As a regulation agency whose sole focus is representing policyholders in insurance coverage disputes, we spend quite a lot of time alleging insurance coverage firms are participating in unhealthy religion practices and preventing tooth and nail for proof that demonstrates this. We get what data we will by means of the invention course of, the principles and logistics of which might range drastically relying on the state, the courtroom, and even the choose. Discovery have to be tailor-made to every particular person case, and insurance coverage firms invariably object to requests for details about wider enterprise practices or schemes as too obscure, too broad, too burdensome, or irrelevant. This could make acquiring any proof of unhealthy religion practices we already know are occurring an extended and dear battle.
Thankfully, discovery isn’t the one course of by means of which unhealthy religion or illegal insurance coverage practices will be uncovered. State insurance coverage departments and regulators can even examine the enterprise practices of insurance coverage firms by means of market conduct exams to make sure that firms working within the state are following the regulation. The significance of market conduct exams has been mentioned on this weblog earlier than. In April 2022, Mr. Merlin wrote a submit about 5 market conduct exams carried out in Louisiana specializing in the conduct of a number of insurers in dealing with claims from hurricanes Laura, Delta, and Zeta. Mr. Merlin famous the exams “found 44 instances of improper activities and/or business practices that were noncompliant with the Louisiana Insurance code.” The Louisiana Insurance Commissioner proposed almost a million {dollars} in fines primarily based on the examination findings. Two others posts (right here and right here) by Mr. Merlin summarize an analogous scenario in North Dakota, the place a market conduct examination into Farmer’s “Bring Back a Billion Program” and claims dealing with resulted in a $750,000 fantastic for state regulation violations. He additionally explains the Insurance Regulatory Examiners Society’s mission, which is to guard shoppers and protect a sturdy, aggressive market by means of “fair, firm, [and] honest insurance regulation.”
The legal guidelines, rules, and procedures governing market conduct exams range by state. In Oklahoma, the place I stay, the state legislature requires insurers to “annually file with the Insurance Commissioner market conduct annual statements reporting market conduct data of insurers.” 36 OK Stat § 36-311.4(A) (2022). Failure to take action might lead to a $1,000 fantastic. The insurance coverage division has additionally promulgated guidelines requiring insurers to submit a Corporate Governance Annual Disclosure, which incorporates details about the corporate’s governance framework, procedures for efficiency analysis and compensation, and threat evaluation processes. Okla. Admin Code § 365:25-7-91. Using these studies and different metrics like monetary statements or complaints, the Insurance commissioner has full discretion to find out “whether a market conduct examination or investigation of an insurer should be conducted.” 36 OK Stat § 36-311.4(B)(1)(F)(2022).
The Oklahoma Insurance Department web site notes it “perform[s] and publish[es] Market Conduct Examinations.” However, the final revealed report is from May 2009 (which discovered Farmers made varied declare dealing with errors and was in violation of Oklahoma regulation). After I reached out to ask the place the remainder of the examination studies have been, the OID knowledgeable me market conduct exams can be found upon submitting a FOIA request. This is less complicated stated than finished since market conduct exams happen on the discretion of the commissioner, and I couldn’t discover any listing or discover of what insurers have been examined or when these exams occurred. I’ve since submitted a FOIA request for a listing of all exams carried out by the OID since 2009 and am ready to listen to again – I’ll maintain you all posted.
I’m admittedly a bit skeptical of the reliability of the commissioner figuring out an examination is warranted primarily based on firms’ self-reporting. From what I’ve seen of discovery disputes, insurers are loath to inform on themselves. Ideally, different metrics, similar to a rise in shopper complaints or a spike in lawsuits – just like the one Micah Cartwright identified in her latest weblog about State Farm – would additionally inform the commissioner’s decision-making. Given the essential function market conduct examinations can play in exposing unlawful insurance coverage practices, full transparency all through the examination and reporting course of would higher accomplish the entire function of market conduct exams and greatest serve shoppers. But for now, at the very least in Oklahoma, a FOIA request must do to be taught which market conduct exams have been carried out since 2009, adopted by one other FOIA request to acquire copies of any of these exams.