WorkflowCompliance, Market Conduct & AI Governance

Claims Compliance Audit

A claims compliance audit of every closed claim — each deadline tested, each late step priced, each exception confirmed by a reviewer

Every closed claim checked, not the few dozen a reviewer can sample.

See one case, screen by screen ↓
demo14,286claimsclosed in the quarter, every one checked overnight against its state's five fair claims steps
demo559claimswith a late or missing step — where last quarter's 60-file sample found 2
demo$1.22Mof exposure at risk, each late step priced from its state's exposure basis
target100%of closed claims checked against their state's rules, not a sample
In short

What is Claims Compliance Audit?

Software that tests claims handling against the fair claims rules a regulator examines: acknowledgment, investigation, decision and payment deadlines, and what a denial letter must say. Claims Compliance Audit tests every closed claim rather than a sample, cites each step to its file page, and has a reviewer confirm every exception.

How to choose AI solutions for insurance →

Updated

The problem

Why a quarterly claims sample misses what the examiner finds

Every state's fair claims rules put clocks on a claim: acknowledge it, begin the investigation, accept or deny it, pay it, and explain any denial in writing with the reason, the policy provision and the regulator's review notice. Claims compliance tests those clocks by pulling a few dozen closed files a quarter, dating each step by hand from the notes and letters, and writing up what the sample shows.

The examiner pulls the whole claims population by data call. So the late status letters and the denial letters missing a review notice turn up in the exam, not in the quarterly memo. And when a sample does find errors, counting them points the fix at the most frequent one, not at the one that carries the most exposure.

demo60filesin last quarter's sample, which found 2 exceptions
demo3.9%of the full quarter had a late or missing step once every claim was tested
typical7%error tolerance examiners commonly test claims practices against
Where a quarter's claims audit days goestimated
By hand32 days
With the solution7 days
  • Pulling files and dating each step10 → 0.5 d
  • Testing each step against the state rule4 → 0.5 d
  • Reading denial and status letters3 → 1 d
  • Finding root causes and ranking fixes3 → 1 d
  • Answering an exam data call10 → 2 d
  • Review and sign-off2 → 2 d

Estimated split for one quarter's claims compliance testing and an exam data call response, by hand and with the solution.

How it works

How a closed claim is audited

Six specialist agents read every closed file, test each fair claims step and price every late one; a compliance reviewer confirms each exception.

What comes in
Closed claims in4 sources · claim files, letters, state rules, prior exam findings
Agents at work
File readerevery event dated, page cited
Then
Clock checker
Letter checker
Then
Exposure pricermoney at risk per late step
Then
Pattern finderroot causes, ranked by money
A person decides
Claims compliance reviewerconfirms or overturns each exception
What comes out
Pass or exception per claim, cited
Fix plan by money at risk
Exam evidence pack
One case, step by step

One quarter, one late decision, one exam pack

Ashgrove Mutual Insurance Group closed 14,286 claims in California, Texas, Florida and New York in the third quarter. The California Department of Insurance has sent a claims data call, due October 30. Here is what happens, screen by screen, in the working solution.

  1. 01Overnight · 02:00–03:14

    Every closed file read, every step tested

    The agents

    The file reader works through 14,286 closed files and 1,962,410 pages, dating every step and citing it to its page. The clock checker tests 58,571 steps against California v7, Texas v5, Florida v9 and New York v4. The letter checker reads 3,234 denial letters and finds 83 missing required content. The exposure pricer prices 559 late or missing steps, and the pattern finder ranks 11 patterns by money at risk.

    The last line of the run is a person: “Lena Hoshino confirms — 331 exceptions waiting · 212 confirmed.”

  2. 02Morning

    The quarter, one pixel per claim

    Lena Hoshino · Claims compliance lead

    Lena opens the strip wall: every closed claim of the quarter as a pixel, by state and by the week it closed — California 121 late, Texas 137, Florida 41, New York 260. Beside it, each claim is a strip of five dots — acknowledge, investigate, decide, pay, explain denial — placed on the day the step happened, with a tick for the state's deadline. On the right, $1,218,920 at risk, ranked by fix.

