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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

OLD REPUBLIC GENERAL INSURANCE CORPORATION

NAIC # 24139 CDI # 1800-2

AS OF DECEMBER 15, 2015

ADOPTED APRIL 6, 2017

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 ................................................................ 6

SUMMARY OF EXAMINATION RESULTS .................................................................. 11

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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 examiners,

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

Company’s 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:

Old Republic General Insurance Corporation NAIC # 24139

Group NAIC # 0150

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

ORGIC, or the Company.

This examination covered the claim handling practices of the aforementioned

Company on Commercial Automobile and Workers’ Compensation claims closed during

the period from December 16, 2014 through December 15, 2015, and claims open as of

May 6, 2016. The examination was made to discover, in general, if these and other

operating procedures of the Company 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 Company for use in California including any documentation maintained by the

Company 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 December 16, 2014 through December

15, 2015, a review of previous CDI market conduct claims examination reports on this

Company; and a review of prior CDI enforcement actions.

The review of the sample of individual claim files was conducted at the offices of

the Company’s third party administrator in Aliso Viejo, California.

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EXECUTIVE SUMMARY

The Commercial Automobile claims reviewed were closed from December 16,

2014 through December 15, 2015. The Workers’ Compensation (WC) claims reviewed

were both open and closed claims with the date of injury no earlier than December 16,

2013. The closed claims reviewed were closed from December 16, 2014 through

December 15, 2015. The open claims reviewed were open as of May 6, 2016. This is

referred to as the “review period”. The examiners randomly selected 193 ORGIC claim

files for examination. The examiners cited 74 alleged claims handling violations of the

California Insurance Code and the California Code of Regulations and the California

Vehicle Code from this sample file review.

Findings of this examination included the failure to provide a complete Auto Body

Repair Consumer Bill of Rights to the insured; failure to adopt and implement

reasonable standards for the prompt investigation and processing of claims; failure to

effectuate prompt, fair and equitable settlements of claims; failure to warrant in writing

the use of non-original equipment manufacturer replacement crash parts are at least

equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit

and performance and failure to ask if a child passenger restraint system was in the

vehicle at the time of a loss.

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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:

ORGIC SAMPLE FILES REVIEW

LINE OF BUSINESS / CATEGORY CLAIMS IN

REVIEW PERIOD

SAMPLE FILES

REVIEWED

NUMBER OF ALLEGED

VIOLATIONS

Commercial Automobile / Collision 751 66 42

Commercial Automobile / Comprehensive / Other Than Collision

40 4 2

Commercial Automobile / Bodily Injury 277 12 3

Commercial Automobile / Property Damage 957 38 13

Commercial Automobile / Uninsured / Underinsured Motorist BI

3 3 0

Workers’ Compensation / Indemnity 822 11 3

Workers’ Compensation / Denied 107 4 4

Workers’ Compensation / Medical Payment Only

1,027 35 4

Workers’ Compensation / Open 1,357 20 3

TOTALS 5,341 193 74

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TABLE OF TOTAL ALLEGED VIOLATIONS

Citation Description of Allegation ORGIC Number of Alleged Violations

CCR §2695.85(a) *[CIC §790.03(h)(3)]

The Company failed to provide the insured with the Auto Body Repair Consumer Bill of Rights either at the time of application for automobile insurance, at the time a policy was issued, or following an accident.

13

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.

7

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

6

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.

6

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.

6

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.

5

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.

4

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.

3

CCR §2695.7(p) *[CIC §790.03(h)(3)]

The Company failed to provide written notification to a first party claimant of its decision to discontinue pursuit of subrogation.

3

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.

2

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Citation Description of Allegation ORGIC Number of Alleged Violations

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

2

CVC §11515(b) *[CIC §790.03(h)(3)]

The Company failed to notify the Department of Motor Vehicles that the owner of a total loss salvage vehicle retained possession of the vehicle, The Company failed to notify the insured or owner of his or her responsibility to comply with CVC §11515(b).

1 1

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.

1

CCR §2695.5(e)(1) *[CIC §790.03(h)(2)]

The Company failed to acknowledge notice of claim within 15 calendar days.

1

CCR §2695.5(e)(2) *[CIC §790.03(h)(3)]

The Company failed to provide necessary forms, instructions, and reasonable assistance within 15 calendar days.

1

CCR §2695.5(e)(3) *[CIC §790.03(h)(3)]

The Company failed to begin any necessary investigation of the claim within 15 calendar days.

1

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.

1

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

The Company failed to deny, dispute or reject a third party claim, in whole or in part, in writing.

1

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.

