1. WAMIC MEETING
March 30, 2017
Rebecca L. Rebholz Director- Market Regulation
Christina Keeley Property & Casualty Section Chief

2. Market Regulation Property and Casualty Section Answering Inquiries
Investigating Complaints
Reviewing Filings
Performing Analysis
Conducting Examinations
The Bureau of Market Regulation is responsible for the administration and enforcement of laws and rules relating to all market conduct activities of insurers and agents. We have three sections; Accident & Health, Life & Health and Property & Casualty.
P&C has 8 examiners and a chief. The work of the examiners…
Inquiries – phone/ contacts from consumers or their representatives, agents, companies
Investigating issues raised via the complaint process
Filings – most forms are file and use, but some categories, such as medical malpractice, require a full review
Analysis – Review and monitor the market conduct activities of insurers/agents doing business in Wisconsin
Examination – Market Conduct Examinations of insurers- final reports are made available online

3. Complaints Overview Types of Complaints: Complaints Process: Claims
Policyholder Service
Sales
Underwriting
Complaints Process:
Receive, Set up File, Request response, Review, Follow-Up, Conclude, Archive
The insurer is involved in the steps of Request and Follow-Up
Complaint Process: we receive the complaint/inquiry and set up a complaint file. We notify the complainant that we have received the complaint and we send a copy of the complaint to the insurance company/agent named. We request a response from the insurance company. Once that response it received, the examiner reviews the file and either requests additional information or concludes the review.

4. Complaint System Goals of the Complaint System:
Review all written requests for information or statements of dissatisfaction
Facilitate communications
Provide the consumer with a response from the company/agent and OCI
Build/maintain an information base about trending issues in the marketplace
Document potential or actual violations of Wisconsin insurance laws or regulations
The term complaint can be misleading – sometimes a person may really be making an inquiry; asking for information or an answer to a question. If the question requires information from an agent or company, we would open a complaint or refer the person to the complaint system. That is the mechanism we use to conduct any kind of review or investigation because it allows us to document the process and maintain searchable records.

5. What OCI is looking for in a Complaint Response
A response to each issue or question raised by the consumer
Even if the response is “no” or “we don’t know”
Background explanation or description
Help OCI understand the full picture
Any relevant supporting documentation
For example – if the dispute regards a notice, provide a copy of that notice
Town Mutuals do not typically have many complaints.

6. What OCI is looking for when the Complaint is regarding a claim
A description of any the company has done in an effort to reach settlement
Documentation to support the settlement offered
Compliance with the Unfair Claims Settlement Practices Rule – s. Ins (3), Wis. Adm. Code – includes:
Promptly respond to claims-related contacts
Initiate and conclude the investigation with reasonable dispatch
Provide any necessary claims forms, instructions and assistance
Etc.
OCI does not adjudicate claims, and we do not make factual or legal determinations. However, we will look at compliance with Wisconsin insurance laws and regulations. We will also look at the timeline of activity on a file to be sure that the file was being handled (not sitting on someone’s desk) even if it took time to complete the investigation.

7. What can insurers do? Give the file a full review
Reopen communications if that may be beneficial
Respond to each issue
Provide additional background information
First, review the actions taken by the company, adjuster and/or agent in light of the issues raised by the consumer.
Second, where it could be useful, reopen communications and contact the consumer to discuss
Third, respond to each issue raised by the consumer
We don’t want to put words in the company’s mouth, so let us know your position on each issue
Fourth, provide background information where appropriate
OCI sends the company all the information provided by the consumer in their original complaint. Frequently there is more to the story, and we rely on the company to fill in some of the gaps

8. Some final thoughts on Complaints
Our goal is to facilitate communication
Your response is your opportunity to help tell the whole story
Your response is provided to the consumer
You may use this opportunity to offer compromise settlements
Our authority and responsibility do not end when the consumer files an action in court
OCI strives to facilitate communication between the consumer and the company.
We will send a copy of your response to the consumer unless you provide a basis to assert confidentiality
Responding to complaints is your chance to help us develop a full picture of the facts and issues
Consider offering an adjustment to the settlement if that would be appropriate
Even if the matter has gone to the courts, it is OCI’s responsibility and authority to evaluate the file for violations of insurance laws and regulations