    “Last quarter's sample: 60 files, 2 exceptions.”

  3. 03One red dot

    The Prescotts' claim, decided 9 days late

    Lena Hoshino · Claims compliance lead

    CLM-CA-26-118427, Marisol & Ethan Prescott, homeowners, Chico. Proof of claim came on Jul 22, so California's 40 days ended Aug 31; the decision went out Sep 9. Lena clicks the red Decide dot and reads the rule, the three dates and the exposure: $5,000, up to $5,000 per act, non-willful, under Cal. Ins. Code §790.035(a).

    “No written status letter between Jul 22 and Sep 9 (file pages 32–37).”

  4. 04Open the file

    The claim against its state's clock

    Lena Hoshino · Claims compliance lead

    The strip is drawn large: each deadline window from its starting event, the proof-of-claim line on Jul 22, and the red overrun from Aug 31 to Sep 9. Below it, the file itself — 13 documents, 42 pages — from the first notice of loss to the contractor estimate of $31,470.00 that started the 40-day decision clock. Claimed $31,470.00, paid $18,640.22, denied $12,829.78.

  5. 05Where the clock passed

    Margin notes on day 30 and day 40

    File reader · Clock checker · Letter checker

    Two red margin notes sit in the file where the clock passed: day 30 from proof of claim on Aug 21, when a written status letter was due, and day 40 on Aug 31, the decision deadline. The letter checker confirms the Sep 9 partial denial gives the reason, section I.C.8 and the review notice — so the denial letter passes, and only the decision is late. The agents' run on this file is shown step by step, with a re-check button.

    The clock checker is fixed rules: the same dates always give the same result, and it never excuses a late step.

  6. 06Decided

    Confirm, or overturn with a reason

    Lena Hoshino · Claims compliance lead

    Nothing is an exception until a reviewer says so. Lena can confirm it, send it to Dev Ramaswamy, the team lead, or overturn it — and overturning asks why: the insured asked for more time in writing, the agent read the wrong date, or the claim is outside the audit. She confirms the Prescott claim: $5,000 at risk, added to the exam pack.

    “Overturning takes it out of the money at risk. The reason is kept with the file and shown in the exam pack.”

  7. 07The queue

    Every exception, priced and cited

    Claims compliance reviewers

    The exceptions queue holds all 559: 331 to confirm, 212 confirmed, 16 overturned. Each row names the step, what happened, the due and done dates, the cite, the days late, the team and the money at risk — the Texas commercial property payments made more than 5 business days after the acceptance letter, under Tex. Ins. Code §542.057(a), sit at the top. Reviewers filter by state and pattern, select and confirm in a batch.

  8. 08The fix plan

    Ranked by money, not by count

    Marcus Feld · Claims quality manager

    Counted, New York auto acknowledgments come first: 211 claims, $105,500. Priced, California homeowners decided past 40 days with no status letter come first: 63 claims, $315,000 — third by count. Each of the 11 patterns carries why it happens, the fix and the teams; Marcus assigns the status-letter fix — a day-30 diary from proof of claim — to Dev Ramaswamy.

    “Counting errors puts the wrong fix first; pricing them does not.”

  9. 09Every week

    Where the clock slips

    Marcus Feld · Claims quality manager

    Late or missing steps per 1,000 closed claims, by team and step: Albany Auto Team 2 at 148.5 on acknowledgments, Sacramento Property Team 3 at 42.2 on decisions, Austin Commercial Property at 38.4 on payments. Week by week by state, and by line — homeowners carry $560,640 at risk on 155 exceptions.

  10. 1018 days to the data call

    The exam pack builds; the VP signs

    Teodor Wills · VP, Compliance

    The exam pack builder assembles the California response in the Department's data call layout: the 5,128-claim population, a result per claim with its page citations, the 121 exceptions with evidence, the rules tested, the corrective actions for patterns 1, 2 and 8, the reviewer log and a draft cover memo. It then goes to Teodor Wills to sign.

