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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

MARKEL INSURANCE COMPANY NAIC # 38970 CDI # 3601-2

MARKEL AMERICAN INSURANCE COMPANY NAIC # 28932 CDI # 3614-5

AS OF OCTOBER 31, 2017

ADOPTED AUGUST 7, 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 ................................................................ 7

SUMMARY OF EXAMINATION RESULTS .................................................................. 15

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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).

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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:

Markel Insurance Company NAIC # 38970

Markel American Insurance Company

NAIC # 28932

Group NAIC # 0785

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

MIC, MAIC, or the Company, and collectively as the Companies.

This examination covered the claim handling practices of the aforementioned

Companies on Private Passenger Auto, Commercial Auto, Homeowners and

Commercial Multiple Peril claims closed during the period from November 1, 2016

through October 31, 2017. 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

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.

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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 November 1, 2016 through October 31,

2017, 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 California Department of Insurance in Los Angeles, San Francisco, and

Sacramento, California.

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EXECUTIVE SUMMARY

The Private Passenger Auto, Commercial Auto, Homeowners and Commercial

Multiple Peril claims reviewed were closed from November 1, 2016 through October 31,

2017, referred to as the “review period”. The examiners randomly selected 155 MIC

claim files and 177 MAIC claim files for examination. The examiners cited 198 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 the failure to include the license fee and

other annual fees in total loss settlements; failure to ask about or reimburse the cost of

car seats in the vehicle at the time of a covered loss, and failure to pay sales tax on

homeowner claim settlements.

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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:

MAIC SAMPLE FILES REVIEW

LINE OF BUSINESS / CATEGORY CLAIMS IN

REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS

Private Passenger Auto / Collision 75 27 17

Private Passenger Auto / Collision Total Loss 24 6 11

Private Passenger Auto / Comprehensive 16 6 8

Private Passenger Auto / Comprehensive Total Loss

8 2 3

Private Passenger Auto / Property Damage 72 34 11

Private Passenger Auto / Bodily Injury 5 2 2

Private Passenger Auto / Uninsured / Underinsured Motorist Bodily Injury

8 7 1

Private Passenger Auto / Medical Payment 5 5 0

Homeowners / Liability 52 28 7

Homeowners / First Party Property / HO4 Renters

195 58 81

Commercial Multiple Peril / First Party Property

1 1 0

Commercial Multiple Peril / Liability 1 1 0

TOTALS 462 177 141

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MIC SAMPLE FILES REVIEW

LINE OF BUSINESS / CATEGORY CLAIMS IN

REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS

Commercial Auto / Collision 98 34 30

Commercial Auto / Collision Total Loss 5 2 1

Commercial Auto / Comprehensive 20 7 4

Commercial Auto / Comprehensive Total Loss 4 1 2

Commercial Auto / Property Damage 99 34 14

Commercial Auto / Bodily Injury 30 11 0

Commercial Auto / Uninsured / Underinsured Motorist Bodily Injury

4 4 2

Commercial Auto / Medical Payment 7 6 0

Commercial Multiple Peril / First Party Property

167 26 2

Commercial Multiple Peril / Liability 189 30 2

TOTALS 623 155 57

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TABLE OF TOTAL ALLEGED VIOLATIONS

Citation Description of Allegation

MAIC Number of

Alleged Violations

MIC Number of

Alleged Violations

CIC §1879.2(a) *[CIC §790.03(h)(3)]

The Company failed to include the California fraud warning on insurance forms related to first-party claimants.

52 2

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.

11 2

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

The Company failed to include, in the settlement, the license fee and other annual fees computed based upon the remaining term of the current registration, or The Company failed to include, in the settlement, all applicable taxes, or The Company failed to include, in the settlement, the one-time fees incident to transfer of evidence of ownership of a comparable automobile.

4 8

CCR §2695.7(d) *[CIC §790.03(h)(3)]

The Company failed to conduct and diligently pursue a thorough, fair and objective investigation, or The Company persisted in seeking information not reasonably required for or material to the resolution of a claims dispute.

9 1

CIC §790.034(b)(1) *[CIC §790.03(h)(3)]

The Company failed, upon receiving notice of claim, to provide the insured with a copy of §790.03 of the California Insurance Code within 15 calendar days.

9 0

CCR §2695.7(g) *[CIC §790.03(h)(5)]

The Company attempted to settle a claim by making a settlement offer that was unreasonably low.

8 1

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

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.

2 6

CCR §2632.13(e)(1) *[CIC §790.03(h)(3)]

The Company failed to properly advise the insured that the driver of the insured vehicle was principally at-fault for an accident.

7 0

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Citation Description of Allegation

MAIC Number of

Alleged Violations

MIC 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.

6 1

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.

4 3

CCR §2695.7(p) *[CIC §790.03(h)(3)]

The Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation.

4 2

CCR §2695.4(a) *[CIC §790.03(h)(1)]

The Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy.

2 3

CCR §2695.5(b) *[CIC §790.03(h)(2)]

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

4 1

CCR §2695.8(b)(4) *[CIC §790.03(h)(3)]

The Company failed to explain in writing the determination of the cost of a comparable vehicle at the time the settlement offer was made. Determination of the actual cash value (ACV) was not explained, or The Company failed to fully itemize in writing the determination of the cost of a comparable vehicle at the time the settlement offer was made. Itemization of all components of the settlement was not provided.

