Compliance

Expert Tips to Avoid Accident & Health State Filings Form Rejections

by Susan Cornett

State filings form rejections waste your company’s time and money. When you are forced to resubmit your forms, your company is on the hook to resubmit state filing fees (where applicable) and SERFF fees. These fees might be nominal in some cases, but if you are required to resubmit multiple forms in multiple states, they can range from a few hundred to thousands of dollars. Depending on the state, when you resubmit, you also run the risk of re-starting the approval clock from zero. This can result in delays of weeks or months, and lost revenue due to delayed insurance product releases.
During our decades providing state filings services, we’ve seen almost every reason a form is likely to be rejected. We also know that many of these setbacks are avoidable. Here are some of the most common mistakes that lead to rejection–and what you can do to prevent them.

Tip #1: Pick the appropriate type of insurance (TOI)

When you file through SERFF, you must specify the correct code for the exact type of policy you are submitting. In most cases, a sub-TOI is also required. These codes are crucial because they let the department know what to expect when reviewing your forms. The reviewer evaluates your form through the lens of your selected TOI, looking for particular information. A wrong TOI code subjects your form to review under the wrong classification and may result in unnecessary objections. It can also make your submission look sloppy. Submitting a filing under an incorrect TOI is one of the fastest ways to get your form rejected outright.
NAIC publishes updated codes every January. Each state’s DOI has the authority to control the number and types of insurance codes that they accept each year. Depending on the types of policies issued in their states, commissioners can “turn on and turn off” codes at their discretion. Insurance consulting companies that offer state filing services regularly review these changes, looking for new codes that apply to emerging products and codes that are no longer in use.
But what if your policy doesn’t exactly fit a particular TOI? No matter whether your product is an exact fit or not, you must pick a TOI code. For policies that don’t exactly match a particular state’s TOI code in SERFF, select the code that most closely aligns with your policy, then address individual points of variation in the filing description. Unfortunately, there are no guarantees that a reviewer will read your description, but it’s your best course of action. If you’re unsure about which TOI to select, work with an experienced insurance consulting company that specializes in state filing services. They’ll help you evaluate the code that most closely applies to your form.

Tip #2: For group policies, correctly identify your market

Selecting the correct group designation (“employer,” “union,” “association,” etc.) is hugely important. Your form is subject to rejection if the designation is incorrect or does not match what is allowed in a particular state. As with correct identification of TOI, the self-designation sets the lens through which the reviewer will check your forms. If you are missing required accompanying forms (i.e., association by-laws) for a particular type of group designation, your filing is likely to be rejected.

Tip #3: Pay close attention to the requirements of each state and line of business

Checklists, transmittals and certification requirements vary by state and by line of business. Health-specific plans that are subject to the Affordable Care Act (ACA) require additional considerations, including form and rate requirements and other ancillary forms. It’s easy to get lost in the weeds. You must have a clear understanding of the questionnaires and filing certifications required by each state. These requirements are usually­–but not always–listed on SERFF. Pay attention to these details. Missing or incomplete information will stop your filing in its tracks.

Tip #4: Include required information–and nothing more

Pay close attention to the specific information that should accompany each filing. Include what is required by SERFF but do not include additional information. Doing so can open your filing up to questions and confusion.
The sheer volume of work required to track filing requirements that change frequently and vary by state can present challenges for internal departments at most insurance companies. We recommend working with an insurance services partner who provides detailed content reviews as part of their state filings services. Their breadth of experience and deep understanding of all specific statewide filings can save you time, money and runaround.
When it comes to avoiding state filings form rejection, the most important thing is to take your time. Hasty work leads to oversights and careless mistakes that can set your filing back to square one.
Have questions about your state filings process? Contact us today to speak to our state filings experts. 

3 Reasons You Need to Audit Your Operations Now

by Terri Hitchcock

When people think of auditing, they often imagine a team of IRS agents storming into the office and demanding massive compilations of tax-related documents. However, audits–especially self-imposed audits of operations and internal processes–can be so much more meaningful.
Internal audits are a way to review areas where your operations are thriving and where you can streamline systems to achieve greater efficiency and profitability. Insurance is an industry based on the idea of being “better safe than sorry.” Internal operational audits can uncover opportunities to tighten up your business before you’re faced with an operational crisis.
If you haven’t conducted an audit lately, here are three reasons to get moving right away.

Reason 1: Compliance, Compliance, Compliance

In an industry as highly regulated as insurance, this is the most obvious reason to conduct an operational audit. Compliance must be taken seriously. Whether you’re an insurance company, MGA, licensing agent, broker or provider of any other insurance-related service, you are subject to a long string of regulations up and down the chain of command.
State statutes for rates and forms, federal statutes for the same, privacy rules, disclosure rules, information sharing, guidelines for proper use of credit, protection of social security numbers, bank transfers, matters covered by the Gramm-Leach-Bliley Act, rules governing methods and means of communication – all create a minefield of potential regulatory pitfalls.
Each of these processes faces scrutiny by some regulatory body. Operate in violation of any of these regulations and you put your organization at risk for hefty fines or the suspension–or even loss of–license or certificate of authority. An audit by insurance operations consulting experts will reveal areas where you are out of compliance so you can correct those immediately.