1

CCR §2695.7(d) *[CIC §790.03(h)(3)]

The Company failed to conduct and diligently pursue a thorough, fair and objective investigation.

1

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.

1

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.

1

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Citation Description of Allegation ORGIC Number of Alleged Violations

CCR §2695.7(h) *[CIC §790.03(h)(5)]

The Company failed, upon acceptance of the claim, to tender payment within 30 calendar days.

1

CCR §2695.8(k) *[CIC §790.03(h)(5)]

The Company failed to pay the reasonable towing charges incurred by the claimant.

1

CIC §790.03(h)(2) The Company failed to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.

1

CIC §1871.3(a) *[CIC §790.03(h)(3)]

The Company failed to secure a theft affidavit from the insured.

1

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

The Company failed to disclose in writing to the claimant that notice of the salvage retention by the claimant must be provided to the Department of Motor Vehicles and that this notice may affect the loss vehicle’s future resale and/or insured value.

1

Total Number of Alleged Violations 74

*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.

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.

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TABLE OF ALLEGED VIOLATIONS BY LINE OF BUSINESS

COMMERCIAL AUTOMOBILE

2015 Written Premium: $132,115,900

AMOUNT OF RECOVERIES $4,542.20

NUMBER OF ALLEGED VIOLATIONS

CCR §2695.85(a) [CIC §790.03(h)(3)] 13

CIC §790.03(h)(5) 6

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

CCR §2695.7(c)(1) [CIC §790.03(h)(3)] 5

CCR §2695.8(f) [CIC §790.03(h)(3)] 4

CCR §2695.4(a) [CIC §790.03(h)(1)] 3

CCR §2695.7(p) [CIC §790.03(h)(3)] 3

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

CVC §11515(b) [CIC §790.03(h)(3)] 2

CCR §2695.7(g) [CIC §790.03(h)(5)] 1

CCR §2695.8(k) [CIC §790.03(h)(5)] 1

CIC §790.03(h)(5) 1

CCR §2695.3(a) [CIC §790.03(h)(3)] 1

CCR §2695.5(e)(1) [CIC §790.03(h)(2)] 1

CCR §2695.5(e)(2) [CIC §790.03(h)(3)] 1

CCR §2695.5(e)(3) [CIC §790.03(h)(3)] 1

CCR §2695.7(b) [CIC §790.03(h)(4)] 1

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

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

CCR §2695.7(d) [CIC §790.03(h)(3)] 1

CCR §2695.7(f) [CIC §790.03(h)(3)] 1

CCR §2695.7(h) [CIC §790.03(h)(5)] 1

CIC §790.03(h)(1) 1

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CIC §1871.3(a) [CIC §790.03(h)(3)] 1

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

SUBTOTAL 60

WORKERS’ COMPENSATION

2015 Written Premium: $157,601,602

AMOUNT OF RECOVERIES $881.81

NUMBER OF ALLEGED VIOLATIONS

CIC §790.03(h)(3) 7

CIC §790.03(h)(5) 5

CIC §790.03(h)(1) 1

CIC §790.03(h)(2) 1

SUBTOTAL 14

TOTAL 74

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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 Company is required to identify remedial or

corrective action that has been or will be taken to correct the deficiency. The Company

is obligated to ensure that compliance is achieved.

Any noncompliant practices identified in this report may extend to other

jurisdictions. The Company should address corrective action for other jurisdictions

when applicable.

Money recovered within the scope of this report was $5,424.01 as described in

section numbers 8, 9, 10, 11, and 13, below.

COMMERCIAL AUTOMOBILE 1. In 13 instances, the Company failed to provide the insured with the Auto Body Repair Consumer Bill of Rights either at the time of application for automobile insurance, at the time a policy was issued, or following an accident. In 10 instances, there was no documentation in the claim file that the Auto Body Repair Consumer Bill of Rights (ABRCBR) had been sent. In three instances, the ABRCBR did not include item #6 of the updated language. The Department alleges these acts are in violation of CCR §2695.85(a) and are unfair practices under CIC §790.03(h)(3).