1 4

CCR §2695.85(c) *[CIC §790.03(h)(3)]

The Company failed to provide the insured with the Auto Body Repair Consumer Bill of Rights as a separate standardized document.

1 4

CCR §2695.8(g)(5) *[CIC §790.03(h)(3)]

The Company required the use of non-original equipment manufacturer replacement crash parts without the use of such parts disclosed in accordance with §9875.1 of the California Business and Professions Code.

0 4

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.

2 1

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Citation Description of Allegation

MAIC Number of

Alleged Violations

MIC Number of

Alleged Violations

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, or 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.

0 3

CCR §2695.8(g)(3) *[CIC §790.03(h)(3)]

The Company required the use of non-original equipment manufacturer replacement crash parts and failed to disclose in writing, in any estimate prepared by or for the insurer, the fact that it warrants such parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance.

0 3

CIC §790.03(h)(1) The Company misrepresented to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.

2 0

CIC §1871.3(b) *[CIC §790.03(h)(3)]

The Company failed to properly instruct the insured regarding the signing of the theft affidavit.

2 0

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.

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.

2 0

CCR §2695.7(f) *[CIC §790.03(h)(3)]

The Company failed to provide written notice of any statute of limitation or other time period requirement upon which the insurer may rely to deny a claim.

2 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.

1 1

CCR §2695.9(f) *[CIC §790.03(h)(3)]

The Company failed to document in the claim file all justification for the adjustment of the amount claimed because of betterment, depreciation, or salvage. Any adjustment for betterment or depreciation shall reflect a measurable difference in market value attributable to the condition and age of the property, or The Company failed to fully explain the basis for any adjustment to the claimant in writing.

2 0

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Citation Description of Allegation

MAIC Number of

Alleged Violations

MIC Number of

Alleged Violations

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

1 0

CIC §1874.6 *[CIC §790.03(h)(3)]

The Company failed to report an automobile theft and salvage total loss to the National Automobile Theft Bureau.

1 0

CCR §2695.5(c) *[CIC §790.03(h)(3)]

The Company failed to appoint a person properly designated by law to handle the claim on behalf of the insured.

1 0

CCR §2695.5(d) *[CIC §790.03(h)(3)]

The Company’s claims agent failed to immediately transmit notice of claim to the insurer.

1 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 1

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 1

CCR §2695.7(q) *[CIC §790.03(h)(3)]

The Company failed to include the insured’s deductible in the subrogation demand.

0 1

CCR §2695.8(b)(2) *[CIC §790.03(h)(5)]

The Company failed to fairly adjust for any differences between the comparable automobile and the insured vehicle. The actual cost of a comparable automobile shall not include any deduction for the condition of a loss vehicle unless the documented condition of the loss vehicle is below average for that particular year, make and model of vehicle.

0 1

CCR §2695.8(i) *[CIC §790.03(h)(3)]

The Company failed to document the basis of betterment or depreciation.

1 0

Total Number of Alleged Violations 144 54

*DESCRIPTIONS OF APPLICABLE UNFAIR CLAIMS SETTLEMENT PRACTICES

CIC §790.03(h)(1) The Company misrepresented to claimants pertinent facts or insurance policy provisions relating to any coverages at issue.

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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

MAIC 2016 Written Premium: $966,143 AMOUNT OF RECOVERIES $468.41

NUMBER OF ALLEGED VIOLATIONS

CIC §1879.2(a) [CIC §790.03(h)(3)] 11

CCR §2632.13(e)(1) [CIC §790.03(h)(3)] 7

CCR §2695.5(b) [CIC §790.03(h)(2)] 4

CCR §2695.7(d) [CIC §790.03(h)(3)] 4

CCR §2695.7(p) [CIC §790.03(h)(3)] 4

CCR §2695.8(b)(1) [CIC §790.03(h)(5)] 4

CCR §2695.8(c) [CIC §790.03(h)(3)] 4

CIC §1871.3(b) [CIC §790.03(h)(3)] 2

CIC §11580.011(e) [CIC §790.03(h)(3)] 2

CCR §2695.3(a) [CIC §790.03(h)(3)] 2

CIC §790.03(h)(5) 1

CIC §1874.6 [CIC §790.03(h)(3)] 1

CCR §2695.7(b) [CIC §790.03(h)(4)] 1

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

CCR §2695.7(g) [CIC §790.03(h)(5)] 1

CCR §2695.8(b)(4) [CIC §790.03(h)(3)] 1

CCR §2695.85(c) [CIC §790.03(h)(3)] 1

CCR §2695.8(f) [CIC §790.03(h)(3)] 1

CCR §2695.8(i) [CIC §790.03(h)(3)] 1

SUBTOTAL 53

COMMERCIAL AUTO

MIC 2016 Written Premium: $4,485,492

AMOUNT OF RECOVERIES $9,891.10

NUMBER OF ALLEGED VIOLATIONS

CCR §2695.8(b)(1) [CIC §790.03(h)(5)] 8

CIC §11580.011(e) [CIC §790.03(h)(3)] 6

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CCR §2695.85(c) [CIC §790.03(h)(3)] 4

