Connecticut Insurance Commissioner Thomas R. Sullivan signed an order this week fining five Safeco subsidiaries a total of $434,000 for improper cancellations, improper rating and unlicensed agents and adjusters, among other violations to state law.
The total fine amount is a result of smaller fines assessed to subsidiary companies as follows:
American Economy Insurance Company, Indiana $41,000
American States Insurance Company, Indiana $68,000
General Insurance Company of America, Washington $76,000
Safeco Insurance Company of America, Washington $144,500
Safeco Insurance Company of Illinois, Illinois $104,500
“While the Connecticut Insurance Department acknowledges Safeco’s commitment to corrective action, we are disturbed by the number and breadth of violations our exam team uncovered,” Sullivan said. “Our examination of this firm calls into question the extent to which they have proper compliance monitoring and controls.”
While the violations varied by company, there were consistent violations related to instances of unlicensed adjusters and agents not appointed. In Connecticut, insurance companies are required by law to formally appoint and register with the state all agents who sell insurance products on their behalf. When combined, Safeco and its subsidiaries had 55 instances where agents were not appointed and 93 instances where individuals acted as casualty adjusters without being properly licensed.
Other violations included instances where companies did not include in their settlement the amount attributed to one’s inability to use their property, which is commonly referred to as ‘loss of use.’ Violations of ‘loss of use’ occurred, on average, 23 percent of the time, across all subsidiary companies.
Additionally, numerous underwriting and rating errors resulting in under- and over-charging of premiums, and incorrect coverage amounts were found across all companies, which contributed to the significant fine.
The company complied with the stipulation and final order, and will submit a compliance report to the commissioner within 90 days.