALIFORNIA Conduct Exam Reports/11… · 19/04/2011 · geico casualty company naic # 41491 cdi # 2943-9 government employees insurance company

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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

GEICO CASUALTY COMPANY NAIC # 41491 CDI # 2943-9

GOVERNMENT EMPLOYEES INSURANCE COMPANY

NAIC # 22063 CDI # 1348-2

GEICO GENERAL INSURANCE COMPANY NAIC # 35882 CDI # 2306-9

GEICO INDEMNITY COMPANY

NAIC # 22055 CDI # 1668-3

AS OF FEBRUARY 16, 2018

ADOPTED OCTOBER 31, 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 ................................................................ 9

SUMMARY OF EXAMINATION RESULTS .................................................................. 14

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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

Companies’ 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).

http://www.insurance.ca.gov/

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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:

GEICO Casualty Company NAIC # 41491

Government Employees Insurance Company

NAIC # 22063

GEICO General Insurance Company NAIC # 35882

GEICO Indemnity Company

NAIC # 22055

Group NAIC # 0031

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

GCC, GEICO, GGIC, GIC or the Company, and collectively as the Companies.

This examination covered the claim handling practices of the aforementioned

Companies on Private Passenger Auto and Commercial Auto claims closed during the

period from February 17, 2017 through February 16, 2018. The examination was made

to discover, in general, if these and other operating procedures of the Companies

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 Companies for use in California including any documentation maintained by the

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Companies 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.

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 these

Companies closed by the CDI during the period February 17, 2017 through February

16, 2018, a review of previous CDI market conduct claims examination reports on these

Companies; and a review of prior CDI enforcement actions.

The review of the sample of individual claim files was conducted at the offices of

the Companies in Poway, California.

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EXECUTIVE SUMMARY

The Private Passenger Auto and Commercial Auto claims reviewed were closed

from February 17, 2017 through February 16, 2018, referred to as the “review period”.

The examiners randomly selected 27 GCC claim files, 159 GEICO claim files, 128

GGIC claim files and 50 GIC claim files for examination. The examiners cited 36

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

Code of Regulations from this sample file review.

Findings of this examination included instances of failure to ask if a child

passenger restraint system was in the vehicle at the time of the loss, failure to maintain

all documents, notes and work papers which reasonably pertain to each claim in such

detail that pertinent events and the dates of the events can be reconstructed, failure to

conduct and diligently pursue a thorough, fair and objective investigation, and failure 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. Details regarding all findings are provided in the final sections of this

report.

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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:

GCC SAMPLE FILES REVIEW

LINE OF BUSINESS / CATEGORY CLAIMS IN

REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS

Private Passenger Auto / Collision 12,979 4 0

Private Passenger Auto / Collision / Total Loss

2,632 1 0

Private Passenger Auto / Comprehensive 3,911 1 0

Private Passenger Auto / Comprehensive / Total Loss

473 1 0

Private Passenger Auto / Property Damage 36,963 6 0

Private Passenger Auto / Property Damage / Total Loss

1,409 2 0

Private Passenger Auto / UM Property Damage

377 3 1

Private Passenger Auto / UM Property Damage / Total Loss

118 1 0

Private Passenger Auto / UM Bodily Injury 868 5 0

Private Passenger Auto / Bodily Injury 7,904 2 0

Private Passenger Auto / Medical Payment 612 1 0

TOTALS 68,246 27 1

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GEICO SAMPLE FILES REVIEW


REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS



3,123 1 0



385 1 0



1,017 1 0


128 1 0


48 1 0



Private Passenger Auto / Medical Payment 1,651 4 1

Commercial Auto / Collision 444 46 12

Commercial Auto / Collision / Total Loss 72 10 2

Commercial Auto / Comprehensive 118 10 1

Commercial Auto / Comprehensive / Total Loss

9 4 0

Commercial Auto / Property Damage 67 22 3

Commercial Auto / Property Damage / Total Loss

20 10 2

Commercial Auto / UM Bodily Injury 11 9 2

Commercial Auto / Bodily Injury 58 18 1

TOTALS 51,376 159 28

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GGIC SAMPLE FILES REVIEW


REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS



13,022 6 1



1,692 1 0



4,604 6 1


713 7 0


311 1 0

Private Passenger Auto / UM Bodily Injury 4,172 28 0



TOTALS 324,185 128 5

GIC SAMPLE FILES REVIEW


REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS



6,282 2 0


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1,158 1 0



1,904 3 1


368 3 0


187 1 0




TOTALS 115,048 50 2

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TABLE OF TOTAL ALLEGED VIOLATIONS