CCR §2695.8(b)(4) [CIC §790.03(h)(3)] 4

CCR §2695.8(g)(5) [CIC §790.03(h)(3)] 4

CCR §2695.4(a) [CIC §790.03(h)(1)] 3

CCR §2695.8(b)(1)(A) [CIC §790.03(h)(5)] 3

CCR §2695.8(c) [CIC §790.03(h)(3)] 3

CCR §2695.8(g)(3) [CIC §790.03(h)(3)] 3

CIC §1879.2(a) [CIC §790.03(h)(3)] 2

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

CCR §2695.7(p) [CIC §790.03(h)(3)] 2

CIC §790.03(h)(3) 1

CCR §2695.5(b) [CIC §790.03(h)(2)] 1

CCR §2695.7(d) [CIC §790.03(h)(3)] 1

CCR §2695.7(f) [CIC §790.03(h)(3)] 1

CCR §2695.7(g) [CIC §790.03(h)(5)] 1

CCR §2695.7(h) [CIC §790.03(h)(5)] 1

CCR §2695.7(q) [CIC §790.03(h)(3)] 1

CCR §2695.8(b)(2) [CIC §790.03(h)(5)] 1

CCR §2695.8(f) [CIC §790.03(h)(3)] 1

SUBTOTAL 53

HOMEOWNERS

MAIC 2016 Written Premium: $2,493,212 AMOUNT OF RECOVERIES $356.35

NUMBER OF ALLEGED VIOLATIONS

CIC §1879.2(a) [CIC §790.03(h)(3)] 41

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 11

CIC §790.034(b)(1) [CIC §790.03(h)(3)] 9

CCR §2695.7(g) [CIC §790.03(h)(5)] 7

CCR §2695.7(b)(3) [CIC §790.03(h)(3)] 5

CCR §2695.7(d) [CIC §790.03(h)(3)] 5

CIC §790.03(h)(1) 2

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CIC §790.03(h)(3) 2

CCR §2695.4(a) [CIC §790.03(h)(1)] 2

CCR §2695.9(f) [CIC §790.03(h)(3)] 2

CCR §2695.5(c) [CIC §790.03(h)(3)] 1

CCR §2695.7(b) [CIC §790.03(h)(4)] 1

SUBTOTAL 88

COMMERCIAL MULTIPLE PERIL MAIC 2016 Written Premium: $627,084

MIC 2016 Written Premium: $11,715,475 AMOUNT OF RECOVERIES $0

NUMBER OF ALLEGED VIOLATIONS

CCR §2695.5(d) [CIC §790.03(h)(3)] 1

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

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

CCR §2695.7(f) [CIC §790.03(h)(3)] 1

SUBTOTAL 4

TOTAL 198

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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 $10,715.86 as described in

section numbers 6, 11, 13, 17, 24, 25, 26, 32, 33, 34, and 39 below. Pursuant to the

findings of the examination as described in section numbers 6, 9, 16, 17, 24, 25, 26, 30

and 39 below, the Companies are conducting a closed claims survey. The results of the

survey and additional payments, if any, shall be reported to the Department by end of

3rd Quarter 2018.

PRIVATE PASSENGER AUTO 1. In 11 instances, the Company failed to include the California fraud warning on insurance forms related to first-party claimants. Specifically, the warning was not included on the Cycle Apparel/Parts Accessories Inventory form. The Department alleges these acts are in violation of CIC §1879.2(a) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations and has notified the independent adjusting firm used to update the Cycle Apparel/Parts Accessories Inventory form to include the applicable fraud language. The form was updated on January 19, 2018 and a copy was provided to the Department on February 6, 2018. In addition, a meeting was held with claims management and staff on April 6, 2018 to emphasize use of the updated forms pursuant to the regulatory requirement.

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2. In seven instances, the Company failed to properly advise the insured that the driver of the insured vehicle was principally at-fault for an accident. These instances involved the failure to send the determination of fault notice. The Department alleges these acts are in violation of CCR §2632.13(e)(1) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations that an at-fault letter was not sent to the insured in these instances. As a result of the examination, letters were issued to the insured. In addition, a meeting was held with claims management on April 6, 2018 to emphasize sending the at-fault letter pursuant to the regulatory requirement.

3. In four instances, the Company failed to respond to communications within 15 calendar days. The Company did not respond within 15 calendar days to the insured attorney’s request for a copy of the declaration page and for a copy of the policy; the claimant attorney’s request for a copy of the declaration page and an attorney’s demand letter. The Department alleges these acts are in violation of CCR §2695.5(b) and are unfair practices under CIC §790.03(h)(2).

Summary of the Company’s Response: The Company agrees that in these instances it failed to respond to the requested information within 15 calendar days. As a result of the examination, a meeting was held with claims management and staff on April 6, 2018 to emphasize timely response to communications pursuant to the regulatory requirement.

