DELAWARE DEPARTMENT OF INSURANCE
MARKET CONDUCT EXAMINATION REPORT
ROOT INSURANCE COMPANY
AUTHORITY # 10974-20-702
80 E. Rich Street, Suite 500
Columbus, OH 43215
As of
December 31, 2019
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Root Insurance Company
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Table of Contents
EXECUTIVE SUMMARY ............................................................................................ 2
SCOPE OF EXAMINATION......................................................................................... 4
METHODOLOGY ......................................................................................................... 4
COMPANY HISTORY AND PROFILE ....................................................................... 5
COMPANY OPERATIONS AND MANAGEMENT ................................................... 7
MARKETING AND SALES .......................................................................................... 6
CONSUMER COMPLAINTS ........................................................................................ 7
UNDERWRITING AND RATING .............................................................................. 10
CLAIMS HANDLING ................................................................................................. 12
CONCLUSION ............................................................................................................. 15
Honorable Trinidad Navarro
Insurance Commissioner
State of Delaware
1351 West North Street
Suite 101
Dover, Delaware 19904
Dear Commissioner Navarro:
In compliance with the instructions contained in Examination Authority Numbers 10974-
20-702 and pursuant to statutory provisions including 18 Del. C. §§ 318-322, a Market
Conduct Examination has been conducted of the affairs and practices of:
Root Insurance Company – NAIC #10974
The examination was performed as of December 31, 2019.
The examination was conducted off-site, performed at the offices of the Delaware
Department of Insurance, hereinafter referred to as the Department, or other suitable
locations.
The report of examination herein is respectfully submitted.
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Root Insurance Company
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EXECUTIVE SUMMARY
ȋDz dzȌ -to-consumer
personal lines property and casualty insurance company, which is a wholly owned
subsidiary of Root, Inc. ȋDzȌǤ
The examination was a targeted review of the Company’s personal automobile book of
business in the following areas of operation: Company Operations and Management,
Marketing and Sales, Consumer Complaints, Underwriting and Rating, and Claims
Handling. The examination period was January 1, 2018 through December 31, 2019.
The following exceptions were noted during the review of Consumer Complaints,
Underwriting and Rating, and Claims Handling.
3 Exceptions
18 Del. C. § 2304(17), Failure to maintain complaint handling procedures.
(17) Failure to maintain complaint handling procedures- Failure of any person to
maintain a complete record of all the complaints which it has received since the
date of its last examination as otherwise required in this title. This record shall
indicate the total number of complaints, their classification by line of insurance,
the nature of each complaint, the disposition of these complaints and the time it
took to process each complaint. For purposes of this subsection, “complaint”
shall mean any written communication primarily expressing a grievance.
The Company had one complaint that was not listed in the log and listed two
complaints that were combined with other complaints. The Company did not
include the time involved in order to resolve the two complaints.
1 Exception
18 Del. C. § 3904 Cancellation or non-renewal of automobile policy – Reasons
for cancellation or nonrenewal.
(a) No notice of cancellation of a policy shall be effective and the insurer shall
not refuse to renew or threaten to refuse renewal of a policy unless based on 1 or
more of the following reasons: Eight reasons (not listed here) with sub-sections
then follow.
The Company did not use an allowable reason for non-renewing one policy.
1 Exception
18 Del. C. § 2712(a) Filing, approval of forms.
(a) No basic insurance policy or annuity contract, form, or application form
where written application is required and is to be made a part of the policy or
contract or printed rider or endorsement form or form of renewal certificate shall
be delivered or issued for delivery in this State, unless the form has been filed
with the Commissioner.
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The Company did not file for approval from the Delaware Department of
Insurance for its Declaration pages.