    “Nothing is sent to the Department until he signs.”

Who it’s for

Built for everyone who answers for claims handling.

The same quarter, seen by the four people who carry it — what their quarter looked like, and what it looks like now.

LH
Lena HoshinoClaims compliance lead
Claims compliance reviewer
Before
Draws the quarterly sample, reads 60 files and writes the findings memo — while the examiner reads the other fourteen thousand.
Now
Starts the morning on a wall of every closed claim, with each late step cited to its file page; she confirms or overturns, with a reason.
MF
Marcus FeldClaims quality manager
Fix plan owner
Before
Gets a list of errors by count, and fixes the most common one first.
Now
Sees the same patterns ranked by money at risk beside the count, with the root cause and the teams, and assigns each fix to a lead.
DR
Dev RamaswamyTeam lead, Sacramento Property Team 3
Claims team lead
Before
Needs to know on day 30 that a file is heading past 40 days — and hears it from the audit instead.
Now
Sees his team's strips, gets the exceptions sent to him, and owns the day-30 status-letter fix — without being able to change a result.
TW
Teodor WillsVP, Compliance
Approver and signatory
Before
Signs an exam response assembled by hand from a sample and a spreadsheet.
Now
Approves every rule version and the exposure schedule, and signs a pack where every exception carries its file page and the rule it was tested against.
Built on the engine

6 agents. Each with one job, and hard limits.

Six specialist agents read every closed file, test each fair claims step and price every late one; a compliance reviewer confirms each exception.

File reader

Reads every note, letter, estimate and payment in a closed claim file and dates each event — notice, acknowledgment, investigation, proof of claim, decision, payment — with the page it came from.

  • Never infers a date the file does not show
  • Every date carries a citation
  • Where two documents disagree on a date, records both and flags it
Clock checker

Applies the state's rule to the dated events — calendar or business days, state holidays, the status-letter extension — and marks each step on time, within 2 days, late or not applicable.

  • Fixed rules: no model decides a deadline
  • Never excuses a late step
  • A written request for more time goes to a reviewer as possible tolling
Letter checker

Reads denial and status letters for what the state requires: the specific reason, the policy provision and the regulator's review notice — and looks for status letters between proof of claim and the decision.

  • Never writes to an insured
  • Quotes the letter; never paraphrases it as proof
Exposure pricer

Prices each late or missing step from the approved exposure schedule — per-act caps, statutory interest on the claim, the attorney's-fee allowance — and shows the arithmetic and the source on every amount.

  • Never calls an estimate a fine
  • Non-willful amounts unless a reviewer marks a file willful
Pattern finder

Groups exceptions into root causes by state, line, team, step and letter template, reads the claim notes for why the step slipped, and ranks the fixes by money at risk with the count rank beside it.

  • Never names an adjuster outside their team
  • Proposes a fix — a person assigns it
Exam pack builder

Assembles the evidence pack for a market conduct exam in the regulator's data call layout: population, results, exceptions with their file pages, corrective actions, the reviewer log and a cover memo.

  • Drafts the memo from confirmed numbers only
  • Never sends anything to a regulator
  • The VP, Compliance signs
Claims compliance reviewer

Confirms each exception; the VP, Compliance signs the exam pack. The agents propose; a named person decides.

Ask in plain words

Ask about any claim, rule or pattern

The claims compliance team can ask in plain words — or tell it what to change. Answers name the rule and the file pages they rest on.

Why is the Prescott claim an exception?

Because the decision was 9 days late with no status letter. Proof of claim came on Jul 22 (contractor estimate, file p. 19–31), so California's 40 days ended Aug 31. The partial denial went out Sep 9 (p. 38–40). A written status letter was due by day 30 if more time was needed — there is none between p. 32 and p. 37. Exposure: $5,000, per act, non-willful. Everything else on the strip is on time.

Which fix saves the most money at risk?