Citation Description of Allegation

GCC Number of

Alleged Violations

GIC Number of

Alleged Violations

GEICO Number of

Alleged Violations

GGIC

Number of Alleged

Violations

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

The Company failed to ask if a child passenger restraint system was in use by a child during the accident or was in the vehicle at the time of a loss that was covered by the policy, and failed to reimburse the claimant for the cost of purchasing a new child passenger restraint system.

0 0 4 2

CCR §2695.3(a) *[CIC §790.03(h)(3)]

The Company failed to maintain all documents, notes and work papers which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed.

0 2 2 0

CCR §2695.7(d) *[CIC §790.03(h)(3)]

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

0 0 4 0

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.

0 0 4 0

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.

0 0 3 0

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

The Company failed to deny, dispute or reject a third party claim, in whole or in part, in writing.

0 0 2 0

CCR §2695.7(b) *[CIC §790.03(h)(4)]

The Company failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days.

0 0 2 0

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Citation Description of Allegation

GCC Number of

Alleged Violations

GIC Number of

Alleged Violations

GEICO Number of

Alleged Violations

GGIC

Number of Alleged

Violations

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.

0 0 2 0

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.

0 0 2 0

CCR §2695.7(b)(1) *[CIC §790.03(h)(13)]

The Company failed to provide in writing the reasons for the denial of the claim in whole or in part including the factual and legal bases for each reason given.

0 0 0 1

CIC §11583 *[CIC §790.03(h)(3)]

The Company failed, upon making an advance or partial payment toward an injury or death claim, to notify the recipient in writing of the applicable statute of limitations.

0 0 0 1

CCR §2695.5(b) *[CIC §790.03(h)(2)]

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

0 0 1 0

CCR §2695.7(h) *[CIC §790.03(h)(5)]

The Company failed, upon acceptance of the claim, to tender payment within 30 calendar days.

0 0 1 0

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

The Company failed to include, in the settlement, all applicable taxes.

0 0 1 0

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.

0 0 0 1

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

The Company failed to include, in the settlement, sales tax associated with the cost of a comparable vehicle, discounted by the amount of sales tax attributed to the salvage value of the loss vehicle.

1 0 0 0

Total Number of Alleged Violations 1 2 28 5

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*DESCRIPTIONS OF APPLICABLE

UNFAIR CLAIMS SETTLEMENT PRACTICES

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)(4) The Company failed to affirm or deny coverage of claims within a reasonable time after proof of loss requirements had been completed and submitted by the insured.

CIC §790.03(h)(5) The Company failed to effectuate prompt, fair, and equitable settlements of claims in which liability had become reasonably clear.

CIC §790.03(h)(13)

The Company failed to provide promptly a reasonable explanation of the bases relied upon in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.

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TABLE OF ALLEGED VIOLATIONS BY LINE OF BUSINESS

PRIVATE PASSENGER AUTO

GCC 2016 Written Premium: $303,199,403 GEICO 2016 Written Premium: $284,715,548 GGIC 2016 Written Premium: $1,137,681,331

GIC 2016 Written Premium: $366,152,907 AMOUNT OF RECOVERIES $341.15

NUMBER OF ALLEGED VIOLATIONS

CIC §11580.011(e) [CIC §790.03(h)(5)] 3

CCR §2695.3(a) [CIC §790.03(h)(3)] 2

CCR §2695.7(d) [CIC §790.03(h)(3)] 2

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

CIC §11583 [CIC §790.03(h)(3)] 1

CCR §2695.5(b) [CIC §790.03(h)(2)] 1

CCR §2695.7(b)(1) [CIC §790.03(h)(13)] 1

CCR §2695.7(h) [CIC §790.03(h)(5)] 1

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

SUBTOTAL 13

COMMERCIAL AUTO

2016 Written Premium: $8,919,278

AMOUNT OF RECOVERIES $0

NUMBER OF ALLEGED VIOLATIONS

CCR §2695.8(c) [CIC §790.03(h)(3)] 4

CIC §11580.011(e) [CIC §790.03(h)(5)] 3

CCR §2695.8(f) [CIC §790.03(h)(3)] 3

CCR §2695.3(a) [CIC §790.03(h)(3)] 2

CCR §2695.7(b) [CIC §790.03(h)(4)] 2

CCR §2695.7(b)(1) [CIC §790.03(h)(13)] 2

CCR §2695.7(b)(3) [CIC §790.03(h)(3)] 2

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 2

CCR §2695.7(d) [CIC §790.03(h)(3)] 2

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

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SUBTOTAL 23

TOTAL 36

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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 Companies are required to identify remedial or