1 Exception
18 Del. C. § 603-11.0 - Delaware Form A “Coverage Election”.
11.1 The coverage election form (Delaware Form A), attachment to
Regulation 603 (Formerly Regulation No. 9),
shall be properly presented by
the insurer, broker, or agent to the policyholder, and acknowledged by the
policyholder's signature. Proper presentation by the insurer, where possible,
should be in person at the time
application is made. If personal presentation is
not possible, or if there is further need for clarification, insurers
may present
Form A by mail. The language or context of Form A shall be as shown unless, in
accordance with
filings made with this office, the insurer offers options,
deductibles, etc., other than those described on the
approved form. Any
amended Form A shall clearly describe all additional options of coverage and
must be filed with this Department prior to use. Any version of the coverage
election form which deviates from Delaware Form A must be filed with the
Department prior to its use except that companies may overprint the form with
company name, address and logo without filing it with the Department,
providing the text remains unchanged
The Company did not have Form A, “Coverage Election”, available for use
during the examination period.
3 Exceptions
18 Del. Admin. C. § 902-1.2.1.1 Prohibited Unfair Claim Settlement Practices.
1.2.1.1 Misrepresenting pertinent facts or insurance policy provisions relating to
coverage at issue.
The Company misrepresented pertinent facts or insurance policy provisions
relating to the coverage at issue.
1 Exception
18 Del. Admin. C. § 902-1.2.1.2 Prohibited Unfair Claim Settlement Practices.
1.2.1.2 Failing to acknowledge and respond within 15 working days, upon receipt
by the insurer, to communications with respect to claims by insureds arising
under insurance policies.
The Company failed to acknowledge and respond to communications with respect
to claims by insureds within 15 working days.
4 Exceptions
18 Del. Admin. C. § 902-1.2.1.3 Prohibited Unfair Claim Settlement Practices.
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1.2.1.3 Failing to implement prompt investigation of claims arising under
insurance policies within 10 working days upon receipt of the notice of the loss by
the insurer.
The Company failed to implement the prompt follow-up investigation of claims.
7 Exceptions
18 Del. Admin. C. § 902-1.2.1.6 Prohibited Unfair Claim Settlement Practices.
1.2.1.6 Not attempting in good faith to effectuate prompt, fair and equitable
settlement of claims in which liability has become clear.
The Company failed to effectuate a prompt, fair and equitable settlement of
claims.
1 Exception
18 Del. C. § 2104 4.1 Written Notice by Insurers of Payment of Third-Party
Claims.
4.1 Upon payment in excess of $5,000.00 in settlement of or upon judgment on
any third-party liability or casualty claim and where the claimant is a natural
person, the insurer or its representative shall mail to the third-party claimant
written notice of payment at the same time such payment is made to the third
party’s attorney, accountant, agent or other representative.
The Company failed to provide the third-party claimant written notice of payment
at the time such payment was made.
SCOPE OF EXAMINATION
The Market Conduct Examination was conducted pursuant to the authority granted by 18
Del. C. §§ 318 - 322 and covered the experience period of January 1, 2018 through
December 31, 2019. The purpose of the examination was to determine compliance by the
Company with applicable Delaware laws and regulations.
The examination was a targeted review of Root Insurance Company’s activities related to
its personal automobile book of business in the following areas of operation: Company
Operations and Management, Marketing and Sales, Consumer Complaints, Underwriting
and Rating, and Claims Handling.
METHODOLOGY
This examination was performed in accordance with Market Regulation standards
established by the Department and examination procedures suggested by the NAIC.
While the examiner’s report on the errors found in individual files, the examination also
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focuses on general business practices of the Root Insurance Company.
The Company identified the universe of files for each segment of the review. Based on
the universe sizes, random sampling was utilized to select the files reviewed during this
examination.
Delaware Market Conduct Examination Reports generally note only those items to which
the Department, after review, takes exception. An exception is any instance of Company
activity that does not comply with an insurance statute or regulation. Exceptions
contained in the Report may result in imposition of penalties. Generally, practices,
procedures, or files that were reviewed by Department examiners during the course of an
examination may not be referred to in the Report if no improprieties were noted.
However, the Examination Report may include management recommendations
addressing areas of concern noted by the Department, but for which no statutory violation
was identified. This enables company management to review these areas of concern in
order to determine the potential impact upon company operations or future compliance.
Throughout the course of the examination, company officials were provided status
memoranda, which referenced specific complaint, policy and/or claim numbers with
citation to each section of law violated. Additional information was requested to clarify
apparent violations. Written summaries were provided to the Company on the exceptions
found. An exit conference was conducted with Company officials to discuss the various
types of exceptions identified during the examination and to review written summaries
provided on the exceptions found.