Pattern 1: California homeowners decided past 40 days with no status letter — 63 claims, $315,000. 41 are in Sacramento Property Team 3 and 22 in Fresno Property Team 2. The fix is a status letter diaried at day 30 from proof of claim. It was also a finding in the 2023 California exam. By count it is only third.

Rank the patterns by count instead

By count, New York auto acknowledgments come first — 211 claims — but they carry $105,500 on the compliance schedule, fifth by money. California's 63 status-letter claims carry three times as much.

Build the California exam pack

Building it now: the population of 5,128 California claims, every result with its page citation, 121 exceptions with evidence, rules v7, the corrective actions for patterns 1, 2 and 8, and the cover memo. It goes to Teodor Wills to sign; nothing is sent to the Department before that.

Every screen

The working solution, as it ships.

12 screens from the working solution, on its sample data. Pick one to see it large.

The strip wallThe quarter one pixel per claim, each claim a strip of five fair claims steps, and the money at risk ranked by fix.
The overnight runWhat each agent did overnight — files read, steps tested, letters checked, steps priced, patterns ranked — and what waits for the reviewer.
A late step, opened in placeThe rule, proof-of-claim, due and done dates, the missing status letter and the exposure with its basis — confirm it or say why not.
The claim fileThe strip drawn large against the state's deadline windows, the file page by page, and the exception with its exposure.
Margin notes and the agents' runRed margin notes where the clock passed, and each agent's step on this file with what it found.
Overturn with a reasonTolled, a wrong date read, or outside the audit — the reason is kept with the file and shown in the exam pack.
Exceptions to confirmAll 559 exceptions with the step, the dates, the cite and the money at risk; filter by state, pattern and status, and confirm in a batch.
The fix planThe same 11 patterns ranked by count and by money at risk, each with why it happens, the fix, the teams and an owner.
Where the clock slipsLate or missing steps per 1,000 closed claims by team and step, week by week by state, and by line.
State fair claims rulesEach state's five steps with days, how they count and the cite, what a late step can cost, and prior exam findings tested first.
The exam evidence packSeven parts in the data call layout, built step by step, with a cover memo drafted for the VP, Compliance to sign.
SettingsThe exposure schedule, rule versions in force, the nightly run, the amber margin and who confirms and signs.
Governance

Built for market conduct: cited, confirmed, signed.

Every dot cites its page and its ruleEach step on a strip links to the file page its date came from and the rule version it was tested against — California v7, Texas v5, Florida v9, New York v4.
Deadlines are computed, not guessedThe clock checker is fixed rules: calendar or business days, state holidays, the status-letter extension. The same dates always give the same result, and it never excuses a late step.
A person confirms every exceptionAgents read, date and cite; a claims compliance reviewer confirms each exception. Overturning needs a reason — tolling, a wrong date read, out of scope — and the reason is kept with the file and shown in the exam pack.
Exposure is an estimate, with its basisEvery amount shows its basis and source — a statutory cap, statutory interest, or the compliance team's own schedule — and is never called a fine. Willful amounts apply only when a reviewer marks a file willful.
Nothing reaches a regulator unsignedThe exam pack builder never sends anything to a regulator. The pack goes to the VP, Compliance, and nothing leaves until he signs.
Rule changes are versioned and approvedState rules and the exposure schedule change by proposal, approved by the VP, Compliance. Claim files are kept as read, and every reviewer decision is logged: who, when and why.
Configuration

Your states, your schedule, your sign-off

What a late step costs, who confirms, and when the check runs are settings — changed by proposal and approved by the VP, Compliance.

