American Independence Insurance Company

Pet Insurance
Claim Processing and Underwriting Rules
Guidelines
July 31, 2013

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 Purpose:
This document provides general rules and guidelines for pet insurance claim administration in accordance
with the Claims Administration Agreement between Independence American Insurance Company (IAIC)
and Pets Best Insurance (Pets Best). These guidelines supersede any prior rules or guidelines (verbal or
written), and may be updated on an ad hoc basis to cover changes in business requirements, regulatory
requirements, or provide additional guidance or clarification to IAIC and/or Pets Best.

Table of Contents

I General Guidelines ......................................................................................................................................3

II Underwriting Guidelines ............................................................................................................................4
III Claim Handling Guidelines .......................................................................................................................6
V Performance Standards..............................................................................................................................9
VI Compliance ...............................................................................................................................................9

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 I General Guidelines
1. IAIC and Pets Best have two (2) Agreements that govern their relationship: the General Agent
Agreement and the Claim Administration Agreement. This supplements those Agreements by
articulating the underwriting and claim processing guidelines to be used by Pets Best in the
administration of these agreements.

2. Regulatory Compliance is our obligation to our customers. Our business practices must satisfy or
exceed regulatory requirements. By establishing parameters that meet or exceed the baseline
measure for market conduct exams, we ensure regulatory compliance. Such compliance results in
heightened policyholder satisfaction and in protection from adverse sanctions, including fines and
corrective action that result in negative public attention. At all times, we must conduct business
lawfully and in accordance with IAIC policies with a commitment to integrity and business ethics.

3. This document reflects guidelines consistent with the actuarial risk models reflected in the rates of
IAIC. Deviation from these guidelines without the express permission of IAIC may expose the
product to greater financial risk than supported by the current pricing model.

4. IAIC has reviewed the established policies and procedures of Pets Best. These policies and
procedures are assumed to be in practice and used by any individual trained to work with the IAIC
underwritten product. Changes to these policies and procedures that affect the servicing of IAIC
underwritten policies shall require notification and advance written approval by IAIC.

5. Discounts are generally granted for the purpose of providing customers a share of the reduced
distribution costs associated with the acquisition of customers. In some cases, discounts are
extended to defined customers with pets that further the acceptance of pet insurance in a defined
marketing channel.

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 II Underwriting Guidelines
1. Pet Insurance is filed as a personal line of property insurance. Therefore, policies can only be sold
to individuals insuring a present personal property pet or pets (canine or feline). Any company,
shelter, adoption group, animal welfare organization, or any other commercial or non-profit
organization, group or entity cannot purchase/own a policy on behalf of any individual, including
its employees or volunteers. Payment of premiums, in whole, or in part, by an organization
defined above, will not alter the administration of an individual policy, as long as the policyholder
is an individual, and the direct legal relationship is between IAIC/Pets Best and the individual.

2. The individual owning the pet or the individual with whom the pet is domiciled may purchase a
policy covering said pet. An individual with a third party payer is an exception and must show an
insurable interest in the pet. (Example: Service Dogs owned by a Municipality may be insured by
the handler. The Municipality is a third party payer.) At no time may a service provider purchase
a policy for someone else’s pet. (Example: A veterinary hospital providing coverage for a
customer’s/employee’s pet.)

3. No person or entity should be encouraged to circumvent the electronic underwriting process. The
IAIC underwriting process has been automated for the purposes of ensuring the consistent
application of the rating factors filed with each individual jurisdiction. Circumventing the
underwriting process exposes IAIC to regulatory discriminatory practice violations and financial
exposure. A commercial or non-profit entity, as defined in Paragraph 1 above, should not be
allowed or encouraged to insure inventory as a pet. (Example: A professional breeder placing
coverage in the name of an individual for commercial property [canine or feline] for sale by the
entity.)

4. Veterinarians with pets are an important customer segment that requires certain consideration in
our service and sales approach. The higher level of attention should not supersede the established
rules and business practices that support the IAIC pet insurance product. Veterinarians may only
purchase coverage for a pet that is owned by the veterinarian or a member of their immediate
family residing in the same household. A domestic partnership would constitute a family for the
purpose of this definition.