corrective action that has been or will be taken to correct the deficiency. The

Companies are obligated to ensure that compliance is achieved.

Any noncompliant practices identified in this report may extend to other

jurisdictions. The Companies should address corrective action for other jurisdictions

when applicable.

Money recovered within the scope of this report was $341.15 as described in

section numbers 1 and 4 below.

PRIVATE PASSENGER AUTO 1. In three instances, the Companies failed to ask if a child passenger restraint system was in use by a child during the accident or was in the vehicle at the time of a loss that was covered by the policy, and failed to reimburse the claimant for the cost of purchasing a new child passenger restraint system. The Department alleges these acts are in violation of CIC §11580.011(e).

Summary of the Companies’ Response: The Companies acknowledge the

alleged violations and agree that in one instance, they did not ask if a child passenger restraint system was in the vehicle at the time of the loss. In another instance, the child passenger restraint system (CPRS) was not reimbursed. As a result of the examination, the claimant was paid $100.00 for replacement of a car seat that was occupied during the accident. In one instance, the Companies agree that no payment was made for the CPRS in the vehicle at the time of loss, but do not agree reimbursement of the unoccupied car seat was necessary as per NHTSA guidelines which state:

• NHTSA recommends that child safety seats be replaced following a moderate or severe crash in order to ensure a continued high level of crash protection for child passengers.

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• NHTSA recommends that child safety seats do not automatically need to be replaced following a minor crash. Minor crashes are those that meet ALL of the following criteria: • The vehicle was able to be driven away from the crash site; • The vehicle door nearest the safety seat was undamaged; • There were no injuries to any of the vehicle occupants; • The air bags (if present) did not deploy; AND

• There is no visible damage to the safety seat.

In attempting to arrive at an objective standard, the Companies have modified these procedures to maintain compliance with CIC §11580.011(e) going forward, as follows:

In every claim made under these coverages (Liability, Uninsured Motorists Property Damage, Collision and Comprehensive), an insurer must ask whether a child passenger restraint system was in use by a child during an accident or was in the vehicle at the time of the loss. The child passenger restraint system will be reimbursed or replaced

If the child passenger restraint system was in use by a child during an accident, the insurer will pay for replacement, regardless of actual damage to the child passenger restraint system.

If the child passenger restraint system was not in use by a child during an accident and it was damaged, the insurer will pay for replacement.

If the child passenger restraint system was not in use by a child during an accident and if there was incursion into the passenger compartment, the insurer will pay for replacement, regardless of actual damage to the child passenger restraint system.

2. In two instances, the Companies failed to maintain all documents, notes and work papers which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed. In these instances, a denial letter and a WebMVR form showing how vehicle license fees are calculated were not contained in the claim file. The Department alleges these acts are in violation of CCR §2695.3(a) and are unfair practices under CIC §790.03(h)(3).

Summary of the Companies’ Response: The Companies agree with the alleged violations that all documentation pertinent to the claim were not contained in the claim file. As a result of the examination, the involved adjusters were counseled and refresher training provided between May 18, 2018 and June 15, 2018 to ensure adherence to Companies’ standards and compliance with the regulation. 3. In two instances, the Companies failed to conduct and diligently pursue a thorough, fair and objective investigation. In one instance, the claim was closed before the payment of waiver of deductible was reimbursed one month later. In another instance, reimbursement for a car seat was withheld until the insured provided proof that the seat straps were cut. The Department alleges these acts are in violation of CCR §2695.7(d) and are unfair practices under CIC §790.03(h)(3).

