March 07, 2011

Missouri Department of Insurance fines auto insurer $256,000, orders changes in business practices

Company must properly investigate, settle claims

Jefferson City, Mo.  - A Chicago-based auto insurance company has paid $256,000 in fines and is required to more quickly process, investigate and pay claims under a settlement reached with the Missouri Department of Insurance. Universal Casualty Co. also has paid more than $15,500 to consumers for underpayments found during a comprehensive market conduct examination by the department.

The settlement is the latest in a series of state actions against the company: In June 2009 the department issued a cease and desist order against Universal Casualty, prohibiting it from selling any new insurance policies in Missouri. This came after an extremely high number of consumer complaints about the company's handling of claims. The department lifted the order in April 2010 after the company demonstrated it had made significant changes to its management and operations.

"Missourians pay insurance premiums so that they'll be treated fairly and in a timely manner when they file auto claims," said Missouri Insurance Director John M. Huff. "Because of our regulatory intervention, Universal Casualty has improved staff training, reduced caseloads and is now following state law when handling claims and other insurance processes."

At the time of the department's cease and desist order in 2009, consumers had filed more than 100 complaints against Universal Casualty. The market conduct exam began shortly after the order was issued. Among more than 600 potential violations of Missouri law, the examiners found the company:

  • Failed to properly investigate and settle claims, delaying payments in many cases;
  • Improperly denied or underpaid claims;
  • Failed to respond promptly to claims;
  • Failed to maintain a log of all written complaints made against the company, as required by state law;
  • Failed to respond to inquiries from the Department of Insurance, as required by law;
  • Failed to maintain records of correspondence with policyholders, as required by law; and
  • Could not prove it sent sales tax affidavit to policyholders whose vehicles were totaled, as required by law. This affidavit allows consumers to receive a sales tax reduction when they buy a new vehicle. Universal Casualty has been ordered to re-examine records to ensure that sales tax affidavits have been sent to all eligible policyholders.

The department's Market Conduct Section completed 23 examinations in 2010, and returned nearly $1 million to consumers who had not been paid enough for claims or whose premiums had risen too high. The Market Conduct Section also collected more than $900,000 in fines from insurance companies.

In a market conduct exam, the department reviews thousands of insurance company documents detailing the treatment of policyholders, from the rates the companies charge to the way they handle claims to other responsibilities under state law. Exams can result in refunds for consumers, fines, changes in business practices or other remedies.

Universal Casualty wrote $4.3 million in premiums in 2009, according to the most recent Department of Insurance market share report. That accounted for less than 1 percent of the auto insurance market in Missouri.

Consumers with questions or complaints about Universal Casualty or other companies are encouraged to call the department's Consumer Insurance Hotline at 800-726-7390 or file a complaint at