Hassle-Free Health Coverage: Regulatory Reform Issues
In 1993, California Insurance Commissioner John Garamendi put in place a number of regulations to simplify the claims process. The California regulations were loosely patterned after model standards adopted in 1991 by the National Association of Insurance Commissioners. Insurance industry analysts predicted their use in California may influence other states' treatment of similar standards.
Among Garamendi's 1993 regulations:
- Within 15 days of any notice of claim, an insurance company must acknowledge receiving the notice. The company must also start its investigation within 15 days of receiving a notice of claim.
- Within 40 days of receiving a notice of claim, an insurance company must affirm or deny the claim and affirm or deny liability.
- If 40 days isn't sufficient time, the company must write to the claimant and specify why more time is needed, and what further information it needs.
- A denial of a claim, in whole or part, must be accompanied by a letter that spells out the policy provisions and factors on which the company is relying. All denials must include a notice that the company's decision can be reviewed by the Insurance Department.
- Insurance companies must disclose to their policyholders all benefits, coverage, time limits or other relevant provisions of any policy they have issued that may apply to a claim.
- Any other communication that "reasonably suggests that a response is expected," and that regards a claim not in litigation, must be responded to within 15 days of receipt.
