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State suspends 6 Insurance Companies for poor records management…

Posted by Johnny Lee on November 22, 2010

The Insurance Commissioner of Washington state has suspended six insurance companies from writing new coverage for the next nine months.  The insurance companies, all providers of property and casualty policies, were repeatedly found to have failed in their documentation of rate changes.

Insurance Commissioner, Mike Kreidler, was quoted as saying that rate decisions “must be based on a sound rationale and documented,” elaborating that numerous exams over the course of more than a decade showed that these companies were not “playing by those rules.”  In addition to the suspension of the company’s license to sell insurance in the state, Kreidler also proposed a $534,000 fine for the parent company (Chubb & Son) of the six suspended entities.  (The fine is only proposed at this point because its enactment is contingent upon a hearing related to the suspension.)

Kreidler commented on the rare penalty of suspending a company’s certificate to sell insurance, stating that it was warranted here because his office has “repeatedly tried to work with Chubb and its subsidiaries to fix a number of ongoing violations of state law.”  He went on to say that some of the issues with these companies have been ongoing for more than a decade.

The companies subject to the order are Federal Insurance Company; Pacific Indemnity Company; Great Northern Insurance Company; Executive Risk Indemnity, Inc.; Vigilant Insurance Company; and Northwestern Pacific Indemnity Company.  The order, effective November 18, does not affect existing policies or renewals.

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