Summary of the Company’s Response: The Company acknowledges the violations and states that it is their standard practice to send the ABRCBR at the time of claim. In the instances in which the form was not sent, the issue was addressed with the Resolution Manager and training/coaching was provided to the adjuster. In addition, effective April 25, 2016, the Company is including the ABRCBR to all commercial automobile new and renewal policies at policy issuance. This is in addition to the claim adjuster issuance of such ABRCBR following an accident. In the remaining instances, the bill did not include item #6 which states:

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“ 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”

As a result of the examination, the ABRCBR form was corrected and provided to the involved claimants. In addition, training was completed with the Resolution managers on May 20, 2016 to ensure regulatory compliance, and a checklist was created as quick reference to the California Fair Claims Practices Regulations. 2. In six instances, the Company specified 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. 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 acknowledges the alleged violations and agrees that it did not warrant the use of non-original equipment manufacturer replacement crash parts in writing in these instances. As a result of the examination, the Company will warrant in writing that non-OEM parts are of like kind, quality, safety, fitness and performance as original. The Company will provide the documented procedures to the Department. 3. 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: It is the Company’s standard practice to inquire about child passenger restraint systems (CPRS) on a case by case basis based on the facts of the loss. In three instances involving collision claims, there was no mention of any minor passengers in the vehicle throughout the Resolution Managers’ investigation which included discussions with the insured driver and passenger. In three instances involving a property damage claim, the Company agrees that there is no proof to show that the Company asked whether a CPRS was in use or was in the vehicle at the time of loss. As a result of the examination, all adjusters handling California auto claims will be reminded to ask whether a CPRS was present in the damaged vehicle, whether any such system was damaged, and to appropriately document the claim file. This process was disseminated to all adjusters as of June 15, 2016. 4. In five 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).

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Summary of the Company’s Response: The Company acknowledges the

alleged violations and agrees that the required notices were not sent in these instances. As a result of the examination, the Company completed a mandatory session on July 11, 2016 to provide refresher training on all claim protocols and regulatory notices to ensure claims practices are consistent with the California Fair Claims Practices Regulations. 5. In four instances, the Company failed to supply the claimant with a copy of the estimate upon which the settlement was based. The Department alleges these acts are in violation of CCR §2695.8(f) and are unfair practices under CIC §790.03(h)(3). Summary of the Company’s Response: The Company acknowledges the alleged violations and agrees that it did not send a copy of the repair estimate to the claimant in these instances. As a result of the examination, the pertinent adjusters were counseled. In addition, training was provided to the Resolution Managers on May 20, 2016 to ensure that all repair estimates (including supplements) are emailed or provided to the pertinent parties (insureds and claimants) prior to settlement of the claim. 6. In three 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: It is the Company’s standard practice to verbally explain coverages to the claimant on initial contact. However in these instances, there are no documented notes to comply with this regulatory requirement. Training has been provided to the adjusting staff on May 20, 2016 to ensure that claims practices including proper file documentation and disclosure notices are compliant with the California Fair Claims Practices Regulations. 7. In three instances, the Company failed to provide written notification to a first party claimant of its decision to discontinue pursuit of 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 acknowledges the alleged violations and agrees that it did not send notification to the insured about its intent to discontinue pursuit of subrogation in these instances. As a result of the examination, the Resolution Manager has been coached and regulatory training was conducted with claims staff as of July 11, 2016. 8. In two instances, the Company failed to include, in the settlement, fees incident to the transfer of the vehicle to salvage status. In one instance involving a

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first party total loss, only the value of the lease was calculated for the fee payments. In the second instance, the salvage certificate fee was underpaid. 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 acknowledges the alleged violations and agrees that it did not include all fees incident to transfer of the vehicle to salvage status. The Company indicates these were isolated instances and has addressed it with pertinent staff. As a result of the examination, the Company reopened the claims and paid an additional $974.28 to the insureds. 9. In one instance, the Company attempted to settle a claim by making a settlement offer that was unreasonably low. The Company failed to pay for transportation expenses. 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 acknowledges the alleged violation and agrees that it did not offer transportation expense coverage beginning 48 hours after the theft of the insured’s vehicle. The Company states that this was an inadvertent error and as a result of the examination, the insured was paid the maximum benefit amount of $600.00. The Company also completed a mandatory refresher training session on July 11, 2016 regarding claim protocols and regulatory notices to ensure claims practices are consistent with the California Fair Claims Practices Regulations. 10. In one instance, the Company failed to pay the reasonable towing charges incurred by the claimant. The Department alleges this act is in violation of CCR §2695.8(k) and is an unfair practice under CIC §790.03(h)(5). Summary of the Company’s Response: The Company acknowledges the alleged violation and agrees that it did not offer to pay reasonable towing charges incurred by the insured in this instance. The Company states that this was an inadvertent error and as a result of the examination, the insured was paid an additional $2,020.00. The Company also completed a mandatory refresher training session on July 11, 2016 regarding claim protocols to ensure claims practices are consistent with the California Fair Claims Practices Regulations. 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 reimbursed for the full value of his loss of use claim. The Department alleges this act is in violation of CIC §790.03(h)(5). Summary of the Company’s Response: The Company acknowledges the alleged violation. As a result of the examination, the Company issued additional payment in the amount of $947.92 to the insured. The Company also completed a

