Excellence in Claims Handling Part Two
More to Help Insurers Create a Staff of Claims Personnel Committed to Excellence in Claims Handling
Required Continuing Education
State insurance departments across the country are attempting to micromanage the business of insurance with various statutes and regulations. Failure to comply with the continuing education requirements can be used as evidence of an insurer’s failure to require its employees to comply with the covenant of good faith and fair dealing. Insurers should not only ensure that their training programs conform to those required by the relevant states, but also that the claims staff consistently apply excellence in claims handling training in compliance with the requirements of the Regulations.”[1]
Continuing Education Requirement
On January 1, 2009, AB 2044 — which has been added to the California Insurance Code as § 14090.1 — went into effect. Section 14090.1 requires continuing education with the following language:
(a) An individual who holds an insurance adjuster license and who is not exempt under subdivision (b) of this section shall satisfactorily complete a minimum of 24 hours, including ethics, of continuing education courses pertinent to the duties and responsibilities of an insurance adjuster license reported to the insurance commissioner on a biennial basis in conjunction with his or her license renewal cycle.
(b) This section does not apply to either of the following:
(1) A licensee not licensed for one full year prior to the end of the applicable continuing education biennium.
(2) A licensee holding a nonresident insurance adjuster license who has met the continuing education requirements of his or her designated resident state.
Section 15059.1 contains identical provisions that require the same number of continuing education hours for public insurance adjusters, and provides that:
(a) An individual who holds a public insurance adjuster license and who is not exempt under subdivision (b) shall satisfactorily complete a minimum of 24 hours, including ethics, of continuing education courses pertinent to the duties and responsibilities of a public insurance adjuster license, to be reported to the insurance commissioner on a biennial basis in conjunction with his or her license renewal cycle.
(b) This section shall not apply to:
(1) A licensee not licensed for one full year prior to the end of the applicable continuing education biennium.
(2) A licensee holding a nonresident public insurance adjuster license who has met the continuing education requirements of his or her designated state or residence.
In addition, the law authorizes the insurance commissioner to mail an applicant or a licensee a citation and an order assessing a specified fine for a violation the commissioner believes the applicant or licensee committed.
Only if the licensee requests a hearing can proceedings be initiated regarding the validity of the citation and order. The issuance of a notice, citation, or order under this provision would not constitute a disciplinary action or an administrative action against the licensee. In essence, the commissioner can punish any licensee without a trial and make the licensee guilty until proven innocent.[2]
Fraud Training Requirement
In addition, as of October 7, 2005, California imposed a regulation, at Subchapter 9, Article 2, starting at Section 2698.30 et seq., called the “Special Investigation Unit Regulations.”[3]
If you are an employee of an insurer who has any business in California and anything to do with claims or underwriting, an independent adjuster or adjusting firm, a managing general agent, or an appointed agent of any insurer doing business in California and were not trained about insurance fraud recognition by the end of September 2005 you and the insurer are in violation of the California Code of Regulations. The regulations require each insurer to train you annually and to train all new hires within 90 days of hire.
If you and your staff have not been trained by the insurer(s) with whom you are employed or who you represent, and if you do not have a training program in force, you, your employer, and the insurers you represent are in violation of the regulations. Fines of $5,000 to $10,000 can be assessed for each violation.[4] Similar regulations and fines exist in many, if not most, states.
You can protect yourself, and the insurers you represent, from California Department of Insurance audits and fines by complying with these regulations.
The regulations at Section 2698.39 require every admitted insurer to train all “Integral Anti-Fraud Personnel.” Very few people employed by an insurer or its agents are not included in this list.
Integral antifraud personnel include:
claims handlers;
underwriters;
agents;
policy handlers;
call center staff;
legal staff; and
other insurer employees who perform similar duties.
The regulations also require that the admitted insurer maintain:
[r]ecords of the anti-fraud training provided to all staff [and that they] shall be prepared at the time training is provided and be maintained and available for inspection by the Department on request. The training records shall include the title and date of the anti-fraud training course, name and title and contact information of the instructor(s), description of the course content, length of the training course, and the name and job title(s) of participating personnel.
Limitation on State’s Enforcement of Regulations
“California Administrative Law Judge Stephen J. Smith issued a 51-page ruling finding the CDI’s Fair Claims Practices Regulations (FCPR) might not be brought as unfair claims acts. The ruling affects how the CDI has imposed, and will impose in the future, penalties against insurers for claims since the inception of the FCPR in 1992.
