benchmark

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• Langue: English

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BEFORE THE COMMISSIONER OF INSURANCE
OF THE STATE OF KANSAS

In the Matter of )
Benchmark Insurance Company ) Docket No. 3425-MC

ORDER
Pursuant to the authority conferred to the Commissioner of Insurance in K.S.A.
40-222, Sandy Praeger, the duly elected, qualified Commissioner of Insurance hereby
adopts the Kansas Insurance Department’s June 30, 2003 Report of Market Conduct
Examination of Benchmark Insurance Company (attached herein as Attachment A) by
incorporating the same in its entirety with specific findings stated as follows:
Findings of Fact
1. The Commissioner of Insurance has jurisdiction over this matter pursuant to
K.S.A. 40-222.
2. The Kansas Insurance Department (hereinafter “KID”) completed a market
conduct examination of the Benchmark Insurance Company (hereinafter
“Benchmark” or “the Company”) in June 2003.
3. On or about September 10, 2004, the examiner-in-charge provided Benchmark
with a draft of the written Report of Market Conduct Examination with notice
advising the company regarding its opportunity to prepare and submit to KID
written comments, additions, or acceptance with respect to any and all matters
contained in the report by October 15, 2004.
4. Benchmark responded with written comments regarding the draft report on
October 11, 2004. (See Attachment B). 5. The Kansas Commissioner of Insurance has since fully reviewed said Kansas
report.
6. Benchmark’s Kansas Manual for Non-standard Automobile - New Business, ¶4,
p.2, filed with the KID effective 12/1/02, states: “[a] policy is issued promptly
based on the premium submitted and surcharges determined from the application
and the motor vehicle record. If additional accidents and/or violations results from
the MVR or other variables cause the premium to differ from the quoted
premium, the policy term will be adjusted to the exact number of dates covered by
the premium submitted.” (See, Attachment A, pp. 17-18).
7. Benchmark calculates its non-standard automobile new business policy
premiums as a percentage basis of 30-day rate for the risk insured, i.e. not
calculated on a per day basis but rather on a ratio to the 30-day term. (Id.)
8. In 2 out of the 44 randomly selected files regarding cancellation for nonpayment
of premium, Benchmark received premiums from its managing agent but
cancelled for non-payment after premium payment checks written by the insured
to the company were tendered but subsequently returned from the banks on the
1ground of non-sufficient funds.

1 Renewal payments were applied to NSFs in prior terms prior non-renewal:
BFP 134424 and BFP 136750

_____________________________________________________________________ 2
ORDER
In the Matter of Benchmark Insurance Company, Docket No: 3425-MC
9. In four incidents involving paid auto claims, Benchmark failed to respond to
claim correspondence in a timely manner as required by the pertinent Kansas
2insurance regulations.
10. In eleven incidents involving paid auto claims, Benchmark failed to properly
handle claims in accordance with policy provisions and applicable Kansas
3insurance statutes, rules and regulations.

Applicable Law
11. K.S.A. 40-2403 states:

No person shall engage in this state in any trade practice which is defined
in this act as, or determined pursuant to K.S.A. 40-2406 to be, an unfair
method of competition or an unfair or deceptive act or practice in the
business of insurance.

12. K.S.A. 40-2404 states, in pertinent part:

The following are hereby defined as unfair methods of competition
and unfair or deceptive acts or practices in the business of
insurance:

. . .

(1) Misrepresentations and false advertising of insurance policies. Making,
issuing, circulating or causing to be made, issued or circulated, any
estimate, illustration, circular, statement, sales presentation, omission or
comparison which:

2 Paid Claims:
LFN0016394, LFN0014923, LFN0017455, LFN0017872, violations of K.A.R. 40-l-34(6)(c).

3 Paid Claims:
BMK C01574, violation of K.A.R. 40-l-34(8)(e).
LFN 0017357, LFN 0017080, BMK C01146, LFN 0015651, LFN 0014856, violations of K.A.R.
40-1-3-4(9)(a)(1).
BMK C01670, violation of K.A.R. 40-1-34(9)(a)(2), (9)(j)(2).
LFN 0016646 and LFN 0014923, violations of K.A.R. 40-1-34(9)(a)(2)(A) & (B)
LFN 0017273, LFN 0017872, violations of K.S.A. 40-3110.

