Settlement Reached Between Auto Insurance Providers and CDI

Stack of full file foldersA settlement agreement has been reached between the California Department of Insurance (CDI) and two companies that provide coverage in the state over their practices from nearly five years ago.

According to the CDI, Civil Service Employees Insurance Company and CSE Safeguard Insurance Company committed claims handling violations between May 1, 2005, and April 30, 2006. Examiners from the department randomly picked 596 files closed during a review period and found 661 incidences of misconduct.

The violations include not providing the claimant with a copy of the estimate for vehicle repairs or a written basis for vehicle loss, and failing to pay specific fees and taxes.

Commissioner Steve Poizner said the settlement should serve as a notice to other CA auto insurance providers in the state while also being a victory for policyholders.

“The laundry list of violations perpetrated by each of these companies is unacceptable,” Poizner said. “I am pleased with the work of my department in holding them accountable for their irresponsible actions.”

The carriers, which serve civil servants, said they disagreed with the “vast majority” of the issues raised by the CDI. They noted most involved technical interpretations of regulations rather than the unfair or improper treatment of the companies’ customers.

“The findings of the Department of Insurance’s market examination are not representative of our commitment to providing excellent service to our policyholders, but we look forward to putting this matter behind us and building a collaborative future relationship with the Department,” said CSE Group President and Chief Executive Officer Pierre Bize.

CSE opted to have the matter resolved through an administrative hearing. Once that was adjourned, the companies noted the CDI came to them with a settlement package that was reduced when compared to previous offers.

The CDI said the signed order will force the two companies to discontinue the acts that led to the alleged violations. Those include failure to provide customers with policy provisions and information, not advising on fault determinations, and not settling claims in a prompt manner, along with other infractions.

CSE will also have to pay a $505,000 penalty as a result of the settlement.

According to the state regulators, this is not the first time the companies were charged with similar violations. An examination from May 2000 to April 2001 unearthed additional charges of alleged misconduct. The CDI said the companies paid $155,000 to settle those matters.

Meanwhile, the companies noted they have been recognized by the CDI the past for their performance.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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