CDOI, 790.03(h): The California Fair Claims Settlement Practices Regulations

Why Should You Attend:

The regulations imposed on all insurance claims personnel the requirement that they read and understand the regulations or attend an annual training program no later than September 1 of each year. They require that insurers ascertain that every employee involved in any way in the claims process is trained about the regulations or has submitted a sworn statement that he or she has read and understands the regulations. The regulations even require that the insurance claims managing executive attest, under oath, that each employee has been trained with regard to and/or understands the Regulations. This requirement must be complied with in order to avoid the possibility of administrative penalties upon the insurer or prosecution of the officer for perjury.

This webinar will cover these regulations and will allow attendees to certify to any insurer that he or she has been trained concerning the regulations. That certification must then be maintained by the insurer to present it to the CDOI if required.

Areas Covered in the Webinar:

• The reasons behind the California regulations
• The California Fair Claims Settlement Practices Regulations
• The rights of the CDOI to enforce the regulations
• The use of the regulations in trial
• The regulations and the court

Who Will Benefit:

• Insurer Claims Executives
• Insurer Claims Representatives
• Independent Insurance Adjusters
• Insurer SIU Investigators
• Insurance Agents and Brokers
• Operational Risk Managers
• Insurance Coverage Lawyers
• Insurance Claims Lawyers

Instructor Profile:

Barry Zalma, Esq., CFE, has practiced law in California for more than 43 years as an insurance coverage and claims handling lawyer. Mr. Zalma now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally, for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Mr. Zalma is the author of “Insurance Law” published by the National Underwriter Company; “The Insurance Fraud Deskbook” published by the American Bar Association; “Insurance Claims: A Comprehensive Guide;” the “Mold Claims Coverage Guide;” the “Construction Defects Coverage Guide” published by the National Underwriter Company. In addition e-books are available from ClaimSchool, Inc. including “Zalma on Diminution of Value Claims”; “Getting the Whole Truth”; “Random Thoughts on Insurance – Volumes I, II and III”; “MOM & the Taipei Fraud”; “Zalma on Insurance – 2013”; “Heads I Win, Tails You Lose”; “Zalma on California SIU Regulations”; “Zalma on California Claims Regulations – 2013”; “Zalma on Rescission of Insurance in California – 2013”; “Murder and Insurance Fraud Don’t Mix”; “Murder & Old Lace”; and “Arson for Profit.”

Topic Background:

Insurance is a means of spreading the risk of loss by mutual promises. An insurance policy is created by an exchange of promises between the insurer and the person seeking insurance. The insurer promises to indemnify (compensate the person seeking insurance for loss or damage) the person seeking insurance against certain specified risks of loss.

Since some insurers failed to fulfill their promises, took advantage of their insureds, or because they acted in bad faith, the California legislature enacted a Fair Claims Settlement Practices Act to allow it to regulate insurers. The state set up a statutory scheme and a set of regulations that allowed the state, by the office of the elected insurance commissioner, to punish insurers who violated the statutory and regulatory requirements. The statutes and regulations are one sided, they only control the activities of insurers, not those who are insured.

In 1993, the California Department of Insurance started the regulatory process to control, through regulatory micromanagement, claims handling in the state of California. The first version of what was then called the “Unfair Claims Settlement Practices Regulations” were issued to comply with the direction of the California Supreme Court made as part of the ruling in a case known as Moradi-Shalal v. Fireman’s Fund Ins. Companies, 46 Cal. 3d 287 (1988) that concluded: “Neither [Insurance Code] section 790.03 nor section 790.09 was intended to create a private civil cause of action against an insurer that commits one of the various acts listed in section 790.03, subdivision (h).” The Supreme Court concluded that enforcement was the obligation of the CDOI.

The CDOI, five years after receiving instruction from the Supreme Court, issued the first version of the Regulations in 1993 and modified the Regulations in 1996, 1997, 2004, 2007 and 2009. The 1997 changes renamed the Regulations the “California Fair Claims Settlement Practices Regulations,” which name remains.

The regulations imposed on all insurance personnel a detailed laundry list of actions the CDOI considered wrongful or in violation of the Fair Claims Practices Act, California Insurance Code Section 790.03(h).

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