9. Town Mutual Complaints in 2015
Town Mutual complaints tend to be very low was a busy storm year. Storm or weather events not only increase overall complaints, but specifically tend to cause a jump in claims handling complaints.
Underwriting includes: Cancellation, Nonrenewal, Premium & Rating, Surcharges
Marketing & Sales includes: Agent handling, failure to submit an application, misappropriation of premium, misrepresentation and policy not as applied for
Claims Handling includes: Adjuster handling, Claim Delay, Claim Denial, Unsatisfactory Settlement/Offer
Policyholder Service includes: Abusive service, delays/no response, delivery of policy, payment not credited, unsatisfactory refund of premium

10. Town Mutual Complaints in 2016
2016 was a quieter weather year
complaints were very low
there were zero marketing and sales complaints

11. Applications Legal document Applications should be: Complete
Submitted Timely
Legal Document: Any change to the information on the application must be initiated by the applicant/insured.
Complete: Include all the information provided by the applicant
Signature of both the Agent of Record and the applicant
Electronic Signatures are allowed
Submit Timely:
The company needs time to do the initial underwriting

12. Application Binders Oral or written binders are allowed
s , Wis. Stats.
The company is bound by the acts of its agents
s , Wis. Stats.
Application binder section
Effective date is the same as the effective date of the policy
Expiration date is the same as the expiration date of the policy
Binders do not expire by their own terms

13. Electronic Delivery of Records
Does the insured have to have a written consent on file before electronic delivery can be made and provide an address?
Yes, the insured should have written consent and an address on file prior to electronic delivery. (s (3), Wis. Stat.)
Does the insured have to sign and return a receipt of delivery of the electronic policy?
If the policy requires verification or acknowledgement of receipt in paper format the same will be required in electronic format. (s (2) (c), Wis. Stat.
Is there a standardized receipt form (ACORD 68?) that should be used if a receipt is mandatory?
OCI does not require the use of specific form. However, any form used must comply with s and Ch. 137, Wis. Stats.

14. Terminations & Renewals: Section 631.36, Wisconsin Statutes
This part of the presentation will review terminations, non-renewals, cancellations and renewal with altered terms.

15. Termination Process Conducting a timely underwriting review
Giving proper written notice to terminate coverage
Documenting company records
Maintain record of the notification and the reason for the termination
This statute is very specific on the timeframes and what constitutes proper notice. We will get into that in more detail in just a moment.

16. Timely Underwriting Why? When?
New Policies s (2) (c), Wis. Stats.
Renewals s (4) (a), Wis. Stats.
Why? To take advantage of the cancellation and policy alteration provision of the statute.
When?
New Policies - You have the first 59 days of a new policy to underwrite and cancel if need be – s (2) (c), Wis. Stats.
Renewals - Start reviewing renewal policies at least 90 days prior to the renewal date
The policyholder has a right to have the policy renewed on the same terms and at the same premium unless a 60 day notice of non-renewal/altered terms is issued – s (4) (a), Wis. Stats.

17. Proper Notices for Termination
NEW policies in the first 59 days for underwriting reasons: 10 days prior notice to cancel – s (2) (c). Wis. Stats.
Nonpayment of premium: 10 days prior notice to cancel for – s (2) (a), Wis. Stats.
Non-renew a policy at the renewal or anniversary date: 60 days prior notice to – s (4) (a), Wis. Stats.
Important: When counting days, only count full days of coverage – do not count the day the notice is sent or the day coverage ends at 12:01 am.
Note that a non-renewal is different than a cancellation. Cancellation would occur mid-term in a policy period. Non-renewal would only occur at the renewal/expiration date of the policy.
An insurer may not refuse to renew a policy solely because of the termination of the agent’s contract unless the notice contains an offer to continue or renew the policy with the insurer if the insurer receives a written request from the policyholder prior to the cancellation or renewal date.

18. Proper Notice of Terminations
Mid-term cancellation notices and non-renewal notices must state the basis for the termination with “reasonable precision” – s (6), Wis. Stats
“Loss/claim history” or “does not meet underwriting standards” is not sufficient
For loss history – list the actual claims.
For underwriting standards – list the points of concern
Notices must contain “adequate instructions” for applying to the WIP - s (7) (a), Wis. Stats
Phone number and address
Adequate instructions – All insurers must provide the WIP’s contact information (phone and address) on almost all cancellation/nonrenewal notices (the exceptions are when cancelling within the first 59 days or cancelling for non-payment of premium. Directing an insured to contact their agent is not considered adequate. Also, be sure the contact information you provide is accurate. An incorrect address for the WIP would not be considered “adequate instructions”.

