California Department Of Insurance Launches Enforcement Action Against Insurers Over Claims Handling Practices
News: 2012 Press Release
The California Department of Insurance (CDI) announced today it served an Order to Show Cause, a Statement of Charges/Accusation and a Notice of Monetary Penalty against the New Hampshire Insurance Company and its authorized agent for claims processing, York Risk Services Group, Inc. regarding their handling of claims related to the 2008 Sayre Fire in Sylmar, California. New Hampshire Insurance Company is a subsidiary of AIG.
"The Department is committed to ensuring that insurers and administrators processing claims on consumers' behalf adhere to the requirements of the California Insurance Code," said Adam M. Cole, General Counsel at CDI. "We expect insurers and their agents to be thoroughly diligent in handling claims, especially at times of devastation such as the Sayre fire. The allegations in this case reflect a troubling lack of attention to consumer needs by New Hampshire Insurance Company."
The Sayre Fire, which occurred on November 14, 2008, led to the loss of 489 residences, including 480 mobile homes, and the destruction of more than 600 structures overall. During the course of the fire, more than 11,000 acres were burned. In response, both the Mayor of Los Angeles and the Governor of the California issued state of emergency declarations. The 480 mobile homes destroyed in the fire were located in the Oakridge Mobile Home Park, which, before the fire, housed 600 mobile homes. The New Hampshire Insurance Company issued Mobile Homeowners Policies to approximately 370 policyholders whose homes suffered total losses as a result of the firestorm.
In the ensuing months, CDI's Claims Services Bureau received a number of complaints from New Hampshire Insurance Company policyholders. Consequently, CDI investigated the complaints and cited New Hampshire Insurance Company and York Risk Services Group, Inc. for 125 violations of the California Insurance Code, with each violation representing an alleged unfair or deceptive act.
Under the California Insurance Code, any person who engages in any unfair or deceptive act is liable to the state for a civil penalty not to exceed five thousand dollars ($5,000) for each act, or, if the act or practice was willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each act.
The California Insurance Code permits New Hampshire Insurance Company and York Risk Services Group, Inc. the opportunity to respond to the allegations in an administrative hearing.
In 2009, CDI acted on complaints from Sayre Fire survivors relating to disputes over how much extended replacement cost coverage was available under the New Hampshire Insurance Company policy. CDI was able to secure an additional 110 percent or 125 percent of fire insurance coverage for most policyholders. This action resulted in approximately $10.8 million in increased payments to the Sylmar fire victims.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.