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Summary of the Companies’ Response: The Companies agree with the alleged violations and that the procedures were not followed in these instances. As a result of the examination, the involved adjusters were counseled and refresher training was provided between May 18, 2018 and June 15, 2018 to ensure adherence to Companies’ standards and compliance with the regulation. Further, the Companies have proposed to re-train the staff. The agreed handling guidelines reflect:

In every claim made under these coverages (Liability, Uninsured Motorists

Property Damage, Collision and Comprehensive), an insurer must ask whether a child passenger restraint system was in use by a child during an accident or was in the vehicle at the time of the loss. The child passenger restraint system will be reimbursed or replaced




4. In one instance, the Companies failed to include, in the settlement, sales tax associated with the cost of a comparable vehicle, discounted by the amount of sales tax attributed to the salvage value of the loss vehicle. In this instance, the total loss settlement did not include tax. The Department alleges this act is in violation of CCR §2695.8(b)(1)(A) and is an unfair practice under CIC §790.03(h)(5).

Summary of the Companies’ Response: The Companies agree with the

alleged violation that sales tax was not included in the total loss settlement. As a result of the examination, $241.15 was issued to the insured. In addition, the involved adjusters were counseled and refresher training provided between May 18, 2018 and June 15, 2018 to ensure adherence to Companies’ standards and compliance with the regulation.

5. In one instance, the Companies failed, upon making an advance or partial payment toward an injury or death claim, to notify the recipient in writing of the applicable statute of limitations. In this instance, a Med Pay claim denial letter was not sent advising of the statute of limitations. The Department alleges this act is in violation of CIC §11583 and is an unfair practice under CIC §790.03(h)(3). Summary of the Companies’ Response: The Companies agree with the alleged violation and that this incident was the result of inadvertent error. As a result of the examination, the involved adjuster was counseled and refresher training provided between May 18, 2018 and June 15, 2018 to ensure adherence to Company standards and compliance with the requirement.

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6. The Companies failed to comply with the Fair Claims Practices Regulations. In each single instance (for a total of four instances), the Companies failed to comply with the following Fair Claims Regulations Practices: a) CCR §2695.5(b) for failure to respond to communications within 15 days; b) CCR §2695.7(b)(1) for failure to issue a denial in writing; c) CCR §2695.7(h) for failure to pay within 30 days; e) CCR §2695.8(b)(1)(A) for failure to document the Salvage Certificate fee paid as part of the salvage settlement breakdown.

The Department alleges these acts are in violation of Fair Claims Practices

Regulations and are unfair practices under CIC §790.03(h)(2), CIC §790.03(h)(5) and CIC §790.03(h)(13).

Summary of the Companies’ Response: The Companies agree with the

alleged violations and as a result of the examination, the adjusters were counseled between May 18, 2018 and June 15, 2018 to ensure adherence to Companies’ standards and compliance with the regulations. COMMERCIAL AUTOMOBILE 7. In four instances, 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. In each instance, the Company did not use the required language to notify the insured. 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 alleged violations that it did not notify the insured that the claim would be reopened within 35 days of notice if a comparable automobile cannot be purchased for the settlement amount offered or paid. It is the Company’s procedure to include the required language and as a result of the examination, the pertinent adjusters were counseled. As Commercial Auto is transferred to the ATLAS claims systems on November 4, 2018, the language will be automatically included within the total loss settlement offer letter. In the interim, Commercial adjusters have had refresher training to manually apply the required language to the appropriate correspondence to ensure compliance. 8. In three 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. In these instances, the Company did not ask if a car seat was in the vehicle at the time of the loss. The Department alleges these acts are in violation of CIC §11580.011(e) and are unfair practices under CIC §790.03(h)(3).

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Summary of the Company’s Response: The Company agrees with the alleged violations and as a result of the examination, the adjusters were counseled. In addition, refresher training was provided to ensure adherence to Company standards and compliance with the requirement. 9. In three instances, the Company failed to supply the claimant with a copy of the estimate upon which the settlement was based. In these instances, the Company did not provide a copy of the estimate to the insured. 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 the alleged violations and states that in these instances, there was an error on the system stamp applied to the claim summary which would indicate if the insured was contacted regarding the estimate. The adjuster has subsequently corrected his system’s stamps to ensure the accurate verbiage is utilized when delivering a copy of the estimate to the customer. In addition, refresher training was provided to ensure adherence to Company standards and documentation of compliance with the regulation. 10. In two instances, the Company failed to maintain all documents, notes and work papers which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed. In these instances, the photographs of the damaged vehicle were not included in the claim file. The Department alleges these acts are in violation of CCR §2695.3(a) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations that photographs of the damaged vehicle were not provided in the claim file. The Company anticipates that with the Commercial Auto claims transition into the ATLAS claims systems November 4, 2018, the auto damage supervisor will be given a notification if the photographs were not uploaded. In addition, refresher training was provided to ensure adherence to Company standards and compliance with the regulation.

