Travelers Insurance Regulators in California announced that the state is receiving more funds from an enforcement investigation they brought against Travelers Insurance for several violations that included denying discounts to eligible drivers.
Travelers agreed with regulators last month to settle the case for a total of more than $10 million in refunds and fines stemming from violations in the first seven months of 2006. Commissioner Dave Jones announced on July 3 that he deposited $1.5 million from the case into the state’s general fund.
During the investigation, regulators found 125 instances in which the insurer charged policyholders incorrect premium amounts. In some of those cases, drivers who were eligible for a 20 percent good driver discount were denied the markdown because the insurer “did not follow proper procedures,” according to a department statement.
Investigators also uncovered 19 instances in which policies were denied, canceled or not renewed against state regulations. Some of those cases involved the insurer canceling policies when the policyholder failed to complete informational actions with the insurer.
One of those actions was the “policy verification program” in which policyholders would be interviewed by phone to verify coverage information. Regulators said they found cases in which policies were canceled because phone interviews hadn’t taken place.
The insurer also canceled coverage because policyholders failed to return “quote acceptance” and “state coverage” forms and erroneously cited state regulations as their reason for doing so.
According to regulators, state law requires that policy cancellations be due to “an increase in the hazard insured against,” a condition that they said invalidates the cancellations made by Travelers because policyholders failed to submit information.
Regulators are available in every state to deal with consumer complaints about insurers, conduct investigations into market conduct and answer auto insurance policy questions that consumers have.
Pat McConahay, deputy press secretary with the California Department of Insurance (DOI), said Jones was “pleased with the cooperation” that the DOI received from Travelers during the investigation.
“It’s not uncommon to have these kinds of violations,” McConahay said.