4. In four instances, the Company failed to comply with the requirements of CCR §2695.7(d).

(a) In three instances, the Company failed to conduct and diligently pursue a thorough, fair and objective investigation. In one instance, there was a 98-day delay in claim handling between the e-mail requesting an independent adjuster assignment to receiving the appraisal. In another instance the adjuster relied on the insured to order the police report. In one instance, the insured had claimant information but the company did not investigate with the information. 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 to 4(a): The Company agrees with the

alleged violations and, in the first instance, the Company counseled the independent adjuster, instructing to keep a short diary on initial assignments and to seek acknowledgements from appraisal companies with whom they associate. In the second instance, the staff and independent adjusters were advised not to rely on the insured as the means to obtain the report. In the last instance, the Company agreed the statement of loss from the insured had included the claimant’s contact information and there was

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no indication in the file of an investigation. The Company has reopened the file and a call was made to the claimant with no response.

(b) In one instance, the Company persisted in seeking information not reasonably required for or material to the resolution of a claims dispute. The company requested the insured to provide a police report as part of their investigation, when in fact the police report was already in the file. The Department alleges this act is in violation of CCR §2695.7(d) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response to 4(b): The Company agrees with the

alleged violation that the independent adjuster inadvertently requested the insured to provide a police report when the Company had possession of the report. The Company has consulted with staff and adjusters to not ask insured’s for assistance in securing police reports.

5. In four instances, the Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. The Company failed to notify the insured of its intent to subrogate in writing. The Department alleges these acts are in violation of CCR §2695.7(p) 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 counseled the subrogation vendor on proper California requirements regarding subrogation. In addition, a meeting was held with claims management on April 6, 2018 to emphasize sending the subrogation intent letter pursuant to the regulatory requirement.

6. In four instances, the Company failed to include, in the settlement, the license fee and other annual fees computed based upon the remaining term of the registration. The Department alleges these acts are in violation of CCR §2695.8(b)(1) and are unfair practices under CIC §790.03(h)(5). Summary of the Company’s Response: The Company agrees with the alleged violations and counseled their adjusters to utilize the DMV Fee Calculator website for determination of fees owed and unused registration. As a result of the examination, a total of $203.41 was issued to claimants. In addition, the Company is conducting a self-review of license fees and other annual fees covering the time period of November 1, 2013 to October 31, 2017. Results of the survey will be provided to the Department by end of 3rd Quarter 2018. 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. The

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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 and as a result of the examination added the language to their total loss pay letter templates as of January 9, 2018. A copy of the letter was provided to the Department.

8. In two instances, the Company failed to properly instruct the insured regarding the signing of the theft affidavit. In these instances, the insured was not informed that, in lieu of notarization, the form could be signed in the presence of the insurance agent, broker, adjuster, or other claims representative. The Department alleges these acts are in violation of CIC §1871.3(b) 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 revised their current process for obtaining a notarized Theft Affidavit. A cover letter was added to the theft affidavit containing a Notice advising the insured of their option of having their signature notarized by a Notary or; in lieu of a Notary, the Claimant may contact the Company for availability of an appropriate person (agent, broker or adjuster) that can witness their signature upon presentation of their driver’s license. The Notice also includes language advising the insured the Company will reimburse them for the Notary fee. The new process became effective on January 17, 2018. A copy of the revised cover letter was provided to the Department.

9. In two 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. The Department alleges these acts are in violation of CIC §11580.011(e) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations that they failed to ask if a car seat was in use or in the vehicle at the time of a loss in these instances. As a result of the examination, the insureds have been contacted regarding any claims for the car seats. In addition, the Company is conducting a self-review of claims covering the period of November 1, 2013 to October 31, 2017 for replacement of a car seat in the vehicle at the time of a loss. The results of the survey will be reported to the Department by end of 3rd Quarter 2018. In addition, a meeting was held with claims management and staff on April 6, 2018 to emphasize inquiring regarding the presence of a car seat involved in a covered loss pursuant to the regulatory requirement.

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 one instance, the

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attorney submitted a new appraisal of the motorcycle and asked for this to be reviewed/re-evaluated; however, there is no documentation in the file that the company responded. In another instance, the origin of the salvage bid was not documented 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 the claim file did not include all documents, notes and work papers pertinent to the claim file in these instances. As a result of the examination, the adjusters were counseled. In addition, a meeting was held with claims management and staff on April 6, 2018 regarding the finding of the examination and remedial action to ensure future proper file documentation.

11. In one instance, the Company failed to effectuate prompt, fair and equitable settlements of claims in which liability had become reasonably clear. The insured was not offered to be reimbursed for use of notary when filing a loss report. The Department alleges this act is in violation of CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violation and as a result of the examination, reimbursed the amount of $15.00 to the insured for the Notary Fee. Going forward, the Company will continue to reimburse its insureds for the amount of a Notary Fee they are charged for notarization of claim form(s). When the Company is unable to determine the amount charged to an insured, the maximum charge allowable by a Notary under CA Government Code §8211 will be paid.

12. In one instance, the Company failed to report an automobile theft and salvage total loss to the National Automobile Theft Bureau (NATB). The Department alleges this act is in violation of CIC §1874.6 and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that the total loss was not reported to the NATB. As a result of the examination, the Company counseled the transportation claim handlers to comply with the requirements and document the respective report in the claim file.

