Pennsylvania and California Market Conduct Examinations of Guardian Life Insurance Company/Berkshire Life Insurance Company

Pennsylvania:  On February 28, 2013, the Commonwealth of Pennsylvania Insurance Department issued a report on its Market Conduct Examination of Guardian Life Insurance Company during the period of January 1 – December 31, 2010.  Guardian Life Insurance Company is also commonly known by the name of its subsidiary Berkshire Life Insurance Company of America and is one of the nation’s largest providers of disability insurance.

While Pennsylvania’s market conduct examination reviewed both Guardian health insurance and individual disability insurance in order to ensure compliance with Pennsylvania laws and regulations, for purposes of this blog we will only summarize the Insurance Department’s findings relating to Guardian/Berkshire’s individual disability insurance claims handling.

The claims review portion of the Market Conduct Examination consisted of reviewing Berkshire’s claim manuals and reviewing the claim files for any inconsistencies which could be considered discriminatory, specifically prohibited by statute or regulation or unusual in nature.  The Department of Insurance noted 17 violations and further noted that Berkshire’s claims handling documents did not adhere to the examination because their procedures had changed during the examination period but the prior records were not retained.  “The company indicated to the department that when new claim procedures or manuals are updated, the prior editions are not retained.”  In this digital age, it is difficult to understand why prior records could not and would not be retained.

The Department of Insurance also raised a Department Concern that, “[Berkshire] should implement guidelines and standards to avoid any potential discriminatory action in the processing and handling of claims relevant to reservation of rights and advance payment.”

Finally, the Pennsylvania Department of Insurance found Guardian/Berkshire in violation of the regulation that “every insurer shall completion investigation of a claim within 30 days after notification of a claim . . . If the investigation cannot be completed within 30 days, and every 45 days thereafter, the insurer shall provide the claimant with a reasonable written explanation for the delay and state when a decision on the claim may be expected.”

California:  On October 19, 2009, the California Department of Insurance issued a report regarding the results of its limited desk examination of the claims, rating, and underwriting practices of Berkshire Life Insurance Company of America during the period of May 1, 2008 through April 30, 2009.  The Department of Insurance found that Berkshire was in violation of California Code of Regulations § 2695.6(b) which requires that “All licensees shall provide thorough and adequate training regarding the regulations to all their claims agents.  Licensees shall certify that their claims agents have been trained regarding these regulations and any revisions thereto…”  Berkshire Life responded that it did not certify that its claims adjusters had received the required training in accordance with California law but stated that instead their adjusters are trained on a “one-on-one basis.”  Berkshire was asked whether it intended to take appropriate action in all jurisdictions where applicable and responded that it would implement corrective actions.

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