SettingDefaultChoose from
Check every closed claimNightly at 02:00On · Off — claims closed the day before
Re-check the quarter5th of each monthAgainst the rules in force
Show steps within a margin of the deadline2 daysOn · Off — amber dots pass and show the margin
Price willful violationsOffOn · Off — non-willful unless a reviewer marks a file willful
Tell team leads at day 30 on undecided claimsOnOn · Off — before the 40-day line
Exposure basis per stateCA $5,000 per act · TX 18% a year interest · FL $5,000 per act · NY $500 per late step, $1,000 per incomplete denialStatutory cap · statutory interest · your own estimate
Attorney's-fee allowance, Texas$350 per late fileFrom your litigation history
Lines in scopeAuto, homeowners, commercial propertyWorkers' compensation joins in Q1 2027
Connections

Works with the claims records you already keep

Your claims systemthe export of claims in closed status
Claim filesnotes, letters, estimates and payments, each page citable
State fair claims ruleseach state's five steps, its cites and versions
Exposure scheduleper-act caps, statutory interest and your own estimates
Prior exam findingstested first, tied to the step they cited
Exam data callsthe evidence pack in the regulator's layout
What it changes

The difference, in numbers.

Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.

target
100%
of closed claims checked against their state's rules, not a 60-file sample
14,286 of 14,286
claims closed in the quarter
estimated
$1.22M
of exposure found in one quarter, where the sample found 2 exceptions
Quarterly sample60 files
With agentsevery file
typical
7%
error tolerance examiners commonly test claims practices against
Claims tolerance

“demo” = seen in the working solution, on its sample quarter of closed claims · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures (NAIC Market Regulation Handbook — the claims error tolerance). Rules and penalty bases shown in the working solution: 10 CCR §§2695.5, 2695.7 and Cal. Ins. Code §790.035 · Tex. Ins. Code ch. 542 · Fla. Stat. §§627.70131, 624.4211 · 11 NYCRR Part 216; New York amounts are a compliance-team schedule, not statutory caps. People, companies and claims named on this page are fictional — characters and sample data in the working solution.

Questions

What claims compliance teams ask us.

What is claims compliance audit software?

Software that tests claims handling against the fair claims rules a regulator examines: acknowledgment, investigation, decision and payment deadlines, and what a denial letter must say. Claims Compliance Audit tests every closed claim rather than a sample, cites each step to its file page, and has a reviewer confirm every exception.

How does it check a claim against our state's fair claims rules?

The file reader dates each event in the file — notice, acknowledgment, investigation, proof of claim, decision, payment — with the page it came from. The clock checker applies that state's rule set — calendar or business days, state holidays, the status-letter extension — and the letter checker reads denial and status letters for the reason, the policy provision and the review notice.

How is the money at risk calculated?

The exposure pricer applies each state's basis from an approved exposure schedule: a per-act cap such as California's up to $5,000 non-willful, statutory interest such as Texas's 18% a year, or the compliance team's own schedule where no statute sets an amount. Each amount shows its basis and source, and it is an estimate, never called a fine.

Does it decide which claims are violations?

No. It finds and prices late or missing steps; a claims compliance reviewer confirms each exception or overturns it with a reason — tolling, a wrong date read, or a claim outside the audit. A written request for more time is flagged for a reviewer and never excuses a step on its own.

Can it answer a market conduct exam data call?

The exam pack builder assembles the response in the regulator's data call layout: the claims population, the result per claim with page citations, the exceptions with evidence, the rules tested, corrective actions, the reviewer log and a cover memo. It never sends anything; the VP, Compliance signs first.

How often does it run?

Every night at 02:00 on the claims closed the day before, and the whole quarter is re-checked on the 5th of each month against the rules in force. Team leads can be told at day 30 on undecided California claims, before the 40-day line.

Do people stay in control?

Yes. A reviewer confirms every exception, a person assigns every fix, and the VP, Compliance approves every rule version and the exposure schedule and signs every exam pack. Claims team leads see their own team's strips but cannot change results.

How long does it take to go live?

The Agentic Solution Engine builds and deploys it from your requirements and documents — your states' rules, your exposure schedule, prior exam findings and a sample of closed claim files — and it goes live once every quality gate has passed. We will walk you through it on a quarter of your own closed claims first.

See it on
your closed claims.

We'll run Claims Compliance Audit on a quarter of your own closed claims.