American National Insurance Company

American National Insurance Company
American National Property And Casualty Company American National General Insurance Company 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company California Fair Claims Settlement Practices Regulations California Code of Regulations, Title 10, Chapter 5, Subchapter 7.5, Sections through Approved by OAL and filed with Secretary of State 12/31/12. per : Compliance Date: 3/30/13 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company California Laws and Regulations Relating to Claims Handling and Unfair Claims Practices 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company As a representative of American National Insurance Company (ANICO) handling California-based claims, you are expected to thoroughly review, be familiar with, and apply the requirements contained in this version of the California Fair Claims Settlement Practices Regulations. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company The materials compiled in this training program are compiled from the California Department of Insurance home page and the National Association of Independent Insurers (NAII). The presentation includes explanations of relevant California laws and regulations. naii.org 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Agenda The annual review of relevant portions of the regulations as they pertain to California claims practices by certain staff members of American National Insurance Company (American National). These staff members are directly involved the handling, evaluation, and processing of claims. Upon notification of the completion of the review of this training program, a certificate will be prepared and forwarded to each staff member. Copies of the certificates are retained by American National. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section 2695 – Outline Preamble Definitions File and Record Documentation Representation of Policy Provisions and Benefits Duties Upon Receipt of Communications Training and Certification Standard for Prompt, Fair, and Equitable Settlements Additional Standards Applicable to Automobile Insurance 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section 2695 – Outline (continued) Auto Body Repair Consumer Bill of Rights Additional Standards Applicable to First Party Residential and Commercial Property Insurance Policies Standards Applicable to Surety Insurance Additional Standards Applicable to Life and Disability Insurance Penalties * Severability *(Not covered in the training program at this time.) 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Preamble Section (h) California Insurance Code (CIC) identifies sixteen (16) claims settlement practices that are considered unfair claims settlement practices and are, thus prohibited by this section of the CIC. The Insurance Commissioner has promulgated these regulations in order to accomplish the following objectives: (1) To delineate certain minimum standards for the settlement of claims when violated knowingly on a single occasion or performed with such frequency as to indicate a general business practice shall constitute an unfair claims settlement practice within the meaning of Insurance Code Section (h); 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Preamble (continued) Section (h) California Insurance Code (CIC) identifies sixteen claims settlement practices that are considered unfair claims settlement practices and are, thus, prohibited by this section of the CIC. The Insurance Commissioner has promulgated these regulations in order to accomplish the following objectives: (2) To promote good faith, prompt, efficient, and equitable settlements of claims on a cost effective basis; (3) To discourage and monitor the presentation to insurers of false and fraudulent claims; and (4) To encourage the prompt and thorough investigation of fraudulent claims and ensure the prompt and comprehensive reporting of suspected fraudulent claims as required by Insurance Code Section ; 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company CIC Section (h) Knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices: Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverage at issue Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured Not attempting in good faith to effectuate prompt, fair and equitable settlements of claim in liability has become reasonably clear Compelling insureds to institute litigation to recover amount due under an insurance policy by offering substantially less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company CIC Section (h) (continued) (7) Attempting to settle a claim by an insured for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application (8) Attempting to settle claims on the basis of an application, which was altered without notice to, or knowledge or consent of, the insured, his or her representative, agent, or broker (9) Failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made (10) Making known to insureds or claimants a practice of the insurer of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration (11) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company CIC Section (h) (continued) (12) Failing to settle claims promptly where liability has become apparent under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage (13) Failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement (14) Directly advising a claimant not to obtain the services of an attorney (15) Misleading a claimant as to the applicable statute of limitations (16) Delaying the payment or provision of hospital, medical, or surgical benefits for services provided with respect to acquired immune deficiency syndrome or AIDS-related complex for more than sixty (60) days after the insurer has received a claim for those benefits, where the delay in claim payment is for the purpose of investigating whether the condition preexisted the coverage. However, this 60-day period shall not include any time during which the insurer is awaiting a response for relevant medical information from a health care provider 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Definitions Beneficiary - A party or parties entitled to receive the proceeds or benefits occurring under the policy in lieu of the insured Calendar Days - Each and every day including Saturdays, Sundays, and Federal and California State Holidays. If the last day for performance of any act required by these regulations falls on one of these days, the period of time to perform the act is extended to and including the next calendar day which is not a Saturday, Sunday, or State or Federal Holiday. Claimant - A first or third party as defined in these regulations. Any person who asserts a right of recovery, as designated by the insured. Can be an attorney, an insurance adjuster, a public adjuster, or any member of the claimant’s family. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Definitions (continued) Claims Agent - Any person employed or authorized by the insurer to conduct an investigation of a claim - Does not include attorneys unless retained by the insurer - Does not include persons hired to provide valuation as to the subject matter of the claim Insurer - Any licensed person or entity that issues an insurance policy that issues insurance policies or otherwise transacts the business of insurance in the state of California Insurance Policy - The written instrument in which any certificate or group insurance contract of insurance is set forth 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Definitions (continued) Investigation - All activities of an insurer or its claims agent related to the determination of coverage, liabilities, or nature and extent of loss or damage for which benefits are afforded by an insurance policy, obligations, and duties under a bond, and other obligations and duties arising from an insurance company or bond Licensee - Any person or entity that holds a license or Certificate of Authority issued by the California Insurance Commissioner Notice of Claim - Any written or oral notification to an insurer or its agent that reasonably apprises the insurer that the claimant wishes to make a claim. The term “notice of claim” shall not include any written or oral communication provided by an insured or principal solely for informational or incident reporting purposes. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Definitions (continued) Person - Any individual, association, organization, partnership, business, trust, corporation, or other entity Principal - A person whose debt or other obligation is secured or guaranteed by a bond and who has the primary duty to pay to pay the debt or discharge the obligation Proof of Claim - Any evidence or documentation in the possession of the insurer, whether having been submitted by the claimant or obtained by the insurer in the course of investigation, that provides evidence of a claim and that reasonably supports the amount of the claimed loss 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – File and Record Documentation Every licensee’s claim file shall be subject to examination by the Insurance Commissioner or by duly appointed designees. These files should contain all documents, notes, and work papers (including copies of all correspondence) pertaining to each claim in detail, so that events can be easily reconstructed and the licensee’s action pertaining to the claim can be determined; The insurer should be able to provide the claim number, the line of coverage, date of loss, date of payment of the claim, date of acceptance, the claim denial, or if the claim closed without payment. Information should be available for all open and closed files for the current year and preceding four (4) years; 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – File and Record Documentation (continued) The insurer shall record in the file the date the licensee received the claim, the date(s) the claim was processed, the date(s) the payment was transmitted or mailed, and every relevant document or material in the file; and The insurer shall record in the file the date the licensee received the claim, the date(s) the claim was processed, the date(s) the payment was transmitted or mailed, every relevant document or material in the file, and data must be kept available (in the form of hard copy files or claim files that are accessible, legible, and capable of duplication to hard copy) by the insurer. All open and closed files shall be maintained for the current year and the preceding four (4) years. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Representation of Policy Provisions and Benefits Every insurer shall disclose to a first party claimant or beneficiary all benefits, coverage, time limits, or other provisions of any insurance policy issued by that insurer that may apply to the claim presented by the claimant. When additional benefits might reasonably be payable under an insured’s policy upon receipt of additional proofs of claim, the insurer shall immediately communicate this fact to the insured and cooperate and assist the insured in determining the extent of the insurer’s additional liability. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Representation of Policy Provisions and Benefits (continued) No insurer shall: - misrepresent or conceal benefits, coverage, or time limits; - deny a claim on the basis of the claimant’s failure to exhibit property, unless there is documentation in the file (1) of a reasonable demand by the insurer and refusal by the claimant to exhibit the property; or, (2) of the breach of any policy provision providing from the exhibition of property; - require a first party claimant under a policy to give notification of a claim or proof of a claim within a specified time, except where a time limit is specified in the policy; - request that a claimant sign a release that extends beyond the subject matter that gave rise to the claim payment unless the release is fully disclosed and explained in writing to the claimant. This is not required if the claimant is represented by an attorney. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Representation of Policy Provisions and Benefits (continued) No insurer shall: - be precluded from including in any release a provision requiring the claimant to waive the provisions of the California Civil Code Section 1542; - issue drafts or checks in partial settlement of a loss or claim that contains or is accompanied by language releasing the insurer, the insured, or the principal from total liability unless the policy or bond has been paid, or there has been a compromising settlement agreed to by the claimant and the insurer as to the coverage and the amount payable under the insurance policy; - require a first party claimant or beneficiary to submit duplicate proofs of claim where coverage may exist under more than the policy issued by that insurer. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Duties on Receipt of Communications Upon receiving any written or oral inquiry from the California Department of Insurance concerning a claim, the licensee shall immediately, but no more than twenty-one (21) calendar days, provide a complete written response to the California Department of Insurance based on the facts as known and addressing all issued raised by the Insurance Department and including any documentation and claim files as requested. Upon receiving a communication from a claimant regarding a claim that reasonably suggests that a response is expected, the licensee should immediately, but no more than fifteen (15) calendar days, send a complete response to the claimant furnishing the facts as then known by the licensee. - Does not apply subsequent to notice of legal action by that claimant 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Duties on Receipt of Communications (received) Upon receiving notice of a claim, every licensee or claims agent shall immediately transfer notice of the claim to the insurer; Upon receiving notice of the claim, every insurer shall immediately, but in no event more than fifteen (15) calendar days later, do the following unless notice of claim received is notice of legal action: acknowledge receipt of the notice unless payment is made within that period of time; make a notation in claim file of the date received if notice is not in writing; - provide to the claimant necessary forms, instructions, reasonable assistance, and specify information needed for proof of claim; begin any necessary investigation of the claim; - not require that the notice of claim under a policy be provided in writing unless such requirement is specified in the insurance policy or endorsement thereto. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Training and Certification Every insurer shall adopt and communicate to all its claims agents written standards for the prompt investigation and processing of claims, and shall do so within ninety (90) days after the effective date of these regulations or any revisions. All licensees must provide thorough and adequate training regarding these regulations to all their claims agents. Licensees shall certify that their claims agents have been trained regarding these regulations and any revisions thereto. However, licensees need not provide such training and certification to duly licensed attorneys. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Training and Certification (continued) Individual licensees and claims agents must certify in writing (under penalty of perjury) that he or she has read and understands these regulations and any and all amendments. All certifications must be completed on an annual basis, on or before September 1st of each calendar year. Copies of the annual certifications shall be maintained by the licensee at the principal place of the business license to be provided to the Commissioner only upon request. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements No insurer shall discriminate based on age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, or physical disability, or upon the territory of the property or person insured. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) No insurer shall discriminate in it claims settlement practices based upon the claimant’s age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, or physical disability, or upon the territory of the property of the person insured. Upon receiving proof of claim, every insurer shall accept or deny the claim, in whole or in part, within forty (40) calendar days. The amounts accepted or denied should be clearly documented in the claim file unless the claim has been denied in its entirety. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) Denial to First Party claim in whole or in part, must: - be in writing to the claimant; - list all basis for such rejection or denial; - be factual and state a legal basis for each reason for the rejection or denial; and - reference the applicable law or statute, policy provisions, condition, or exclusion, where applicable. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) An insurer’s denial or rejection of a claim to a third party, in whole or in part, or the dispute of any liability or damages must be done so in writing. Subject to the provisions of (k), nothing contained in (b)(1) shall require an insurer to disclose any information that could reasonably be expected to alert a claimant to the fact that the subject claim is being investigated as a suspected fraudulent claim. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) All written notification of denials or rejections of a claim must contain: a statement 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; and shall include the address and telephone number of the unit of the Department that reviews claims practices: 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company California Department of Insurance 300 S. Spring Street Los Angeles, CA The claimant may also call the California DOI Consumer Hotline at: HELP (4357) 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) If more time is required to determine if a claim should be accepted and/or denied, in whole or in part, written notice shall be sent to all involved parties every thirty (30) calendar days until a determination is made. The notice should specify any additional information required by the insurer to make a determination or if legal action is served. The notice should contain the reason why the insurer is unable to make the determination. Thereafter, the insurer shall comply with the continuing notice requirement until a determination has been made. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) No insurer shall attempt to settle a claim by making a settlement offer that is unreasonably low. The California Insurance Commissioner shall consider any admissible evidence offered regarding the following factors in determining whether or not a settlement offer is unreasonably low. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company What would the Commissioner look at? Was claimant’s evidence considered? Was available evidence considered? Was the adjuster’s advice considered? Was counsel’s advice considered? What was insurer’s procedure on property damage? Was probable liability of insured considered? Was the likely jury verdict considered? Was any other credible evidence considered? 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Standards for Prompt, Fair, and Equitable Settlements (continued) No insurer shall require that a claimant withdraw, rescind, or refrain from submitting any complaint to the California Department of Insurance regarding the handling of a claim or any other matter complained of as a condition precedent to the settlement of a claim. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Automobile Insurance One of the following methods must be used to settle first party automobile claims: a cash settlement based on the actual cost of a comparable automobile, less any deductible provided in the policy. The cash settlement amount shall include all applicable taxes and fees incident to transfer of evidence of ownership to a comparable automobile; a replacement auto, which is a specified comparable automobile available to the insured with all applicable taxes, license fees, and other fees incident to transfer of evidence of ownership of the automobile paid by the insurer, at no cost other than any deductible provided in the policy. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Auto Insurance (continued) NON OEM (Original Equipment Manufacturer) crash parts prohibited, unless the following conditions are met: Parts are at least equal to the OEM in terms of kind, quality, safety, fit, and performance; and Insurers specifying the use of NON OEM equipment must pay the cost of any modifications to the parts, which become necessary to effect the repair; and The insurer must warrant such parts are at least equal to the OEM equipment; and, All parts shall carry identification to identify the manufacturer. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Auto Insurance (continued) If using a selected repair facility: the insurer must restore the vehicle to its condition prior to the loss at no additional cost; the claimant cannot be required to travel an unreasonable distance either to inspect a replacement automobile, conduct an inspection of the vehicle, to obtain a repair estimate, or have the vehicle repaired there. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Auto Insurance (continued) When an amount claimed is adjusted, because of a vehicle’s betterment, depreciation: all justification shall be contained in the claim file. All judgments should accurately reflect the betterment or depreciation; a full explanation of the vehicle’s betterment or depreciation shall be fully explained to the claimant in writing. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Auto Insurance (continued) An Insurer cannot: recommend that a claimant use his or her own policy where liability/damages are clear; require a vehicle be repaired at a specific shop; or direct a vehicle be repaired at a shop, unless - requested by claimant, and - claimant has been advised in writing of right to select a repair facility. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Auto Insurance (continued) When using a selected repair facility, if partial loss is settled on the basis of a written estimate prepared by or for the insurer, the insurer will supply a copy of the estimate on which the settlement is based. If the claimant contends that necessary repairs exceed the written estimate prepared by or for the insurer: the insurer must pay the difference between the written estimate and the estimate provided by the claimant; or - provide the claimant with the name of a repair shop that will make the repairs for the amount of the insured’s written estimate; or - reasonably adjust any written by the repair shop of the insured’s choice and provide a copy of the adjusted estimate to the claimant. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Auto Insurance After a covered loss under a policy for automobile collisions coverage or automobile physical damage coverage as defined in California Insurance Code (CIC) Section 660, where towing and storage are reasonably necessary to protect the vehicle from further loss, the insurer must pay reasonable towing and storage charges incurred by the claimant. The insurer must provide reasonable notice to a claimant before terminating payment for storage charges, so the claimant has time to remove the vehicle from storage. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Auto Body Repair Consumer Bill of Rights Every insurer that issues automobile liability or collisions insurance policies shall provide the named insured with an Auto Body Repair Consumer Bill of Rights either at the time of application, at the time the policy is issued, or following an accident or loss reported to the insurer. The Auto Body Repair Consumer Bill of Rights shall be a separate standardized document plainly printed in at least ten (10) point type. The document may be distributed on the insurer’s letterhead but shall read as follows: 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to First Party Residential and Commercial Property Insurance Policies When residential or commercial property insurance policy provides for the adjustment and settlement of first party losses based on replacement cost, the following standards apply: When a loss requires repair of replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for the depreciation nor any other cost but the acceptable deductible. No insurer shall require that the insured have the property repaired by a specific individual or entity. No insurer shall recommend that the insured have the property repaired by a specific individual or entity unless the referral is expressly request by the claimant. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to First Party Residential and Commercial Property Insurance Policies (continued) If the claimant accepts the suggestion or recommendation of a repair individual or entity, the insurer shall cause the damaged property to be restored to no less than its condition prior to the loss and repaired in a manner, which meets accepted trade standards for good construction at no additional cost to the claimant other than stated in the policy or as otherwise allowed by these regulations. The insurer will take reasonable steps to verify that the repair or rebuilding costs utilized by the insurer or claims agents are accurate and representative of costs in the local market area. If the claimant subsequently contends, based on written estimates, which he or she obtains, that the necessary repairs will exceed the written estimate prepared by or for the insurer, the insurer shall pay the difference between the written estimate and a higher estimate obtained by the claimant; or - provide the claimant with the name of at least one repair individual or entity that will make the repairs for the amount of the written estimate. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to First Party Residential and Commercial Property Insurance Policies (continued) When the amount claimed is adjusted, because of betterment, depreciation or salvage; - all justification for the adjustment shall be contained in the claim file. Any adjustments shall be discernable, measurable, itemized, and specified as to the dollar amount, and shall accurately reflect the value of the betterment, depreciation, or the salvage. - any adjustment shall reflect an measurable difference in market value attributable to the condition and age of the property and apply only to the property normally subject to repair and replacement during the useful life of the property. The basis for the adjustment shall be fully explained to the claimant in writing. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Additional Standards Applicable to Life and Disability Claims No insurer shall seek reimbursement of an overpayment or withhold any portion of any benefit payable as a result of a claim on the basis that the sum withheld or reimbursement sought is an adjustment or correction for an overpayment made under the same policy unless: - the insurer’s files contain clear, documented evidence of an overpayment and written authorization from an insured or assignee, if applicable, permitting the reimbursement or withholding procedure; or - the overpayment was erroneous under the provision of the policy; - the error, which resulted in the overpayment was not a mistake of the law. The insurer notifies the insured within six (6) months of the date of the error, except in instances of error prompted by representations of nondisclosure of claimants or third parties, the insurer notifies the insured within fifteen (15) calendar days after the date of discovery of the error: - the notice clearly states the cause of the error and the amount of the overpayment. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Penalties In determining whether to assess penalties and, if so, the appropriate amount to be assessed, the Insurance Commissioner will consider evidence on the following: - the existence of extraordinary circumstances; - whether the licensee has a good faith and reasonable basis to believe that the claim or claims are fraudulent; - the complexity of the claim involved; - a gross exaggeration of the value of the property, severity of the injury, or the amount of damages incurred; - substantial mischaracterization of the circumstances surrounding the loss or alleged default of the principal; - secreting of property that has been claimed as lost or destroyed; - the relative number of claims where the non-complying act(s) are found to exist, the total number of claims handled by the licensee, and the total number of claims reviewed by the Department during a relevant time period; 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Section – Penalties (continued) - whether the licensee has taken remedial measure with respect to the non-complying act; - existence or non-existence of previous violations by the licensee; - the degree of harm occasioned by the non-compliance; - whether the licensee made a good faith attempt to comply with the provisions of this subchapter; - the frequency of occurrence and/or severity of the detriment to the public caused by the violation; - whether the licensee’s management was aware of the facts or should have been apprised of the act(s), and the licensee failed to take any remedial measures; and - the licensee’s reasonable mistakes or opinions as to the valuation of the property, losses, or damages. 8/01/2016 © American National Insurance Company

Credit Insurance License Training Program American National Insurance Company Thank You! You will receive a certificate for completing your review of the 2016 California Fair Claims Settlement Practices Regulations Training Program. 8/01/2016 © American National Insurance Company

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