1. Dave Edwards, CPCU, AIC May 3, 2018
California Department of Insurance Consumer Services Division Regulatory Overview
Dave Edwards, CPCU, AIC
May 3, 2018

2. History Created in 1868 1900s: Anti-fraud legislation
1988: Proposition 103
≈ 1400 Insurance Companies & 400,000 Producers
≈ 1400 Professionals
April 20, 2018

3. Regulatory Overview Mission Statement
We act to ensure vibrant markets where insurers keep their promises and the health and economic security of individuals, families, and businesses are protected
Operational Goals to Support Mission
Together we provide excellent, fair, and responsive service
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4. Regulatory Overview Consumer Services & Market Conduct Enforcement
Financial Surveillance
Legal
Licensing
Rate Regulation
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5. Consumer Services & Market Conduct Branch
Consumer Services Division
Market Conduct Division
Important information is shared across Divisions

6. Consumer Services Division
Consumer Communications
Claims Services
Health Claims
Rating & Underwriting Services
Our consumer services compliance officers have an average of 15 years of insurance industry experience in claims, underwriting, rating and sales.
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7. Consumer Services Division (CSD)
Protect consumers through enforcement of insurance laws and regulations
Respond to consumer inquiries and complaints
Provide education to the public on insurance issues
Analyze proposed bills
Keep abreast of insurance trends and related consumer issues
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8. Consumer Communications Bureau
First contact with CDI
Phone Lines:
(HELP)
(TDD Line)
In-Person: Public Walk-in Counter
Speak to officer of the day
Public phones in various locations throughout the state
Web site:
Contact Us (Inquiries)
Request for Assistance Forms (Complaints)
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9. Consumer Communications Bureau
Respond to phone inquiries in all lines of insurance
Help in primary spoken language (over 150 languages)
Respond to written inquiries (Web & snail mail)
Handle phone and written complaints that are time-sensitive in nature
Respond to legislative inquiries
Administer the Disaster Management Program
Administer the Mediation Program (Post Disaster)
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10. Claims Services Bureau (CSB)
CSB handles written consumer complaints regarding claim issues
Complaints cover all lines of insurance other than health
Most common complaints are delays in payment, delays in communications, amount of benefits & denials of claims
First step in disaster related claims mediation
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11. Mediation Program (Post Disaster)
Earthquake Claims
2001 – Auto Physical Damage
2004 – Residential Property (Wildfires)
EQ & Residential Triggered by Declared Disaster
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12. Mediation Program (Post Disaster)
Issues Eligible for Mediation - Generally
Scope of Loss
Mandated Building Code Upgrades
Preexisting Damage vs. Proximate Cause
ALE
Proof of Loss & Other Personal Property Issues
Underinsurance Issues
Recovery : $18,077,115 As of 12/31/2017
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13. Mediation Program (Post Disaster)
Issues Not Eligible for Mediation
Commercial Properties
Matters in Current Litigation
Legal Interpretation of Policy Provisions
Allegations of Bad Faith
Coverage Issues (cancellation, non-renewals, etc.)
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14. Health Claims Bureau (HCB)
HCB handles written health claim complaints
Common Complaints:
Claim handling delays
Low claim payments
Confusing explanations of how benefits were calculated
Denials of claims especially due to lack of medical necessity and experimental nature of treatment
HCB also administers the Independent Medical Review (IMR) Program
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15. Rating & Underwriting Services Bureau (RUSB)
RUSB is responsible for investigating all consumer rating and underwriting complaints
Rating Complaints - Cost of Insurance
Underwriting Complaints - Cancellation, non-renewal, acceptability
Sales and Servicing Complaints - Billing problems, failing to process policyholder request for changes, sales practices.
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16. Disaster Management Program
Respond to Natural and Other Disasters
Monitor Current Events
Work Closely with CalOES
Staff Local Assistance Centers (LACs)
Work Closely with Licensee CAT Teams
Work with Enforcement Branch to Protect Victims from Unscrupulous Individuals
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17. Complaint Handling Process
Step 1: Consumer contacts CDI for Assistance
Step 2: CDI Acknowledges Contact
Step 3: CDI Contacts the licensee (CRC)
Step 4: Officer Reviews & Investigates
Step 5: Brings Complaint to Conclusion
Step 6: Follow up contact to consumer & licensee if necessary
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18. Complaint Handling Process – Continued
Mediate complaint
Conduct regulatory review
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19. 2017 CSD Statistics Calls Received/In-Person Assist: 151,354
Complaint Cases Opened: 44,557
Complaint Cases Closed: 43,715
Consumer Dollars Recovered: $62,400,189
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20. Types of Complaint Reasons#
Types of Complaint Reasons
2017 1
Denial of Claim
27% 2
Claim Handling Delay
20% 3
Unsatisfactory Settlement Offer
14% 4
Premium & Rating / Misquotes 6% 5
Premium Notice / Billing Problem 3% 6
Cancellation 7
Premium Refund 8
Coverage Question 9
Agent Handling 2% 10
Premium Surcharge
 11
All Other Reasons
17%
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21. Complaints by Line of Coverage 2017
Automobile
45.58%
Accident & Health
25.01%
Homeowners
9.22%
Life & Annuity
5.64%
All Others
14.55%
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22. Complaint Handling Tips
Consumer Perspective
Set reasonable expectations & provide thorough explanation of transaction process at the onset
Respond timely
Emphasize soft skills
Regulatory Perspective
Provide complete response to the Department
Address ALL the issues raised by the consumer
Provide timely response
When in doubt, pick up the phone and talk to the compliance officer
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23. Emerging Issues/Hot Topics
Sharing Economy
Cannabis Insurance
Drones
Big Data and AI in Underwriting and Claim response.
Disaster Response – 2017 & 2018
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24. 2017 – Early 2018 Disaster Events
7117 Fires; 505,956 Acres Burned
5 out of 20 Most Destructive California Wildfires
Major Periods
October Wildfires
December Wildfires
January 2018 Mudslides
$12.33 Billion in Insured Losses (48k insurance claims filed) – October & December Wildfires
$400 Million in Insured Losses to date (2,038 claims filed – Montecito Mudslide
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25. October 2017 Wildfires
Tubbs & Pocket Fires (Napa & Sonoma) – 5,643 destroyed
Nuns Fire (Sonoma) – 1355
Atlas Fire (Napa and Solano) – 781
Redwood Valley Complex (Mendocino) – 544
Wind Complex (Yuba, Nevada and Butte)
Canyon 2 Fire (Orange)
Point Fire (Calaveras)
Sulphur (Lake)
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26. December Wildfires & Subsequent January 2018 Mudslide
6 Major Wildfires
Thomas Fire (Ventura & Santa Barbara)
Lilac Fire (San Diego)
Creek Fire (Los Angeles)
Rye Fire (Los Angeles & Ventura)
Skirball fire (Los Angeles)
Little Mountain Fire (San Bernardino)
Montecito Mudslide
April 20, 2018

27. Microsoft Engineering Excellence
End of presentation
April 20, 2018
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