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CA Department of Insurance

Insurance Commissioner Dave Jones Announces Settlement With Insurer Over Noncompliance Issue

News: 2012 Press Release

For Release: August 20, 2012
Media Calls Only: 916-492-3566
Insurance Commissioner Dave Jones Announces Settlement With Insurer Over Noncompliance Issue

Insurance Commissioner Dave Jones today announced that XL Specialty Insurance Company (XL) has agreed to pay the California Department of Insurance (CDI) a fine in the amount of $298,419, along with a refund of $10,710. The settlement is the conclusion of a noncompliance action that found XL used unapproved rating factors in calculating earthquake premiums.

"I am pleased we were able to resolve this matter," Commissioner Jones said. "In California, we have strict guidelines that insurers must adhere to if they are going to do business in our state."

XL primarily focused on offering commercial earthquake coverage to condominiums in California, and, in 2003, the insurer filed a rate application with CDI. Soil type is an important factor in determining the risk of loss during an earthquake, and XL's application included four soil types to rate the risk. CDI subsequently approved the rate application with the four soil types. In 2006, though, CDI discovered that XL's agent overseeing renewal was using four additional rating factors that had not been approved by the Department. When confronted with this, XL acknowledged that the four additional rating factors were unapproved - this impacted 1,851 policies. XL takes full responsibility for its agents' actions.

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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.

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