11. In two instances, the Company failed, upon receiving proof of claim, to accept or deny the claim within 40 calendar days. In one instance, the Company did not accept or deny the claim in response to proof received for 43 days, and in another instance did not accept or deny until 54 days following receipt of proof. The Department alleges these acts are in violation of CCR §2695.7(b) and are unfair practices under CIC §790.03(h)(4). Summary of the Company’s Response: The Company agrees with the alleged violations and as a result of the examination, the adjusters were counseled. In addition, refresher training was provided to ensure adherence to Company standards and compliance with the regulation.

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12. In two instances, the Company failed to deny, dispute or reject a third party claim, in whole or in part, in writing. In these instances, a partial denial letter was not sent in response to a third party carrier’s subrogation demand. The Department alleges these acts are in violation of CCR §2695.7(b)(1) and are unfair practices under CIC §790.03(h)(3). Summary of the Company’s Response: The Company agrees with the alleged violations and as a result of the examination, the adjusters were counseled. In addition, refresher training was provided to ensure adherence to Company standards and compliance with the regulation with emphasis on subrogation handling. 13. In two instances, 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. In these instances, the Company did not include the required language on denial letters to third party carriers. The Department alleges these acts are in violation of CCR §2695.7(b)(3) and are unfair practices under CIC §790.03(h)(3). Summary of the Company’s Response: The Company agrees with the alleged violations and as a result of the examination, the adjusters were counseled and refresher training was provided. The Company further states that it is their practice to utilize the denial letters that contain California specific language that demonstrates the required points as outlined in CCR 2695.7(b)(3). In this situation the trained process was not adhered to. Upon Commercial Auto claims transitioning to the ATLAS claims system on November 4, 2018, the system will provide the appropriate language to ensure compliance. This will ensure that the CDI language is automatically added to the denial letters.

14. In two instances, the Company failed to provide written notice of the need for additional time or information every 30 calendar days. In one instance, the Company did not provide written notice of the need for body shop of choice information within 30 calendar days. In another instance, a UMBI demand was not responded to within 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 agrees with the alleged violation that in one instance, written notice for additional time was not provided when a UMBI demand was not responded to within 30 days. In another instance, the Company acknowledges the alleged violation stating that it had made verbal requests for choice of body shop although no written notice made within 30 calendar days. The involved adjusters were counseled and refresher training was provided between May 18, 2018 and June 15, 2018 to ensure adherence to Company’s standards and compliance with the regulation.

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15. In two instances, the Company failed to conduct and diligently pursue a thorough, fair and objective investigation. In one instance, the Company incorrectly required a receipt for reimbursement of a car seat. In another instance, the Company unnecessarily delayed authorization of a rental car. The Department alleges these acts are in violation of CCR §2695.7(d) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations and as a result of the examination, the adjusters were counseled. In addition, refresher training was provided to ensure adherence to Company standards and compliance with the regulation with emphasis on car seat reimbursement and rental car authorization handling. Further, the Company has proposed to re-train the staff. The agreed handling guidelines reflect:

In every claim made under these coverages (Liability, Uninsured Motorists Property Damage, Collision and Comprehensive), an insurer must ask whether a child passenger restraint system was in use by a child during an accident or was in the vehicle at the time of the loss. The child passenger restraint system will be reimbursed or replaced




16. In one instance, the Company failed to include, in the settlement, all applicable taxes. In this instance, the Company did not pay sales tax on the insureds leased total loss vehicle. The Department alleges this act is in violation of CCR §2695.8(b)(1) and is an unfair practice under CIC §790.03(h)(5). Summary of the Company’s Response: The Company agrees that in this single instance it neglected to obtain and review the lease agreement that would allow for an accurate determination of the potential monies owed. As a result of the examination, the involved associate was counseled on proper procedure.

Documents

ADOPTED OCTOBER 31, 2018 STATE OF CALIFORNIA Conduct Exam Reports/11… · 19/04/2011 · geico casualty company naic # 41491 cdi # 2943-9 government employees insurance company