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mandatory refresher training session on July 11, 2016 regarding claim protocols to ensure claims practices are consistent with the California Fair Claims Practices Regulations and the California Insurance Code. 12. The Company failed to comply with the Fair Claims Practices Regulations, California Insurance Code and California Vehicle Code. In each single instance (for a total of 15 instances), the Company failed to comply with the following Fair Claims Practices Regulations, California Insurance Code, and California Vehicle Codes: a) CCR §2695.3(a) for failure 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; b) CCR §2695.5(e)(1) for failure to acknowledge notice of claim within 15 calendar days; c) CCR §2695.5(e)(2) for failure to provide necessary forms, instructions, and reasonable assistance within 15 calendar days; d) CCR §2695.5(e)(3) for failure to begin investigation of the claim within 15 calendar days; e) CCR §2695.7(b) for failure to accept or deny the claim within 40 calendar days; f) CCR §2695.7(b)(1) for failure to deny, dispute or reject a third party claim in writing; g) CCR §2695.7(b)(3) for failure to include a statement in its claim denial that, if the claimant believes the claim has been wrongfully denied or rejected, he or she may have the matter reviewed by the California Department of Insurance; h) CCR §2695.7(d) for failure to conduct and diligently pursue a thorough, fair and objective investigation; i) CCR §2695.7(f) for failure to provide written notice of any statute of limitation or other time period requirement upon which the insurer may rely to deny a claim; j) CCR §2695.7(h) for failure to tender payment within 30 calendar days; k) CCR §2695.8(b)(1)(A) for failure to disclose in writing to the claimant that notice of the salvage retention by the claimant must be provided to the Department of Motor Vehicles and that this notice may affect the loss vehicle’s future resale and/or insured value.

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l) CIC §790.03(h)(1) for misrepresenting to claims pertinent facts or insurance policy provisions relating to any coverages at issue; m) CIC §1871.3(a) for failure to secure a theft affidavit from the insured; n) CVC §11515(b) for failure to notify the insured or owner of his or her responsibility to comply with CVC §11515(b), and o) CVC §11515(b) for failure to notify the Department of Motor Vehicles that the owner of a total loss salvage vehicle retained possession of the vehicle; The Department alleges these acts are in violation of Fair Claims Regulation Practices and are unfair practices under CIC §790.03(h)(1), CIC §790.03(h)(2), CIC §790.03(h)(3), CIC §790.03(h)(4) and CIC §790.03(h)(5).

Summary of the Company’s Responses: The Company acknowledges the single isolated incidences of non-compliance with Fair Claims Practices Regulations, California Insurance Code and California Vehicle Code. The Company agrees on the following:

a) The claim file is missing a copy of its written response to a subrogation demand; b) The Company received notice of claim and did not acknowledge claim within

regulatory timelines (total of 115 days); c) The Company failed to provide assistance on a claim within regulatory timelines; d) The Company failed to investigate promptly on a claim within regulatory

timelines; e) The Company received proof of claim and failed to accept or deny the claim

within regulatory timelines (total of 152 days from receipt of proof); f) A liability denial letter was not sent to the claimant. As a result of the

examination, the Company reopened the claim and transmitted a denial letter to the claimant on April 21, 2016;

g) The Company failed to include the CDI referral language in its denial. As a result

of the examination, an electronic mail was sent to the claimant with the appropriate CDI referral language on April 21, 2016;

h) The Company failed to diligently pursue its investigation as it did not complete a

re-inspection on a supplemental estimate. As a result of the examination, a follow-up was completed and a denial letter was subsequently transmitted on April 21, 2016;

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i) The Company did not send a statute of limitation (SOL) notice. The Company

reopened the claim and the claimant was advised of the SOL on April 21, 2016; j) The Company agrees it failed to tender payment promptly on a claim; k) The Company agrees it failed to advise the insured of his/her responsibility to

notify the DMV of salvage owner retention. l) The Company agrees it inaccurately advised a claimant carrier that it does not

pay storage fees; m) The Company did not secure a theft affidavit on a total theft claim. The Company

indicates that it will comply with this requirement and a copy of the template Affidavit of Vehicle Theft form was provided to the Department for review;

n) & o) On an owner-retained salvage total loss, the Company did not comply with

the California Vehicle Code requirements. As a result of the examination, the Company reopened the claim and sent the applicable forms to the insured.