COMPANY HISTORY AND PROFILE
Root Insurance Company (“RIC” or “the Company”) is an Ohio domiciled direct-to-
consumer personal lines property and casualty insurance company, which is a wholly
owned subsidiary of Root, Inc. (“RHC”).
The Company began writing personal automobile insurance in April 2018 in the State
of Delaware entirely through its smartphone mobile application (the “app”) primarily on
iOS and Android platforms. Customers use the app to scan their driver’s license and
provide other rating and underwriting profile information. The app turns the customer’s
phone into a telematics device, gathering t h e c u s t o m e r ’ s driving data over a two to
three week period. The app measures driving speeds, acceleration and braking patterns,
lane changing and other activities that are correlated with auto accident frequency. These
behaviors are incorporated into the underwriting and quoting process. A c c o r d i n g
t o t h e C o m p a n y , w hen closer to full scale, the Company believes this low-cost
automated underwriting approach, o f a n accurate upfront risk selection with no
traditional agency commission, will result in lower combined ratios as compared
t o the personal automobile industry’s risk selection approach. Root’s policies include a
6-month full pay term or monthly billing options.
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Root’s total Private Passenger Automobile direct written premium in Delaware for 2018
was $1,069,049 and their 2019 direct written premium in Delaware was $7,314,294.
COMPANY OPERATIONS AND MANAGEMENT
The Company was asked to provide the following:
A written overview of the Company’s operations, including management structure.
A description of all fines, penalties, and recommendations from any state for the last
five (5) years, and to have available copies of all Financial and Market Conduct
Examination reports conducted during the last five (5) years.
Copies of the annual statements for the prior three years and any property and
casualty related schedules or statements.
A list of all internal audits conducted within the last three (3) years. Internal audits
include those audits completed by an internal audit function within the Company or
conducted via a contracted vendor on behalf of the company.
A list of any third-party entities under contract to perform services related to
Complaint/Grievance Handling, Policyholder Service, Provider Relations,
Underwriting and Rating, or Claims. For each entity listed, provide a copy of the
contracts in effect during the examination period and copies of all audits performed
of the third party since contract inception.
Board of Director agendas, minutes and attachments for all meetings held during the
examination period.
Responses were provided and reviewed. No exceptions were noted. Since Root is
relatively new, they do not yet have a formal Internal Audit Program. They plan to
establish one in 2020; however, they did conduct two nationwide Internal Audits that
included Delaware policies, one pertaining to Non-pay cancellation notices and the other
to Notices of premium increases. No Delaware exceptions were noted.
The Company told us that they were assessed a $500 fine in 2019 by the Indiana
Department of Insurance for missing a due date on a consumer complaint. This fine was
confirmed.
MARKETING AND SALES
The Company was requested to provide a copy of all marketing and sales materials
distributed or available for distribution during the examination period. The Company
provided 82 images (pictures), 128 YouTube videos, and two text advertisements. Also
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included were two websites maintained by or on behalf of the Company for marketing
purposes. The web sites were: joinroot.com and rootbonus.com. In addition to these,
there were three additional marketing subdomains maintained by the Company which
were also included: try.joinroot.com, try.joinroot.com/perkspot/ and quote.joinroot.com.
All marketing and sales materials, including that of the above websites, were reviewed
for compliance with the Delaware Statutes and Regulations, Delaware Department of
Insurance Bulletins and NAIC Market Regulation Handbook Standards in Chapters 16
and 17.
There were no exceptions.
The Company was also requested to provide copies of Delaware Department of Insurance
approval of all marketing materials, applications, and notices. The Company stated they
had no documents to provide. The Company uses a smartphone mobile application
whose screens were reviewed and found suitable.
The Company was requested to provide copies of commission schedules for brokers and
producers, if any. The Company stated they had no documents to provide. The Company
sells its policies exclusively through the mobile application.
The Company was requested to provide a listing of all currently licensed and approved
producers, if any. The Company provided a list of 13 producers. Since the Company
sells its policies exclusively through the mobile application, none of these producers sell
policies so they receive no commissions. The producers answer questions and make
policy changes that require a licensed producer.