Reason 2: Expose Leakage

Operational audits can reveal ways your company is suffering from various forms of leakage– that is, areas where you’re bleeding money of which you are currently unaware. This can be anything from late-paying customers who cause you to miss out on the benefit of interest to unscrupulous or lackadaisical employees who are gaming the system.
When you conduct an audit, either internally or with the help of insurance operations consultants, you confirm that your organization is already using the most effective processes. Or, you reveal areas where you can shore up your operations to reduce unnecessary overspend and make sure you’re collecting everything that is due in a timely manner.

Reason 3: Keep Pace with the Marketplace

Auditing your operations gives you the opportunity to review whether you are keeping pace with not just your competitors, but the marketplace as a whole. Who are your core customers? Who will they be in 25 years? Are your operations and processes geared toward millennials and how they expect to communicate, pay, file a claim and take out a new insurance policy? An operational audit enables you to uncover these trends and determine if your current business trajectory is set to evolve with your clientele, or if your operations are fixed while your customer-base changes.
You can assign an in-house team to audit your operations, but it’s usually a smarter move to work with an insurance operations consulting firm who can look at your business with fresh eyes. An unbiased third party can reveal areas for improvement that might not be obvious to internal teams.
No matter who you decide should perform the audit, it’s a small investment that can pay off huge in revenue increases and protection from expensive fines.
If you’d like to know more about how an operational audit can help your business, contact us today. 

The Value of Rating Manual Compliance Reviews

by Michael Covert

Developing a rating manual is not complicated, but creating a manual that is compliant–while simultaneously providing the flexibility that supports your company’s competitive needs–is an entirely different story. Too often we see insurance companies re-use the format, structure, and content of previously approved competitor rating manuals that are themselves riddled with errors, inconsistencies, and ambiguities. This can lead you to submit a manual that contains unclear or incomplete information, which can lead to questions and even filing disapprovals by state Departments of Insurance (“DOI”).
Is it worth the extra time and effort to review your rating manual for compliance before submission? What’s the true cost if you gloss over this step?
In this article, we will outline a number of ways subjecting your rate manual to review by experts in regulatory compliance services before submission can help protect your company’s reputation–and your bottom line.

The benefits of a rating manual compliance review

By neglecting to perform a compliance review before submitting your rating manual, you are setting yourself up for material losses of both time and money. Consider these main benefits of having a rating manual that is peer reviewed for compliance issues before you submit:

  • Achieve Quicker Speed to Market

With a more compliant rating manual, you will get fewer DOI interrogatories and help to prevent a longer timeline or even disapproval. Rating manuals that are developed in a clear and concise manner with a clear rate order of calculation, appropriate headers, edition dates and page numbers promote clarity. This is not only true for the DOIs, but also for your company’s IT department when it comes to programming and implementing new rates or rate changes in your system as quickly as possible.

  • Remove Inconsistencies and Ambiguities in Rating/Rules

When manuals are not clear, it can create the need for costly and time-consuming refilings or even incorrect policyholder rating. This could cause even more problems during a market conduct exam.

  • Consistency With Forms and Endorsements That Have Premium Impact

It is important that your rating manual has corresponding rules for any forms or endorsements that have an associated rate. The rule should describe the form/endorsement and how it is used to prevent any discrimination or inconsistent application across similar insureds. It is also important to provide clarity on other factors/rates that may or may not impact an endorsement premium, such as minimum premiums or other manual factors, discounts and surcharges. Lack of consistency and clear rules can muddy the process of rating a policy.

  • Minimize Cost of Filing Revisions

If your rating manual or rules are incorrect or inconsistent and the errors are material, it could warrant an entire nationwide refiling to correct it. Nationwide filings have an associated cost and timeline. While the initial nationwide filing is necessary to achieve approval, minimizing the need for future filing revisions could save your company time and money.

  • Help Reduce Market Conduct Exam Fines

During a market conduct exam, examiners typically rate policies and see if they get the same premium you have charged your insureds. If your manual is unclear, missing information or in error, it significantly increases the likelihood of large fines and the need for avoidable nationwide refilings.

