The North Dakota Insurance Reserve Fund (NDIRF) closed 71.5% of third-party claims without payment, according to a market conduct report by the state insurance department. The report also revealed that many NDIRF claim files lacked essential documentation.
The NDIRF, a nonprofit insurer, provides coverage exclusively for North Dakota’s cities and government entities. During the review period, 43.4% of the fund’s total claims came from third parties, including individual citizens and businesses.
The NDIRF closed 8,058 claims during this period, with at least 31% of those claims closed without payment.
The report highlighted NDIRF’s differing approaches to first- and third-party claim handling. Internal claims guidelines from 2018 directed adjusters not to “nickel/dime” first-party claimants to achieve “small savings.”
Although this directive was removed from printed materials in January 2021, the report suggests adjusters continue to follow it. North Dakota law prohibits the use of inconsistent claim-handling standards for different types of claimants.
NDIRF CEO Keith Pic clarified that claims closed without payment aren’t always denials. He noted that some claims are withdrawn, while others begin with a lawsuit or a “notice-only” claim that never develops into a formal demand for payment. In these instances, NDIRF may incur loss adjustment expenses without making indemnity payments.
The report recommended unbiased investigations for all claims, regardless of whether the claimant is a fund member or a third party.
It also urged NDIRF to develop a claim checklist and review process tailored to the type of loss cause, ensuring better file adequacy and compliance.
The report advised NDIRF to hire legal counsel to review denials involving complex legal issues, with evidence of the review included in claim files.
NDIRF is in discussions with the insurance department regarding the recommendations, according to Pic, and is working to address regulatory concerns.
North Dakota Insurance Commissioner Jon Godfread criticized the lack of documentation in claim files and the unequal treatment of third-party claims. He emphasized that claimants, often impacted by public entities like city governments or school districts, deserve fair treatment and are “more than just a number.”