The Company was requested to provide a listing of all producers who have been
terminated during the Examination period, if any. The Company provided a list of two
licensed producers who were properly terminated based upon appointment changes.
No Exceptions were noted.
CONSUMER COMPLAINTS
The Company was requested to provide a listing of all complaints pertaining to personal
automobile filed with them during the examination period of January 1, 2018 through
December 31, 2019. The list was to include complaints received from the Delaware
Department of Insurance as well as complaints made directly to the Company on behalf
of Delaware consumers. The Company provided a list of thirty (30) complaints that were
filed with the Company during the examination period.
The complaint files were reviewed for compliance with the Delaware statutes and
regulations including, but not limited to 18 Del. C. §2304(17), Insurance Department
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Bulletins and NAIC Market Regulation Handbook Standards in Chapter 16. Complaint
files involving claims were reviewed for compliance with 18 Del. C. § 2304(26) and 18
Del. Admin. C. 902 §1.2.1.2.
18 Del. C. §2304(17) also requires maintenance of a complete record of all complaints
received, since the date of its last examination. The Company stated that this was its
initial examination, which was verified.
The Company also provided their Complaint Handling guidelines and procedures. These
were reviewed and found sufficient.
Six of the thirty complaints were the result of an increase in premium at renewal. The
examiners reviewed the new business declarations and the renewal declarations to
determine the amount of the premium increase, as well as the complaint and underwriting
file information to determine the cause of the complaint. In all six cases, the premium
increase was justified and supportable.
Three of the complaints involved prior accidents that were discovered during the renewal
review, two of the three complaints had misstated the months of continuous coverage
with their prior carrier, and one of the three complaints told the Company that he had
prior insurance when he did not.
Two of the thirty complaints were the result of premium increases during the quote
process or during the first 60 days of the term. The examiners reviewed the complaint
and underwriting file information for each consumer to determine the cause of the
complaint. In both cases, the premium increase was justified and supportable.
One driver had received an initial premium prior to his test drive. The test drive provided
insufficient data, so a revised premium was calculated, and a policy issued. The other
driver received a quote, completed the test drive, but thought the subsequent quote was
too high. A policy was never bound on this person. Factors contributing to the higher
quote included the age of the operator (18), lack of credit history and only 15 months of
insurance history.
The following exceptions were noted:
3 Exceptions: 18 Del. C. § 2304(17) Failure to maintain complaint handling
procedures.
The Company had one complaint that was not listed in the log and listed two complaints
that were combined with other complaints. The Company did not include the time
involved in order to resolve the two complaints.
Recommendation: It is recommended that the Company provide additional training to
ensure compliance with 18 Del. C. § 2304(17).
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UNDERWRITING AND RATING
The examination of Underwriting and Rating was conducted and performed to verify the
Company’s compliance with Delaware Statutes and Regulations, Insurance Department
Bulletins and NAIC Market Regulation Handbook Standards in Chapters 16 and 17. The
Company was asked to provide a listing of all new, renewal and terminated personal
automobile policies issued during the experience period, along with relevant copies of all
personal automobile underwriting and rating manuals and personal auto forms and
disclosures in use. The Company did not allow remote access to their underwriting and
rating system, nor was an on-site review practical. The Company provided the requested
documentation via hard copy.
Copies of policies and procedures regarding the use of credit information, including any
specific efforts or reports to ensure compliance with 18 Del. C. §8301 – 8303, were also
requested.
A sample termination notification and any supplemental documentation provided at the
time of termination was also requested and provided.
New Business Policies
Customers can become policyholders in two different manners. Customers can receive a
quote and have coverage bound immediately. A common customer is one without
insurance. The quote is contingent upon the Company’s underwriting acceptability
standards. The now-policyholder then takes a test drive to generate a telematics score
based on driving factors, and from that an updated premium is developed if the
policyholder meets the telematics-based underwriting acceptability standards. This
updated premium is then effective on Day 60 of the six-month policy term.