13. In one instance, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. The Company incorrectly applied a deductible on a diminished deductible policy. The Department alleges this act is in violation of CCR §2695.7(g) and is an unfair practice under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violation that the deductible was incorrectly applied in this instance. As a result of the examination, the deductible amount of $250.00 was paid to the insured. In

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addition, a meeting was held with claims management and staff on April 6, 2018 to emphasize proper settlement procedure pursuant to the regulatory requirement.

14. In one instance, the Company failed to provide the insured with the Auto Body Repair Consumer Bill of Rights (ABRCBR) as a separate standardized document. The ABRCBR did not contain item #6 of the standardized document, which states:

6. SEEK AND OBTAIN AN INDEPENDENT REPAIR ESTIMATE DIRECTLY FROM A REGISTERED AUTO BODY REPAIR SHOP FOR REPAIR OF A DAMAGED VEHICLE, EVEN WHEN PURSUING AN INSURANCE CLAIM FOR REPAIR OF THE VEHICLE.

The Department alleges this act is in violation of CCR §2695.85(c) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation and informed the appraisal company of the error on the estimate. In addition, the Company is sending the ABRCBR with the issuance of all New and Renewal policies. A revised copy of the form issued by the Company was provided to the Department on March 19, 2018.

15. The Companies failed to comply with the Fair Claims Regulations Practices. In each single instance (for a total of five instances), the Company failed to comply with the following Fair Claims Regulations Practices: a) CCR §2695.7(b) for failure to accept or deny the claim within 40 calendar days; b) CCR §2695.7(b)(3) for failure to include a statement in its claim denial that the matter may be reviewed by the California Department of Insurance; c) CCR §2695.8(b)(4) for failure to explain the determination of the actual cash value to the claimant; d) CCR §2695.8(f) for failure to send a written copy of the estimate to the claimant; e) CCR §2695.8(i) for failure to document the basis of betterment taken.

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

Practices and are unfair practices under CIC §790.03(h)(3) and CIC §790.03(h)(4). Summary of the Company Response: The Company agrees with the alleged

violations and as a result of the examination, a) the adjuster involved was counseled on accepting or denying the claim within 40 calendar days; b) the adjuster was reminded to include the required language for future compliance; c) the adjuster was reminded to provide a copy of the Valuation Report on total losses to the claimant; d) the appraiser was reminded to document when the estimate is sent to the claimant; and e) the adjuster involved was counseled to document the rationale for depreciation taken. In addition, a meeting was held with claims management and staff on April 6, 2018 regarding the findings of the examination and remedial actions to ensure future compliance.

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COMMERCIAL AUTO 16. In six 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. The Department alleges these acts are in violation of CIC §11580.011(e) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations that they failed to ask if a car seat was in use or in the vehicle at the time of a loss in these instances. An outdated form with incorrect code language was being sent to claimants. A copy of the revised form was provided to the Department on February 20, 2018. As a result of the examination, the claimants were contacted regarding any claims for a car seat. In addition, the Company is conducting a self-review of claims covering the period of November 1, 2013 to October 31, 2017 for replacement of a car seat in the vehicle at the time of a loss. Results of the survey will be reported to the Department by end of 3rd Quarter 2018. In addition, a meeting was held with claims management and staff on April 6, 2018 to emphasize inquiring regarding the presence of a car seat involved in a covered loss pursuant to the regulatory requirement. 17. In four instances, the Company failed to include, in the settlement, the license fee and other annual fees computed based upon the remaining term of the registration. The Department alleges these acts are in violation of CCR §2695.8(b)(1) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violations and has counseled their adjusters to utilize the DMV Fee Calculator website for determination of fees owed and unused registration. As a result of the examination, a total of $129.33 has been issued to claimants. In addition, the Company is conducting a self-review of license fees and other annual fees covering the time period of November 1, 2013 to October 31, 2017. Results of the survey will be provided to the Department by end of 3rd Quarter 2018.

18. In four instances, the Company failed to explain in writing the determination of the cost of a comparable vehicle at the time the settlement offer was made. Determination of the actual cash value (ACV) was not explained. The ACV report was not provided to the insured. The Department alleges these acts are in violation of CCR §2695.8(b)(4) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations that the determination of the cost of a comparable vehicle was not provided in writing to the insured. The Company states that it is their practice to provide a copy of the Valuation Report with their pay letters extending the offer, however acknowledge that the file does not reflect that such was done in these instances. As a

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result of the examination, the insured was provided with the valuation report and its staff was reminded that such information should be provided.

19. In four instances, the Company failed to provide the insured with the Auto Body Repair Consumer Bill of Rights (ABRCBR) as a separate standardized document. The ABRCBR did not contain item #6 of the standardized document, which states:

6. SEEK AND OBTAIN AN INDEPENDENT REPAIR ESTIMATE DIRECTLY FROM A REGISTERED AUTO BODY REPAIR SHOP FOR REPAIR OF A DAMAGED VEHICLE, EVEN WHEN PURSUING AN INSURANCE CLAIM FOR REPAIR OF THE VEHICLE.

