Audit finds documentation gaps, inconsistent settlements at Insurance Reserve Fund

John Arnold, deputy commissioner with the North Dakota Insurance Department, presented a market conduct examination of the North Dakota Insurance Reserve Fund (NDIRF) at the Dec. 3 Legislative Audit and Fiscal Review Committee meeting in Bismarck.

The examination identified multiple deficiencies: claim files often lacked documentation such as adjusters' reports, repair estimates, police reports, photographs, and legal analyses; denial letters used standardized templates that did not provide adequate justification; claim-resolution processes and outcomes were inconsistent between first- and third-party claimants; and settlement offers to third-party claimants were consistently lower than those to first-party claimants. Arnold summarized recommendations including developing complaint-handling procedures, implementing checklists to complete claim files, engaging attorneys when complex legal principles are cited, and a review process before closing files.

Keith Pic, chief executive officer of the North Dakota Insurance Reserve Fund, told the committee that claimants bear responsibility for proving the covered entity was at fault and that documentation is sometimes omitted for organizational efficiency. A member of the public, Marc Montplaisir of Mandan, described his experience with the Fund's claims process and said his claim was denied.

Why it matters: the exam's findings raise concerns about equal treatment of claimants and the adequacy of internal controls over claim decisions at a fund that covers state entities. The recommendations, if implemented, would increase documentation, legal review, and oversight of claim closures.

Next steps: the record shows committee discussion; the transcript does not record a formal motion to require corrective action. The Fund and the Insurance Department have recommended changes and will be subject to further oversight at subsequent committee meetings if needed.