Customers can also take a test-drive before receiving quote. A common customer is one
who has insurance but is “shopping”. The test-drive generates a telematics score and a
quote which is contingent upon both traditional underwriting acceptability standards
as
well as telematics underwriting acceptability standards. At that time, the customer can
decide to complete an application and buy a policy that will be effective from the day the
quote is generated or at some point in the future.
The examiners were provided a total universe of 6,283 Private Passenger Automobile
policies written as new business during the examination period was January 1, 2018
through December 31, 2019. A random sampling of 116 policies was selected according
to the NAIC Market Coordinators Handbook guidelines. Random sampling was used
through ACL programming. Examination of the underwriting and rating files was
performed to verify the Company’s compliance with Delaware Statutes and Regulations,
Insurance Department Bulletins and NAIC Market Regulation Handbook Standards
Chapters 16 and 17.
The rate testing consisted of manual rating to ensure the amount of premium generated by
the Company’s computer system was in accordance with the Company’s filed and
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approved rates. This process involved the use of rating worksheets with algorithms
matching the rating manuals. Due to the time-consuming nature of manually rating, the
selections were reduced to 10 randomly selected Private Passenger policies to be tested
for rating accuracy. The Company agreed that should there be any inconsistencies noted,
additional policies would be requested for testing. The examiners were able to test and
verify the rating of the policies in accordance with the Company’s filed and approved
rates.
No exceptions were noted.
The examiners also compared seven different new business policy premiums with their
subsequent renewal premium. The seven policies were selected because there were no
insured-inspired changes during the six-month term that would have resulted in a
premium revision. All renewal premium increases were solely the result of the
Company’s renewal process, including Base Rate changes and appropriate Rate Capping.
The examiners identified each rating variable whose factors changed at renewal. Each
rating variable and its corresponding factors were filed and approved. The examiners
then isolated each rating variable’s renewal factor’s sole impact on the corresponding
new business rating variable, to determine the stand-alone impact of each factors’ impact
on the renewal premium. This additive method did not reconcile with the renewal
premium increase due to the multiplicative nature of the rating plan where changes
compounded on each other. Their multiplicative rating plan was part of their rate manual
filing as the rating order calculation. As such, the renewal premium increases were
justified and supportable.
Renewal Policies
The examiners were provided a total universe of 2,848 Private Passenger Automobile
renewal policies during the examination period was January 1, 2018 through December
31, 2019. A random sampling of 115 policies was selected according to the NAIC
Market Coordinators Handbook guidelines. Random sampling was used through ACL
programming. Examination of the underwriting and rating files was performed to verify
the Company’s compliance with Delaware Statutes and Regulations, Insurance
Department Bulletins and NAIC Market Regulation Handbook Standards Chapters 16
and 17.
The rate testing consisted of manual rating to ensure the amount of premium being
generated by the Company’s computer system was in accordance with the Company’s
filed and approved rates. This process involved the use of rating worksheets with
algorithms matching the rating manuals. Due to the time-consuming nature of manually
rating, the selections were reduced to 10 randomly selected Private Passenger policies to
be tested for rating accuracy. The Company agreed that should there be any
inconsistencies noted, additional policies would be requested for testing. The examiners
were able to test and verify the rating of the policies in accordance with the Company’s
filed and approved rates.
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No exceptions were noted.
Credit Information
Copies of policies and procedures regarding the use of credit information, including any
specific efforts or reports to ensure compliance with 18 Del. C. §8301 – 8303, were also
requested, provided and reviewed.
The Company does not use credit scoring as a means to reject an applicant. The
Company uses credit scoring for rating. A FICO credit score is ordered on the primary
named insured. Using the FICO score, the Company has 52 tiers, and each has its own
factor for coverages. “No-Hits” and “No Scores” are assigned tiers and also have their
own factors for each coverage. The tier determined at this point is used for subsequent
renewal terms unless a re-order is requested by the primary named insured. If the new
score is better, the named insured will be placed in a better tier. If the new score is
worse, the named insured’s tier will not change.
No exceptions were noted.