_____________________________________________________________________ 3
ORDER
In the Matter of Benchmark Insurance Company, Docket No: 3425-MC
(a) Misrepresents the benefits, advantages, conditions or terms of any
insurance policy;
. . .
(10) Failure to maintain complaint handling procedures. Failure of
any person, who is an insurer on an insurance policy, to maintain a
complete record of all the complaints which it has received since the
date of its last examination under K.S.A. 40-222, and amendments
thereto, but no such records shall be required for complaints received
prior to the effective date of this act. The record shall indicate the
total number of complaints their classification byline of insurance,
the nature of each complaint, the disposition of the complaints, the
date each complaint was originally received by the insurer and the
date of final disposition of each complaint. For purposes of this
subsection, “complaint” means any written communication primarily
expressing a grievance related to the acts and practices set out in this
section. K.S.A. 40-2404(10)


13. K.S.A. 40-2405 states:

The commissioner shall have power to examine and investigate into
the affairs of every person engaged in the business of insurance in this
state in order to determine whether such person has been or is
engaged in any unfair method of competition or in any unfair or
deceptive act or practice prohibited by K.S.A. 40-2403.


14. K.S.A. 40-2406 states:

(a) Whenever the commissioner has reason to believe that any such
person has been engaged or is engaging in this state in any unfair
method of competition or any unfair or deceptive act or practice,
whether or not defined in K.S.A. 40-2404 and amendments thereto,
and that a proceeding by the commissioner in respect thereto would
be in the interest of the public, the commissioner shall issue and serve
upon such person a statement of the charges in that respect and
conduct a hearing thereon in accordance with the provision of the
Kansas administrative procedure act.

(b) If, after such hearing, the commissioner determines that the person
charged has engaged in any unfair method of competition or any
unfair or deceptive act or practice, any costs incurred as a result of
conducting any administrative hearing authorized under the provisions
of this section shall be assessed against such person or the company or
companies represented by such person as an agent, broker or adjuster
who is a participating party to the matters giving rise to the hearing.
_____________________________________________________________________ 4
ORDER
In the Matter of Benchmark Insurance Company, Docket No: 3425-MC
As used in this subsection, “costs” shall include witness fees, mileage
allowances. any costs associated with reproduction of documents
which become a part of the hearing record and the expense of making
a record of the hearing

15. K.S.A. 40-2,125 states, in pertinent parts:

(a) If the commissioner determines after notice and opportunity for
a hearing that any person has engaged or is engaging in any act or
practice constituting a violation of any provision of Kansas
insurance statutes or any rule and regulation or order thereunder,
the commissioner may in the exercise of discretion, order any one
or more of the following:

(1) Payment of a monetary penalty of not more than $1,000 for each
and every act or violation, unless the person knew or reasonably
should have known such person was in violation of the Kansas
insurance statutes or any rule and regulation or order thereunder in
which case the penalty shall be not more than $2,000 for each and
every act or violation;

16. K.S.A. 40-955 states, in pertinent parts:

(a) Every insurer shall file with the commissioner . . . every manual of
classifications, rules and rates, every rating plan, policy form and
every modification of any of the foregoing which it proposes to
use. Every such filing shall indicate the proposed effective date and
the character and extent of the coverage contemplated and shall be
accompanied by the information upon which the insurer supports
the filings.

. . .

(f) No insurer shall make or issue a contract or policy except in
accordance with filings which have been filed or approved for such
insurer as provided in this act.

17. K.S.A. 40-3118 states, in pertinent part:

(a) No motor vehicle shall be registered or reregistered in this state
unless the owner, at the time