5. Policies may be non-renewed when, in the judgment of both Pets Best and IAIC, the value of the
business is diminished by inappropriate action or harassing behavior by the policyholder. The
decision on whether to renew must be completed prior to the notice requirements of the
jurisdiction where the policyholder resides, or follow appropriate advance notification
requirements for policy termination.

a. Inappropriate actions or harassing behaviors are defined as unwelcome verbal or physical

conduct that has the purpose or effect of unreasonably interfering with an individual’s
work performance or creating an intimidating, hostile or offensive working environment
and is based on an individual’s personal characteristics or status such as race, color, sex,
pregnancy, national origin, citizenship, religion, age, disability, veteran status, sexual
orientation, gender identity, marital status, and/or genetic information. Examples of
include, but are not limited to, the following:
i. Physical abuse, such as lewd touching, violence, or threats of violence;
ii. Racial epithets;
iii. Offensive jokes about a person’s color, race, religion, ethnicity or nationality;

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 iv. Taunting remarks or insults about a person’s age, disability, sexual orientation, etc.
or directed at a religion, racial, ethnic or minority group;
v. Displaying or circulation of written or electronic materials or pictures that are
degrading to either gender or to racial, ethnic or religious groups; and
vi. Abusive, bullying behavior (such as shouting, sarcasm, constant criticism, or
derogatory remarks, ignoring or patronizing attitudes, etc.) if such behavior has an
adverse affect on people based on their personal characteristics or status.
6. In cases where clearly fraudulent activity has taken place on a policy Pets Best can terminate the
policy immediately by issuing a void ab intito notification and returning all collected premium.
Proper notification must be made to IAIC within 3 business days after cancellation of the policy.

7. Transfer of ownership from one party to another can take place if both parties sign a release
authorizing the new policyholder to have access to the previous financial information of the
original policyholder as it applies to the policy in question.

8. All policies must begin coverage within 10 (ten) days of submission of application for individual
policies and within 30 (thirty) days for group policies. If the date between the completion of the
application and the inception of coverage exceeds these deadlines then the application must be
completed anew before coverage can be bound.

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 III Claim Handling Guidelines
1. A complaint is defined as an initial oral or written expression of dissatisfaction by an insured or
their representative regarding quality of service or administrative processes.

2. An appeal is defined as a written request by an insured or their representative that asks IAIC to
change an adverse decision. (i.e. the insured was not satisfied with the decision of the claim
denial).

3. Any written inquiry or complaint involving a claim that has been fully or partially denied is to be
considered an event to be tracked and reported to IAIC. All complaints and appeals are available
to IAIC by request within three (3) business days of receipt by Pets Best. All appeals will be
provided an opportunity for reconsideration via the first level of appeal process. If an adverse
determination is upheld in the first level of appeal, Pets Best will communicate the determination
to the policyholder and notify IAIC of the determination. The policyholder may request a second
level appeal - an external review conducted by an impartial veterinarian selected by both IAIC and
Pets Best. The determination will be communicated to the policyholder and IAIC. Arbitration is
available as a final, optional third level of appeal after all other levels are exhausted and is binding
to all parties. (See Pets Best Complaint and Appeal Policy and Procedure, and Complaint and
Appeal logs for additional detail.)

4. Proof of loss must consist of the following:

− Proof of Payment (Required for claim submission totaling more than $250)
First -
 Invoice clearly documents payment for services has been received; or
 Acceptable hand written invoice with 'PAID' indicated on the document; or
 Attached receipt for payment that matches invoice; or
 A bank statement showing payment in an amount that matches an itemized invoice;
or
 Copy of check that has been processed by bank; or
 Checked 'Pay my Vet' on claim form or a separate form completed indicating third
party payment is authorized.
− Indication of Payment (Required for claim submission totaling less than $250)
 "PAID" stamp without staff signature; or
 Any one of the Proof of Payment documents listed above
If proof of loss does not meet the above criteria the claim will be sent into the incomplete
workflow to attempt to gain proper documentation or denied as incomplete
5. Claims must be for losses incurred only by the named insured. The practice of determining losses
incurred may require some judgment. We will attempt to provide a context for the use of this
discretionary judgment:

− Losses incurred for the care of a pet by the policyholder, spouses, domestic partners,
children (legally adopted and foster care) are considered losses by the insured.
− Losses incurred for a care of a pet on behalf of the policyholder by an extended family
member (siblings, parents, friends, roommates) or professional service (dog sitter, doggie
daycare..) while the pet was in their temporary care are considered losses by the insured.