Terminated Policies
The examiners were provided a total universe of 181 Private Passenger Automobile
policies that were terminated at the request of the Company during the examination
period was January 1, 2018 through December 31, 2019. A random sample of 79
terminated policies was selected according to the NAIC Market Regulation Handbook
guidelines. Random sampling was used through ACL programming. Examination of the
terminated files was performed to verify the Company’s compliance with Delaware
Statutes and Regulations, Insurance Department Bulletins and NAIC Market Regulation
Handbook Chapters 16 and 17. The following exception was noted.
1 Exception: 18 Del C. § 3904 Cancellation or nonrenewal of automobile policy -
Reasons for cancellation or nonrenewal.
The Company did not use an allowable reason for one non-renewal policy.
Recommendation: It is recommended that the Company provide additional training to
ensure Termination reasons are in compliance with 18 Del. C. § 3904.
The examiners also reviewed the Company’s Termination Premium/Fees report
compared to the Company’s Cancellation Rating Data and further compared to the
Cancellation Reports for 10 policies which show uniform reporting and consistent return
premium data.
Forms, Notices, Disclosures and Endorsements
The Company provided five notices and one disclosure. All five notices were reviewed
to verify their approval by the Delaware Department of Insurance. The Company’s one
disclosure was not required to be filed but was reviewed. No exceptions were noted.
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The Company also provided 11 automobile forms and endorsements. All 11 automobile
forms and endorsements were reviewed to verify their approval by the Delaware
Department of Insurance. The following exceptions were noted.
1 Exception: 18 Del. C. § 2712(a) Filing, approval of forms.
The Company did not file for approval from the Delaware Department of Insurance for
its Declaration pages.
Recommendation: It is recommended that the Company file their Declaration pages in in
compliance with 18 Del. C. § 2712(a).
1 Exception: 18 Del. C. § 603-11.0 - Delaware Form A “Coverage Election”.
The Company did not have Form A, “Coverage Election” available for use during the
examination period.
Recommendation: It is recommended that the Company file and begin using Form A
“Coverage Election” in compliance with 18 Del. C. § 603-11.0.
CLAIMS HANDLING
The examination of claims was conducted and performed to verify the Company’s
compliance with Delaware Statutes and Regulations, Insurance Department Bulletins and
NAIC Market Regulation Handbook Standards in Chapters 16 & 17. The Company did
not allow remote access to their claims system, nor was an on-site review practical due to
COVID restrictions and the resultant inability to travel. The Company provided the
requested documentation via hard copy.
Paid Claims
The Company was requested to provide a listing of all Paid Private Passenger
Automobile claims during the examination period of January 1, 2018 through December
31, 2019. The Company provided a universe of 925 claims paid during the examination
period. Of the 925 paid claims, a random sampling of 105 claims wase selected
according to the NAIC Market Coordinators Handbook guidelines. Random sampling
was used through ACL programming. All 105 claims were reviewed for compliance with
Delaware Statutes and Regulations, Insurance Department Bulletins and NAIC Market
Regulation Handbook Chapters 16 and 17.
The following exceptions were noted.
3 Exceptions: 18 Del. Admin. C. § 902-1.2.1.1 Prohibited Unfair Claim Settlement
Practices.
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The Company misrepresented pertinent facts or insurance
policy provisions relating to
coverage at issue. Two of the noted exceptions involved inaccurate communication with
the policyholder regarding claims settlement. In the third exception the consumer was
not informed that the Company had a duty to defend her in an action brought against her
by a third party involved in an accident.
Recommendation: It is recommended that the Company provide additional training to
ensure compliance with 18 Del. Admin. C. § 902-1.2.1.1 Prohibited Unfair Claim
Settlement Practices.
1 Exception: 18 Del. Admin. C. § 902-1.2.1.2 Prohibited Unfair Claim Settlement
Practices.
The Company failed to acknowledge and respond to communications with respect to
claims by insureds within 15 working days.
Recommendation: It is recommended that the Company provide additional training to
ensure compliance with 18 Del. Admin. C. § 902-1.2.1.2 Prohibited Unfair Claim
Settlement Practices.
4 Exceptions: 18 Del. Admin. C. § 902-1.2.1.3 Prohibited Unfair Claim Settlement
Practices.
The Company failed to implement the prompt follow-up investigation of claims. In each
case noted, the original claim was acknowledged however efforts to close the claim were
delayed.
