Error Rate for MC Exams

[LOGO] Andy Beshear GOVERNOR Jacqueline Coleman LIEUTENANT GOVERNOR # PUBLIC PROTECTION CABINET Kentucky Department of Insurance 500 Mero Street, 2SE11 Frankfort, KY 40601 Phone: (502) 564-3630 Toll Free: (800) 595-6053 Ray A. Perry SECRETARY Sharon P. Clark COMMISSIONER # BULLETIN 2023-001 The following Bulletin is to advise the reader of the current position of the Kentucky Department of Insurance ("Department"), on the specified issue. TO: All Insurers Licensed by the Kentucky Department of Insurance FROM: Sharon P. Clark, Commissioner RE: Changes to Error Tolerance Rates Applied in Market Conduct Examinations DATE: February 27, 2023 *** The Kentucky Department of Insurance (the "Department") has elected to adjust certain error tolerance rates utilized in Market Conduct Examinations. These modifications will allow for a more thorough analysis of insurance operations conducted in Kentucky, and more effective enforcement of the Kentucky Insurance Code and corresponding regulations. To that end, please be advised of the following error tolerance rate changes: MARKET CONDUCT EXAMS – HEALTH LINES OF BUSINESS | AREA | CURRENT ERROR TOLERANCE PERCENTAGE | ERROR TOLERANCE PERCENTAGE EFFECTIVE JULY 1, 2023 | | --- | --- | --- | | Company Operations and Management | 0% | 0% | | Record Retention | 5% | 0% | | Complaints | 10% | 0% | | Marketing and Sales | 0% | 0% | | Licensing and Appointments | 0% | 0% | | Policyholder Service | 10% | 5% | Page 1 of 3 | Underwriting and Rating Practices | 10% | 5% | | --- | --- | --- | | Claims Settlement Practices | 5% | 5% | | Utilization Review | 5% | 5% | # MARKET CONDUCT EXAMS – P&C LINES OF BUSINESS | AREA | CURRENT ERROR TOLERANCE PERCENTAGE | ERROR TOLERANCE PERCENTAGE EFFECTIVE JULY 1, 2023 | | --- | --- | --- | | Company Operations and Management | 0% | 0% | | Record Retention | 5% | 0% | | Complaints | 10% | 0% | | Marketing and Sales | 0% | 0% | | Licensing and Appointments | 0% | 0% | | Policyholder Service | 10% | 5% | | Underwriting and Rating Practices | 10% | 5% | | Claims Settlement Practices | 5% | 5% | | LGPT-Risk Allocation | 10% | 10% | # MARKET CONDUCT EXAMS – LIFE LINES OF BUSINESS | AREA | CURRENT ERROR TOLERANCE PERCENTAGE | ERROR TOLERANCE PERCENTAGE EFFECTIVE JULY 1, 2023 | | --- | --- | --- | | Company Operations and Management | 0% | 0% | | Record Retention | 5% | 0% | | Complaints | 10% | 0% | | Marketing and Sales | 0% | 0% | | Licensing and Appointments | 0% | 0% | Page 2 of 3 | Policyholder Service | 10% | 5% | | --- | --- | --- | | Underwriting and Rating Practices | 10% | 5% | | Claims Settlement Practices | 5% | 5% | | LGPT-Risk Allocation | 10% | 10% | Questions regarding this bulletin should be directed to the Market Conduct Division, Phone: 502-564-1936, or email: DOI.MarketConductMail@ky.gov. Sharon P. Clark Sharon P. Clark, Commissioner Kentucky Department of Insurance Page 3 of 3