In each of the above instances, the issue was addressed with the Resolution Manager and the pertinent adjuster was coached. In addition, mandatory claims training was completed with the adjusting staff on July 11, 2016 to reinforce all claim protocols and regulatory notices, as well as to address the results of the Department’s examination. The Company also indicates that its annual recertification of the Fair Claims Settlement Practices Regulations will be completed within regulatory timelines, and with emphasis on these regulations. WORKERS’ COMPENSATION 13. In five instances, the Company failed to effectuate prompt, fair and equitable settlements of claims in which liability had become reasonably clear. In a total of five instances, the Company failed to include statutory self-imposed penalty and interest as required by LC §4603.2(b)(2) and LC §4603.4(d).

a. In two instances, payment of medical bills was not paid within 45 calendar days.

b. In one instance, payment of a radiology bill was not paid within 45 calendar days.

c. In one instance, a charge for service was left unpaid. d. In one instance, the Company’s Average Work Week (AWW) calculation did

not include overtime pay.

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The Department alleges these acts are in violation of Labor Code §4603 and are unfair practices under CIC §790.03(h)(5).

Summary of the Company’s Response: The Company acknowledges the alleged violations. As a result of the examination, the Company reopened the claims and paid $775.92 on unpaid or underpaid claims, and $105.89 on interest and penalties. In addition, internal changes within the Bill Review Department for staff handling California invoices have been implemented. When an error is identified, the third party vendor will open a corrective action request and follow through with the process until the error is corrected. With regard to the radiology invoice, the Company agrees that it failed to apply California regulations as the loss occurred in North Carolina. As a result of the examination, ORGIC will provide additional training to both internal and external staff to emphasize the steps necessary to comply with the California Insurance Code and the Labor Code in establishing the proper jurisdiction. The training was completed on August 8, 2016. In addition, a directive is being sent to all Claims staff, citing the Labor Code which states: LC §3600.5(a) “If an employee who has been hired or is regularly working in the state receives personal injury by accident arising out of and in the course of employment outside of this state, he or she, or his or her dependents in the case of his or her death, shall be entitled to compensation according to the law of this state.”

The directive further explains that if the injured worker was injured in a different state, but was originally hired in California, currently resides in California, and is currently being paid via payroll in California, then the claim must be set up and handled by a California Service Center Resolution Manager. A copy of the directive was provided to the Department on June 29, 2016. 14. In seven instances, the Company failed to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies. The Department alleges the Company failed to conduct a reasonable investigation as required by 8CCR §10109. These include the following:

a. In five instances, the DWC-1 form was not provided to the employee within 24 hours of date of knowledge as required by LC §5401(a).

b. In one instance, a medical bill was paid in error on a denied claim.

c. In one instance, a denial letter did not provide reasons for the denial and employee remedies as required by CCR §9812(i).

The Department alleges these acts are in violation of CIC §790.03(h)(3).

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Summary of the Company’s Response: The Company acknowledges the alleged violations.

a. In the instances in which the DWC-1 form was not provided timely, the Claims Administrator discussed compliance with the employers and provided training.

b. The Company agrees it had erroneously paid on a medical bill and indicates this was an inadvertent error which has been addressed with staff.

c. In one instance involving a denial letter on a loss which occurred out-of-state, the Company agrees that it did not apply California regulations. As a result of the examination, ORGIC will provide additional training to both internal and external staff to emphasize the steps necessary to comply with the California Insurance Code and the Labor Code in establishing the proper jurisdiction. In addition to several verbal and written communications, training was completed with claims staff on August 8, 2016. A copy of the directive was provided to the Department on June 29, 2016.

15. The Company failed to comply with the California Insurance Code. In each single instance (for a total of two instances), the Company failed to comply with the following California Insurance Code: a) CIC §790.03(h)(1) for misrepresenting to claims pertinent facts or insurance policy provisions relating to any coverages at issue; and b) CIC §790.03(h)(2) for failure to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.

Summary of the Company’s Response: The Company acknowledges the single isolated incidences of non-compliance with the California Insurance Code on the following instances: a) As a result of a scanning error, an acceptance letter inaccurately stated that a DWC-1 form was enclosed; and b) The Company failed to send the Notice of First Temporary Disability Indemnity Payment within 14 days of date of knowledge of the injury and disability as required by CCR §9812(a)(1).

In each instance, the issue was addressed with the Resolution Manager and the pertinent adjuster was coached. In addition, mandatory claims training was completed with the adjusting staff on August 8, 2016 to reinforce all claim protocols and regulatory notices, and to address the results of the Department’s examination. The Company states that its annual recertification of the Fair Claims Settlement Practices Regulations will be completed within regulatory timelines and with emphasis on these regulations.