The Department alleges these acts are in violation of CCR §2695.85(c) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that the ABRCBR sent to the insured in these instances did not include item #6 of the standard language. Going forward, a revised copy of the form is being sent with the issuance of the policy for all Commercial Auto Policies. The Company provided a copy of the revised form to the Department on March 19, 2018.

20. In three instances, the Company required the use of non-original equipment manufacturer (OEM) replacement crash parts without the use of such parts disclosed in accordance with §9875.1 of the California Business and Professions Code. The Department alleges these acts are in violation of CCR §2695.8(g)(5) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that the proper disclosure language was not used on estimates requiring non-OEM parts. As a result of the examination, the Company has revised its Appraisal assignment form to include a reminder to the engaged independent appraisers that language compliant with Section 9875.1 of the California Business and Professions Code needs to be included on the prepared estimates.

21. In three instances, the Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy. The file notes do not reflect the rental reimbursement coverage was explained to the insured. The Department alleges these acts are in violation of CCR §2695.4(a) and are unfair practices under CIC §790.03(h)(1).

Summary of the Company’s Response: The Company agrees with the alleged violation and as a result of the examination will include an item on their California claim handling checklist to offer the insured rental reimbursement if available. In addition, the adjusters were reminded in a January 2018 meeting of this regulatory requirement to ensure future compliance.

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22. In three 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. 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 and as a result of the examination added the language to their total loss pay letter templates as of January 9, 2018. A copy of the letter was provided to the Department.

23. In three instances, the Company required the use of non-original equipment manufacturer replacement crash parts and failed to disclose in writing, in any estimate prepared by or for the insurer, the fact that it warrants such parts are at least equal to the original equipment manufacturer (OEM) parts in terms of kind, quality, safety, fit, and performance. The Department alleges these acts are in violation of CCR §2695.8(g)(3) 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 warrant the use of OEM parts in writing. As a result of the examination, the Company provided its independent adjusting firms with instructions to use the required language on the estimating template. In addition, a meeting was held with claims management and staff on April 6, 2018 to emphasize providing the required disclosure in writing pursuant to the regulatory requirement.

24. In two instances, the Company failed to include, in the settlement, all applicable taxes. The Department alleges these acts are in violation of CCR §2695.8(b)(1) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violations that applicable sales taxes were not paid on total loss settlements in these instances. In one instance, $7,526.13 was issued to the insured after being withheld due to undocumented proof of tax-exempt status. In another instance, tax was left unpaid. As a result of the examination, the Company is conducting a self-review of taxes and fees covering the time period of November 1, 2013 to October 31, 2017. Results of the survey will be provided to the Department by end of 3rd Quarter 2018. 25. In two instances, the Company failed to include, in the settlement, the one-time fees incident to transfer of evidence of ownership of a comparable vehicle. The Department alleges these acts are in violation of CCR §2695.8(b)(1) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the

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alleged violations that applicable one-time fees were not paid on total loss settlements in these instances. As a result of the examination, $22.00 was issued to claimants. In addition, the Company is conducting a self-review of one-time fees covering the time period of November 1, 2013 to October 31, 2017. Results of the survey will be provided to the Department by end of 3rd Quarter 2018. 26. In two instances, the Company failed to include, in the settlement, fees incident to the transfer of the vehicle to salvage status. The Department alleges these acts are in violation of CCR §2695.8(b)(1)(A) and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violations that the Salvage Certificate Fee was underpaid or left unpaid in these instances. As a result of the examination, $2.00 was issued to claimants. In addition, the Company is conducting a self-review of Salvage Certificate fees covering the time period of November 1, 2013 to October 31, 2017. Results of the survey will be provided to the Department by end of 3rd Quarter 2018.

27. In three instances, the Company failed to include the California fraud warning on insurance forms related to first-party claimants. In one instance the Bill of Sale and Power of Attorney claim form included the incorrect fraud warning. In another instance, the ACORD form (version 2001/003) did not have the correct fraud warning. The Department alleges these acts are in violation of CIC §1879.2(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 the proper fraud warning was not included on claim forms. In the first instance, the form was updated with the corrected language as of January 9, 2018. A copy of the revised form was provided to the Department on January 31, 2018. In the second instance the Company has instructed all examiners to use the current updated version of the ACORD form and discontinue use of the older form. Copies of the updated form were provided to the Department on February 14, 2018.

28. In two instances, the Company failed to provide written notice of the need for additional time or information every 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 violations that they did not provide written claim status notices every 30 days to the insured in these instances. A meeting was held with claims management and staff on April 6, 2018 reiterating their procedures for sending status notices pursuant to the regulatory requirement.

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29. In two instances, the Company failed to provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation. The Department alleges these acts are in violation of CCR §2695.7(p) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations that the required notice was not sent in these instances. Subrogation is outsourced to a TPA, however; the task of sending the letter has been internalized to ensure future compliance. A meeting was held with claims management and staff on April 6, 2018 reiterating their subrogation procedures pursuant to the regulatory requirement. 30. In one instance, 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. 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 Company’s Response: The Company agrees with the alleged violation that the tax was left unpaid in the owner retain total loss settlement. As a result of the examination, the Company is conducting a self-review of taxes on total loss claims covering the time period of November 1, 2013 to October 31, 2017. Results of the survey will be provided to the Department by end of 3rd Quarter 2018.

