Though the South Dakota Division of Insurance did not find any auto hail damage claims errors or exceptions with Farmers Insurance Group or Foremost Insurance Group in in its full examination report, it did find other claims errors. The two companies reached a settlement with the insurance division in late May. The deal included a $750,000 penalty.
The insurance division said the goal of the examination was “to determine if claims were handled and paid properly,” including auto hail damage claims.
“If the hail is big enough it can damage windshields and sidelites,” says Shawn Nielsen, owner of Fast Auto Glass in Vermillion, S.D. “I’ve never had any issues with the local guys at Farmers. They’ve always been timely in taking care of customers and paying. We have a pre-set amount. I already have a signed contract with Farmers that covers mouldings and everything extra. I know even before I take on a job exactly what I’m going to get paid. Farmers is one of my top 10 insurers to deal with. Others want things done too cheap.”
At Farmers Insurance Exchange, one of the types of claims reviewed was auto hail damage.
“The examiners requested a listing of all hail damage paid claims,” according to the report. “The company provided a universe of 2,089 claims.”
The division found no errors or exceptions.
To discover if claims were handled and paid properly, “examiners reviewed claim files, company procedures and the nature and results of internal company audits,” according to the report.
“The examiners found instances of untimely claim investigations, inadequate communication in claim denials, incomplete files, lack of required notices and failure to promptly and accurately settle claims,” officials wrote in the report.
Five insurance companies within Farmers and Foremost were reviewed. The Farmer Insurance Group companies that came under analysis included Farmers Insurance Exchange, Fire Insurance Exchange and Mid Century Insurance Co.
The Foremost Insurance Group companies examined included Foremost Insurance Co. and Foremost Property and Casualty Insurance Co., according to a statement from the state’s insurance division.
The insurance division issued an order for examination on August 3, 2012 and the review covered the period from January 1, 2009 to June 30, 2012.
For its part, Farmers does not agree that it has done anything wrong; however the company decided to resolve the issue through settlement, says a Farmers’ spokesperson.
“Farmers has reached a settlement agreement with the South Dakota Division of Insurance to resolve a market conduct exam. While we do not agree with many of the division’s findings of alleged violations, we have agreed to this settlement in order to resolve the matter,” says Luis Sahagun of Farmers.
By agreeing to the settlement, the insurance groups are not admitting or denying the alleged violations, according to the state’s insurance division.
To read the full report, click here.