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 − Losses incurred for a care of a pet on behalf of the policyholder by third party payer are
considered losses by the insured.
− All other losses are non-reimbursable.
6. All complete claims will be adjudicated within ten (10) business days. Policyholders will be
alerted of additional information required on incomplete claims within five (5) days of receipt of
claim. All claims, whether complete or pended will be adjudicated within twenty-eight (28)
business days of receipt. All pended claims, in which appeals for additional information have not
been received, will be denied.

7. All claims must have acknowledgement of receipt or claim payment status sent to the customer or
submitting veterinarian within ten (10) business days.

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 IV Discount Guidelines

Affinity Group

An Affinity group is a group of people that must have:

1. A specific definition
2. Specific membership requirements (greater than 10,000 members)
3. Must endorse our product to its members
4. Must have a written contractual agreement with IAIC/Pets Best to perform the duties expressed
above.
5. Must be approved in advance of offer or contract by IAIC.
If an Affinity group meets these definitions then a discount code will be generated giving the members of
that group a 10% discount. This discount is justified by reduced acquisition costs by enrolling a large
group at once. This discount does not apply to individuals outside the group that have been recommended
by members inside the group to purchase our policy.

Web-Link Partner Discount

The Company has available a 5% Discount to policyholders who are the customers or employees of a
qualifying Web Link Partners. Web Link Partners are defined as businesses that will place a web link to
us on their web site for the purpose of promoting pet insurance and optimizing our website. The Web
Link Partner Discount is based upon reduced marketing expenses that will accrue from the economies of
scale and relationship leveraging that occurs through public awareness, group education and cooperative
marketing.

Eligibility:
− This Discount is available under the applicable laws governing personal lines
− This Discount is available for the pet owner
− The pet owner is a consumer or employed by group or company as defined by their state of
domicile or meets a membership criteria for the group at the time of enrollment
− The group or company is greater than three hundred (300) employees/members
− The group or company has signed a marketing agreement

Strategic Educational and Promotional Provider Discount

***No longer a valid discount program**** (Discontinued as of 8/31/2009 date, existing policyholders
will remain effective until first renewal following 8/31/2009.).

Associate Provider Discounts

***No longer a valid discount program****(Discontinued as of 8/31/2009 date, existing policyholders

will remain effective until first renewal following 8/31/2009.)

Discounts developed for the Shelter Best and Staff Best programs are no longer valid. (Discontinued as
of 8/31/2009 date, existing policyholders will remain effective until renewal.)

Corporate Group Benefit Program Discount

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Employees of an employer group or company as defined by the state of domicile has an available 5%
reduction in premium as a result of their employer offering pet insurance as part of their Corporate Group
voluntary Benefit offer. The Discount is based upon reduced acquisition expenses that will accrue from
highly efficient marketing and enrollment.

Eligibility:
− This Discount is available under the applicable laws governing personal lines
− This Discount is available for the pet owner
− The pet owner is employed by group or company as defined by their state of domicile at the
time of enrollment
− The group or company is greater than three hundred (300) employees
− The group or company has signed a marketing agreement

(Note: Corporate discounts are applicable to employer groups, associations and chambers of commerce
with 300 employees or greater.)

V Performance Standards

Pets Best will use commercially reasonable efforts to provide claims administration services that at all
times comply with the following monthly performance targets:

1. Ninety-eight percent (98%) financial accuracy (dollar amount of claims paid accurately divided by
total dollars paid) within the audited sample;

2. Eighty percent (80%) of all complete uncontested claims (“Clean Claims”) must be processed and
paid within the sooner of ten (10) business days after receipt by Administrator or such date as may
be required by Applicable Law;

3. Ninety-six percent (96%) payment incidence accuracy (number of correct payments divided by
total number of payments audited); and

4. Eighty-eight percent (88%) overall accuracy (number of claims with no errors, financial or
otherwise, divided by total number of claims audited).

Pets Best will provide monthly management updates on compliance with these metrics.

VI Compliance

Pets Best, its employees, vendors and agents will comply fully and completely with all Applicable Laws,
including, without limitation, any third party administrator or claim adjustor licensing laws, which are
applicable in connection with the normal performance of its duties.

It is the responsibility of Pets Best, its employees and vendors to secure and keep in its effects any and all
licenses, permits and other authorizations necessary in connection with the performance of its duties.