31. In one instance, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies. The Company did not offer to pay loss of use to the claimant in this instance. The Department alleges this act is in violation of CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that the claimant was not advised of rental coverage available following the loss of use of his vehicle. As a result of the examination, the Company sent an e-mail to the claimant on February 16, 2018 advising of the coverage available if a claim is pursued.

32. In one instance, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. The Company applied a $1,000.00 deductible to the total loss settlement, however based on the policy change documents, the deductible was $500.00. The Department alleges this act is in violation of CCR §2695.7(g) and is an unfair practice under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violation that the claim was underpaid. As a result of the examination a payment in the amount of $500.00 was issued to the insured. In addition, the involved adjuster was counseled.

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33. In one instance, the Company failed to include the insured’s deductible in the subrogation demand. The Company did not share the subrogation recovery of the insured’s deductible in this instance. The Department alleges this act is in violation of CCR §2695.7(q) and is an unfair practice under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that it failed to reimburse the insured’s deductible. As a result of the examination a payment in the amount of $1,000.00 was issued to the insured. In addition, the involved adjuster was counseled.

34. In one instance, the Company failed to fairly adjust for any differences between the comparable automobile and the insured vehicle. The actual cost of a comparable automobile shall not include any deduction for the condition of a loss vehicle unless the documented condition of the loss vehicle is below average for that particular year, make and model of vehicle. The Company applied a dollar-for-dollar deduction for prior and/or unrelated automobile damage in the total loss settlement. The Department alleges this act is in violation of CCR §2695.8(b)(2) and is an unfair practice under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company agrees with the alleged violation that the unrelated prior damage was adjusted incorrectly and as a result of the examination issued payment in the amount of $711.64 to the insured. A meeting was held with claims management and staff on April 6, 2018 reiterating their total loss settlement procedures pursuant to the regulatory requirement.

35. The Companies failed to comply with the Fair Claims Regulations Practices. In each single instance (for a total of five instances), the Company 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(d) for failure to pursue a thorough investigation; c) CCR §2695.7(f) for failure to provide notice of statute of limitation; d) CCR §2695.7(h) for failure to pay within 30 days; e) CCR §2695.8(f) for failure to supply a copy of the repair estimate to the claimant.

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

Practices and are unfair practices under CIC §790.03(h)(2) and CIC §790.03(h)(3). Summary of the Company Response: The Company agrees with the alleged

violations and as a result of the examination, a) the adjusters and management were counseled to meet communication timelines; b) the adjusters were counseled and are required to diary first party auto claims every 30 days to ensure compliance; c) the adjuster was counseled and a statute letter was sent to the claimant. In addition, a meeting was held with claims management and staff on April 6, 2018 regarding the findings of the examination and remedial actions to ensure future compliance.

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HOMEOWNERS 36. In 41 instances, the Company failed to include the California fraud warning on insurance forms related to first-party claimants. The Department alleges these acts are in violation of CIC §1879.2(a) and are unfair practices under CIC §790.03(h)(3). In these instances, either the Personal Property Theft Affidavit, Statement of Loss or Personal Property Inventory forms included the incorrect fraud warning.

Summary of the Company’s Response: The Company agrees with the alleged violations that the claim forms did not include the correct fraud warning. As a result of the examination the forms have been updated to reflect the correct fraud language. Copies of the revised forms were provided to the Department on January 31, 2018. In addition, a meeting was held with claims management and staff on April 6, 2018 to review the use of revised forms and notices pursuant to the regulatory requirement.

37. In 11 instances, the Company failed to provide written notice of the need for additional time or information every 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 violations that status letters were not sent in these instances. A meeting was held with claims management and staff on April 6, 2018 reiterating their procedures for sending status notices pursuant to the regulatory requirement.

38. In nine instances, the Company failed, upon receiving notice of claim, to provide the insured with a copy of §790.03 of the California Insurance Code within 15 calendar days. The Department alleges these acts are in violation of CIC §790.034(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 that CIC Section 790.03 was not sent to the insured in these instances. As a result of the examination, a meeting was held with claims management and staff on February 15, 2018 reiterating the requirement to send the required notice pursuant to the regulatory requirement.

39. In seven instances, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. In four instances, tax was not included in the settlement. In three instances, the claim was underpaid. The Department alleges these acts are in violation of CCR §2695.7(g) and are unfair practices under CIC §790.03(h)(5).

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Summary of the Company’s Response: The Company agrees with the alleged violations that claims were inadvertently underpaid or tax was not paid as is their practice on contents claims. As a result of the examination, payment in the amount of $356.35 was issued to claimants. In addition, the Company is conducting a self-review of contents claims closed during the review period November 1, 2013 to October 31, 2017 for payment of taxes. Results of the review will be reported to the Department by end of 3rd Quarter 2018.

40. In five 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. 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 that the required language was not included on denial letters in these instances. As a result of the examination, an updated denial letter was sent in these instances including the required language. In addition, a meeting was held with claims management and staff on April 6, 2018 reiterating the requirement to include the required language on denial letters pursuant to the regulatory requirement.

