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 DJ Wasson DEPUTY SECRETARY Sharon P. Clark COMMISSIONER # BULLETIN 2024-04 The following Bulletin is to advise the reader of the current position of the Kentucky Department of Insurance 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: July 15, 2024 *** The Kentucky Department of Insurance (the Department) has elected to adjust the error tolerance rates utilized in Market Conduct Examinations. The Department will utilize the following error tolerance rates, which either mirror the error tolerance rates recommended in National Association of Insurance Commissioners' Market Regulation Handbook or set a slightly stricter threshold. The error tolerance rates specified in this Bulletin shall supersede any error tolerance rates previously issued by the Department. To that end, please be advised of the following error tolerance rates which are immediately effective as of the date of this Bulletin: MARKET CONDUCT EXAMS – HEALTH LINES OF BUSINESS | AREA | ERROR TOLERANCE PERCENTAGE | | --- | --- | | Company Operations and Management | 0% | | Record Retention | 5% | | Complaints | 10% | | Marketing and Sales | 0% | Page 1 of 3 | Licensing and Appointments | 0% | | --- | --- | | Policyholder Service | 10% | | Underwriting and Rating Practices | 10% | | Claims Settlement Practices | 5% | | Utilization Review | 5% | # **MARKET CONDUCT EXAMS – P&C LINES OF BUSINESS** | AREA | ERROR TOLERANCE PERCENTAGE | | --- | --- | | Company Operations and Management | 0% | | Record Retention | 5% | | Complaints | 10% | | Marketing and Sales | 0% | | Licensing and Appointments | 0% | | Policyholder Service | 10% | | Underwriting and Rating Practices | 10% | | Claims Settlement Practices | 5% | | LGPT-Risk Allocation | 10% | # **MARKET CONDUCT EXAMS – LIFE LINES OF BUSINESS** | AREA | ERROR TOLERANCE PERCENTAGE | | --- | --- | | Company Operations and Management | 0% | | Record Retention | 5% | | Complaints | 10% | | Marketing and Sales | 0% | | Licensing and Appointments | 0% | Page 2 of 3 | Policyholder Service | 10% | | --- | --- | | Underwriting and Rating Practices | 10% | | Claims Settlement Practices | 5% | | LGPT-Risk Allocation | 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