Avoid these common mistakes

During our decades of providing expert insurance consulting services for all Property & Casualty lines of business across all jurisdictions, we have reviewed and developed hundreds of rating manuals. We have seen the good, the not-so-good, and some downright sloppy messes.
Here are some tips on how to avoid three of the most common costly and time-consuming errors.
Make sure you include rules for forms and endorsements. Many manuals are unclear on how to rate forms and endorsements to achieve the final premium. If you put these rules for forms in your rating manual, it helps prevent ambiguity and assists with programming by your IT department.
Eliminate ambiguity by adding a rate order of calculation. While many personal lines manuals (like automobile and homeowners) include a rate order of calculation, many commercial line manuals do not. If you do not include a rate order of calculation (which explains the logic on exactly how to rate a risk), at least create an internal version, or a simple Excel-based rating engine, to help your team understand the complete rating methodology for arriving at the final rate.
Be on the lookout for missing rules. When it comes to insurance ratemaking, no detail is too small. Pay close attention to things like rounding rules, minimum premium rules, and waiver/additional premium rules. If you are not clear, it can jeopardize the compliance of your manual.
Handling all regulatory compliance services in-house might seem like a good idea, but beware of the potential problems it could cause. Lacking deep experience while developing a new rating manual without comprehensive knowledge of state requirements could lead to costly time-consuming errors.  We recommend working with an insurance consulting expert who specializes in rate manual development and associated compliance issues. A review by a third-party with a fresh perspective and thorough knowledge of state DOI requirements will help expose errors and give you the opportunity to implement changes before your initial submission.
The bottom line when it comes to rating manuals: get it right the first time or risk paying the price.
Talk to the insurance consulting experts at Perr&Knight about a rating manual compliance review today.

Insurance Company Licensing: What to Expect

by Diane Karis

Whether you are submitting a primary application to license a new insurance company, seeking to expand coverage to additional states or adding a line of business so your company can write a new product, every insurance company’s goal is to obtain a speedy approval to begin binding policies as soon as possible.
All types of insurance company licensing share common characteristics. However, many companies proceed full-steam ahead without thoroughly understanding the challenges with licensing that can delay approvals and drain resources in the process.
Based on our extensive experience providing insurance company licensing support in all lines of business in every state, here are some of the top considerations to keep in mind as you submit your insurance license applications.

Expect slightly different requirements from each state.

About 80% of your licensing application information will be standard across the board. But the difference contained in the remaining 20% may jeopardize your approval. If you receive the same question from more than one state, it’s probably something you should address in all of your applications. All states grant the ability to withdraw your application without prejudice, so be proactive about amending your applications and re-submitting. If your company does not have the resources to review each individual application for state-specific requirements, consider working with a specialized consultant whose experience managing each state’s insurance company licensing process can limit unnecessary delays.

Details are critical.

Incomplete applications are a primary cause for delays, rejections or resubmission requests. Keep in mind that departments of insurance will not refund your filing fee once your check has been cashed.
Therefore, it’s smart to take the time to make sure that every question on your application is answered completely. If you don’t understand a question or a specific requirement, contact the state’s Department of Insurance directly and ask. Failure to submit complete, accurate information can cause your application to get kicked back, stalling your approval before the review process has even begun.

Consider your license’s capital requirements.

Your license approval may require your company to outlay a significant amount of additional capital. Your approval might stipulate that you meet certain capital requirements, such as increasing your capital and surplus or your statutory deposit. Consider your company’s process for informing your Board of Directors and the steps your financial department will need to take to ensure that you can access the requisite amount of funds.

Expedite approval of application fees with your finance department.

Your application is not considered complete unless it includes your full submission fees. Take your company’s accounting process into consideration, including the time between payment requisition and obtaining a check in hand. We’ve seen this process sidetrack our clients’ submissions, so our policy is to advance most fees when submitting applications on our clients’ behalf. This enables our clients to generate a single payment to us that covers every portion of their filing, including payment for our service.

Follow up with State Departments of Insurance.

Don’t just submit your application and wait. Though you might submit to multiple states at once, one of the challenges with licensing is that each state reviews applications on their own timetable. Follow up directly with each State Department of Insurance to make sure your application has been received and is getting the attention it deserves. If you lack the manpower for this level of involvement, partner with an insurance consulting services company that is experienced in following up with DOIs and has a tracking system in place.

Expect a mountain of paperwork and many, many man-hours.

Even with paperless submissions and electronic tools, licensing still requires copious amount of paperwork. California alone issues an 80 lb. box of paper.  Therefore, create efficiencies wherever possible. Submit forms via the UCAA electronic application, use digital tracking tools like StateFilings.com, or work with an insurance consulting services company who can manage your applications for you.

The Departments of Insurance make the rules. It pays to follow them.

Though there might be a rule or requirement that seems illogical to you, DOIs are not likely to change their processes anytime soon. Therefore, it’s in your best interest to supply the information they request on their timetable. Prepare to lose a few battles in the interest of winning the war.
Insurance company licensing is a lengthy and detail-intensive process that can take anywhere from six months to a few years. This is not an extensive list of challenges but by keeping the above in mind during your submissions, you can set achievable expectations and timetables.
If you have questions about insurance company licensing, call Perr&Knight at (888) 201-5123 x3 and we will discuss ways we can help streamline your licensing approvals.