19. Documentation Retain a copy of the notice Proof of Mailing
Proof of mailing is not required, but it can be useful

20. Non-renewals
May non-renew for almost any reason as long as the reason is not unfairly discriminatory
s (4) (a), Wis. Stats.
ss. Ins. 6.54, 6.55 and 6.68, Wis. Adm. Code

21. Acceptable Non-Renewal Reasons
Claims
List each claim with a date and a brief description
Lack of Maintenance
Specify the maintenance concern
No longer writing that type of risk
Remember that the basis for the decision must be stated with reasonable precision.

22. Prohibited Termination Reasons
Termination cannot be unfairly discriminatory according to the statutes and rules – s. Ins. 6.54, 6.55 & 6.68, Wis. Adm. Code, and s (3), Wis. Stats.
Age, sex, marital status, sexual preference, “moral” character, race, color, creed.
Past criminal record (unless directly related to the risk)
Physical or developmental disability
Past mental disability
Geographic location
Age of the residential property

23. Acceptable Reasons for Mid-Term cancellation
Mid-term cancel = 10 days notice
Non-payment of premium
Material misrepresentation
Substantial change in the risk
Except to the extent that the insurer should have reasonably foreseen the change
Substantial breach of contractual duties, conditions or warranties
For a mid-term cancellation, the company will need to establish the grounds through documentation. You cannot mid-term cancel for underwriting reasons that could have been identified in the first 59 days of the policy or through any subsequent pre-renewal inspection.

24. Material Misrepresentation
Material is the key word
To be Material, you must show that the policyholder knew the representation was false and either
You relied on the misrepresentation and it is either material or made with intent to deceive or
The Fact misrepresented contributed to the loss
It is not enough to say that the policyholder or applicant provided incorrect information. You need to show that there was intent to provide incorrect information and that the company relied on the incorrect information in providing coverage, or that the incorrect information contributed to the loss in some way.

25. Substantial Change in the Risk
Need to show that the company could not have:
Reasonably foreseen the change
Contemplated the risk in writing the contract

26. Substantial Breaches
Do not affect the company’s contractual obligations unless:
The breach exists at the time of the loss and either
Increases the risk and/or
Contributes to the loss
As always – be sure to document
Failure of a condition or breach of a warranty doesn’t affect the company’s contractual obligations unless
The breach exists at the time of the loss and either
Increases the risk and/or
Contributes to the loss
Documentation is key to supporting the termination

27. The Renewal Process Annual Renewals
Altered Terms and/or Premium Increase Renewals

28. Renewals Company must either send a renewal or a non-renewal notice
Non payment of renewal premium notice:
Not less than 10 days and not more than 75 days prior to renewal/expiration date
Clearly state the effect of nonpayment of premium by the due date
s (4) (a), Wis. Stats
If you are going to send out a renewal survey, you may want to do so well before the expiration date so that you can make an informed decision on the underwriting.

29. Renewal with Altered Terms
60 day prior notice is required if
The insurer offers to renew the policy but on less favorable terms or at higher premiums
s (5), Wis. Stats.
Exception:
If the only premium changing AND
Increase less than 25% and generally applicable to the class of business, and/or
Increase results from action by the insured that alters the nature of the risk
Less favorable terms can be an increase in premium, but it can also be a decrease in coverage and/or an increased deductible. If the only change is that the premium will increase by less than 25%, no altered terms notice is needed. If the company runs a new credit report and the numbers have changed so as to effect the premium charged, that would not fall under the exception. Installing a pool would fall under the exception.

30. Altered Terms/Premium Increase Notice
Timing
Notice must be sent before the renewal date
s (5) (a), Wis. Stats.
Wording
If sent at least 60 days prior to renewal
State the specific, less favorable, terms
If sent within 60 days of the renewal
Insured has 60 days to accept or cancel
New terms/rates are not effective until 60 days after the notice
See OCI Bulletin dated June 2008 – if an insurer offers to renew a policy on less favorable terms, and the notice goes out within 60 days of the renewal date, the insurer must inform the insured that the new terms do not become effective until 60 days after the notice and that the insured has the same 60 day period to cancel the policy if they choose to. Failure to comply means that the notice is not effective and the insurer must continue the old policy terms for an additional policy period.

31. If the Notice was not Effective
Reinstate the policy without a lapse
Pay a claim (that is otherwise payable)
Reinstate terms of the prior policy
Review of similar notices maybe be initiated by OCI
Review of file for regulatory action may occur
Order
Forfeiture