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P&CCaliforniamedium

A California admitted homeowners insurer has experienced a spike in CDI complaints alleging slow claim handling after a wildfire. Under Ins. Code § 730, what type of CDI examination is most appropriate, and what does it review?

A market conduct examination focused on claim practices, underwriting, marketing, and producer compliance
BA financial examination focused on the insurer's risk-based capital ratio, statutory reserves, and overall solvency position
CA rate examination focused exclusively on whether the insurer's filed homeowners premiums remain actuarially justified after the wildfire
DA criminal grand jury investigation conducted under the Penal Code into the insurer's claim-handling personnel and managers

Why this is the answer

A market conduct examination, authorized under Ins. Code § 730 and conducted by CDI's Market Conduct Division, reviews how an insurer treats policyholders and claimants — including claim handling, underwriting, rating, advertising, and producer oversight. By contrast, a financial examination focuses on solvency, reserves, and statutory accounting. When complaint volume spikes — particularly after a CA wildfire — the Commissioner will typically open a market conduct exam to test compliance with the Fair Claims Settlement Practices Regulations (10 CCR §§ 2695.1 et seq.) and the Unfair Insurance Practices Act (Ins. Code § 790.03). See Ins. Code § 730.

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