Improper handling of total-loss auto insurance claims has cost The Hartford tens of thousands of dollars in restitution and fines following an investigation by regulators, according to a Tuesday release from the Vermont Department of Financial Regulation (DFR).
The Hartford had improperly evaluated and underpaid 77 total-loss claims between 2009 and 2011. About $81,700 in restitution will be paid to the Vermont auto insurance policyholders who made the claims, according to the DFR, which added that the total amount includes 12 percent interest.
Spokeswoman Dale Schaft said payments to each policyholder are “all over the map,” ranging from $5.58 to $3,294.
In addition to the restitution payments, which insurance regulators stated must be issued within 14 days of the Dec. 10 order, The Hartford was also fined $77,000 in “administrative penalties.”
DFR investigators did not specify how The Hartford improperly evaluated the claims but stated that it was related to multiple violations of section 8 of regulation 79-2, the portion of the state code governing total and partial loss claims.
Schaft said some of the investigated insurance claims were “improperly calculated,” but could not provide specifics.
The Vermont department began its case on the insurer in late August 2011, according to the report. The dates of claims in the investigation were between January 2009 and Sept. 15, 2011.
As a part of its agreement with regulators, The Hartford will undergo staffing, training and audit-related measures to ensure compliance. According to the report, the insurer will limit its “claim handlers” who are assigned to total-loss claims to between six and nine staff members. Those claims will be subject to “supervisory review” until each of those handlers “has reached 95 percent compliance.”
Also, a mandated training must be completed by all claim handlers assigned to total-loss claims by July 2013, when a test will be administered to the trainees. Participants failing to score 90 percent or above on the test will have to undergo additional training, according to the report.
The Hartford will be subject to monthly audits for a half-year, after which the DRF will conduct a follow-up examination a year after the initial order is signed; that investigation will cover total-loss car insurance claims after September 2011, according to the DFR.
State regulatory agencies frequently carry out similar investigations into market conduct and business practices, recouping payments for policyholders in claims that insurance providers handle incorrectly.
Commissioner Steve Kimbell said in a statement that his department’s “No. 1 priority [is] to protect Vermont consumers.”
“It is always gratifying when a company acknowledges erroneous practices and strives to make improvements,” he said about The Hartford’s recent case.