Recommendation: It is recommended that the Company provide additional training to
ensure compliance with 18 Del. Admin. C. § 902-1.2.1.3 Prohibited Unfair Claim
Settlement Practices.
7 Exceptions: 18 Del. Admin. C. § 902-1.2.1.6 Prohibited Unfair Claim Settlement
Practices.
The Company failed to effectuate a prompt, fair and equitable settlement of claims. A
variety of errors were noted during the examination process. In four of the exceptions
noted, the Company did not appropriately settle the original claim and after review by the
examiner additional funds were remitted to the policyholder. In three of the exceptions
noted, the claims processing was not considered timely.
Recommendation: It is recommended that the Company provide additional training to
ensure compliance with 18 Del. Admin. C. § 902-1.2.1.6 Prohibited Unfair Claim
Settlement Practices.
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1 Exception: 18 Del. C. § 2104 4.1 Written Notice by Insurers of Payment of Third-
Party Claims.
The Company failed to provide the third-party claimant written notice of payment at the
time such payment was made.
Recommendation: It is recommended that the Company provide additional training to
ensure compliance with 18 Del. C. § 2104 4.1 Written Notice by Insurers of Payment of
Third-Party Claims.
Closed Without Payment Claims
The Company was requested to provide a listing of all Closed Without Payment Private
Passenger Automobile claims during the examination period of January 1, 2018 through
December 31, 2019. The Company provided a universe of 716 claims closed without
payment during the examination period. Of the 716 claims, a random sampling of 105
claims wase selected according to the NAIC Market Coordinators Handbook guidelines.
Random sampling was used through ACL programming. All 105 claims were reviewed
for compliance with Delaware Statutes and Regulations, Insurance Department Bulletins
and NAIC Market Regulation Handbook Chapters 16 and 17.
No exceptions were noted.
Denied Claims
The Company was requested to provide a listing of all Denied Passenger Automobile
claims during the examination period of January 1, 2018 through December 31, 2019.
The Company provided a universe of 514 claims denied during the examination period.
Of the 514 claims, a random sampling of 105 claims was selected according to the NAIC
Market Coordinators Handbook guidelines. Random sampling was used through ACL
programming. All 105 claims were reviewed for compliance with Delaware Statutes and
Regulations, Insurance Department Bulletins and NAIC Market Regulation Handbook
Chapters 16 and 17.
No exceptions were noted.
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CONCLUSION
The recommendations made below identify corrective measures the Department finds
necessary as a result of the Exceptions noted in the Report. Location in the Report is
referenced in parenthesis.
1. It is recommended that the Company provide additional training to ensure
compliance with 18 Del. C. § 2304(17). (Consumer Complaints)
2. It is recommended that the Company provide additional training to ensure
Termination reasons are in compliance with 18 Del. C. § 3904. (Underwriting
and Rating)
3. It is recommended that the Company file their Declaration pages in compliance
with 18 Del. C. § 2712(a). (Underwriting and Rating)
4. It is recommended that the Company file and begin using Form A “Coverage
Election” in compliance with 18 Del. C. § 603-11.0. (Underwriting and Rating)
5. It is recommended that the Company provide additional training to ensure
compliance with 18 Del. Admin. C. § 902-1.2.1.1 Prohibited Unfair Claim
Settlement Practices. (Claims Handling)
6. It is recommended that the Company provide additional training to ensure
compliance with 18 Del. Admin. C. § 902-1.2.1.2 Prohibited Unfair Claim
Settlement Practices. (Claims Handling)
7. It is recommended that the Company provide additional training to ensure
compliance with 18 Del. Admin. C. § 902-1.2.1.3 Prohibited Unfair Claim
Settlement Practices. (Claims Handling)
8. It is recommended that the Company provide additional training to ensure
compliance with 18 Del. Admin. C. § 902-1.2.1.6 Prohibited Unfair Claim
Settlement Practices. (Claims Handling)
9. It is recommended that the Company provide additional training to ensure
compliance with 18 Del. C. § 2104 4.1 Written Notice by Insurers of Payment of
Third-Party Claims. (Claims Handling)
16