41. In five instances, the Company failed to conduct and diligently pursue a thorough, fair and objective investigation. In two instances, the investigation was incomplete. In one instance, the insured was not contacted consistently to bring the claim to resolution. In one instance, a returned denial letter was not re-sent via e-mail. In one instance, the Company required the insured to provide a police report resulting in a delay. 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 that a thorough, fair and diligent investigation was not pursued in these instances. As a result of the examination, the individual adjusters were counseled. In addition, a meeting was held with claims management and staff on April 6, 2018 reiterating their procedures for a thorough, fair and diligent investigation of claims pursuant to the regulatory requirement.

42. In two instances, the Company misrepresented to claimants pertinent facts or insurance policy provisions relating to any coverages at issue. In these instances, the insured was incorrectly advised regarding the coverages on the claim. The Department alleges these acts are in violation of CIC §790.03(h)(1).

Summary of the Company’s Response: The Company agrees with the alleged violations that the insured was inadvertently advised incorrectly regarding coverage. As a result of the examination, the individual adjusters were counseled. In addition, a meeting was held with claims management and staff on April 6, 2018

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reiterating procedures for providing proper coverage notification pursuant to the regulatory requirement.

43. In two instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies. In one instance, the claim was closed incorrectly. In another instance, the insured was not provided with a theft affidavit claim form in accordance with Company policy. The Department alleges these acts are in violation of CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violations and in each instance, the individual adjuster was counseled. In addition, a meeting was held with claims management and staff on April 6, 2018 reiterating procedures for proper claims handling pursuant to the regulatory requirement. 44. In two instances, the Company failed to disclose all benefits, coverage, time limits or other provisions of the insurance policy. The Department alleges these acts are in violation of CCR §2695.4(a) and are unfair practices under CIC §790.03(h)(1).

Summary of the Company’s Response: The Company agrees with the alleged violations that all benefits, coverage, time limits or other provisions of the insurance policy were not disclosed in these instances. As a result of the examination, the individual adjusters were counseled. In addition, a meeting was held with claims management and staff on April 6, 2018 reiterating the procedure for disclosing all applicable benefits, coverage, time limits and other provisions of the policy pursuant to the regulatory requirement.

45. In one instance, the Company failed to document in the claim file all justification for the adjustment of the amount claimed because of betterment, depreciation, or salvage. Any adjustment for betterment or depreciation shall reflect a measurable difference in market value attributable to the condition and age of the property. The Department alleges this act is in violation of CCR §2695.9(f) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that the depreciation amount calculated by the independent adjuster was not supported with additional justification of age and condition in this instance. As a result of the examination, a meeting was held with claims management and staff on April 6, 2018 reiterating proper evaluating and noting the depreciation amount as part of the adjustment process, pursuant to the regulatory requirement.

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46. In one instance, the Company failed to fully explain the basis for any adjustment to the claimant in writing. The Department alleges these acts are in violation of CCR §2695.9(f) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company agrees with the alleged violation that they did not explain in writing to the insured the basis for depreciation in this instance. As a result of the examination, a meeting was held with claims management and staff on April 6, 2018 reiterating the procedures for explaining the basis of depreciation to the insured pursuant to the regulatory requirement. 47. The Company failed to comply with the Fair Claims Regulations Practices. In each single instance (for a total of two instances), the Company failed to comply with the following Fair Claims Regulations Practices: a) CCR §2695.5(c) for failure to obtain permission from the insured for a third party to handle the claim on the insured’s behalf; b) CCR §2695.7(b) for failure to accept or deny the claim in 40 days.

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

Practices and are unfair practices under CIC §790.03(h)(3) and 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; a) the adjusters involved were counseled, and b) in this instance which involved a delay due to military service, a team meeting was formed to discuss backup procedures for this situation to ensure compliance. In addition, a meeting was held with claims management and staff on April 6, 2018 regarding the findings of the examination and remedial actions to ensure future compliance.

COMMERCIAL MULTIPLE PERIL 48. The Company failed to comply with the Fair Claims Regulations Practices. In each single instance (for a total of four instances), the Company failed to comply with the following Fair Claims Regulations Practices: a) CCR §2695.7(b)(1) for failure to provide a partial denial letter to the insured; b) CCR §2695.5(d) for the agent’s failure to immediately transmit notice of claim; c) CCR §2695.7(b)(3) for failure to include required referral to the California Department of Insurance on a denial letter; d) CCR §2695.7(f) for failure to provide notice of the statute of limitation on a denied claim.

The Department alleges these acts are in violation of Fair Claims Regulation Practices and are unfair practices under CIC §790.03(h)(3) and CIC §790.03(h)(13).

Summary of the Company’s Response: The Company agrees with the alleged violations and as a result of the examination, a) the Company sent a partial denial letter to the insured; b) the slow transmittal of the loss information was discussed with the producer/broker to assure their knowledge of their responsibilities; c) a revised

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letter was sent to the claimant. In addition, a meeting was held with claims management and staff on April 6, 2018 regarding the findings of the examination and remedial actions to ensure future compliance.