Insurance Commissioner Steve Poizner said a
settlement was reached in an enforcement action against
Civil Service Employees Insurance Company and CSE Safeguard
Insurance Company.
The settlement marks the end of a market conduct examination
that found numerous violations of the Insurance Code and
Regulations for the period May 1, 2005 through Apr. 30, 2006.
Specifically, Department examiners reviewed the companies'
claims handling practices in automobile, homeowners, and
commercial liability lines of insurance, randomly selected 596
claim files closed during the review period and found 661
claim-handling violations.
"Let me be clear - I will continue to pursue and sanction any
insurance company that engages in such gross misconduct,"
Commissioner Poizner said. "The laundry list of violations
perpetrated by each of these companies is unacceptable. I am
pleased with the work of my department in holding them
accountable for their irresponsible actions. This settlement is
a victory for policyholders in California, as well as a notice
to all insurers that deficient and illegal business practices
will not be tolerated."
The violations include such acts as failing to provide their
policyholders with necessary facts, including policy provisions
and other pertinent policy information upon filing of a claim,
failing to properly advise the insured of the determination of
fault, failing to provide the claimant with a copy of an
automobile repair estimate, failing to provide claimant with a
written basis for total automobile loss settlement, failing to
pay all fees and taxes incident to an automobile total loss
settlement, failing to explain the basis for depreciation,
failing to effectuate prompt, fair and equitable settlements of
claims and failing to adhere to the claims processing laws of
the State of Ca.
This is not the first time that these companies were charged
with violations the Insurance Code. A prior examination, for the
period May 2000 through April 2001, uncovered violations similar
to the ones identified in the 2005 - 2006 examination. The
companies paid $155,000 to settle those charges. The current
settlement was preceded by a two-week hearing in Oakland that
was continued for additional testimony to August 2010. The
settlement was reached during the recess of the hearing.
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The Order, signed Sept. 20, 2010, requires the two companies to
cease and desist from the acts in which violations were found
and pay a $505,000 monetary penalty, $450,000 of which was
applied under CIC Sections 790.03 and 790.035, with the
remaining $55,000 applied under CIC Sections 790.05 and 790.07.
For more information visit the
Department of Insurance web site at www.insurance.ca.gov.
