Commissioner of Insurance Jim Donelon has proposed fining five homeowners insurance companies a combined $764,750 following targeted market conduct examinations of their insurance activities between Aug. 27, 2020, and June 30, 2021, a period in which hurricanes Laura, Delta and Zeta made landfall in Louisiana.
The fines were announced April 14 in a news release issued by the Louisiana Department of Insurance.
The five examinations found 44 improper activities and/or business practices that were not compliant with the Louisiana Insurance Code. Violations were found in the areas of claims handling, complaint handling, and operations and management.
The five companies for which the LDI proposed fines are United Property and Casualty Insurance Company, GeoVera Specialty Insurance Company, FedNat Insurance Company, Maison Insurance Company and Allied Trust Insurance Company. The LDI retained Risk and Regulatory Consulting LLC to assist with the examination. All five examination reports were adopted on April 11, 2022.
The scope of the examinations was limited to claims arising as a result of hurricanes Laura, Delta and Zeta and limited to claims arising from the homeowners lines of business. The companies did not agree with all of the examinations’ findings, according to the reports of the examinations. On the other hand, the reports stated that “all unacceptable or non-compliant practices may not have been identified. The failure to identify specific non-compliant company practices does not constitute acceptance of these practices.” In no instance did the findings of non-compliance include the entire sample. In more than 70 percent of the samples the rate error/violations were less than 10 percent of the targeted items.
“The devastation and impact of the 2020 hurricane season was overwhelming, but that doesn’t excuse the activities we discovered in our market conduct examinations of these five insurers,” Donelon said. “I strongly encourage our state’s insurance industry to take note of the unacceptable behavior we found and know we will continue to pursue appropriate fines and regulatory action against any insurer that is not meeting their obligations.”
United Property and Casualty has a proposed fine of $250,000 after the examination found 10 instances of improper activities and/or business practices, including failing to conduct an on-site review of the underwriting and claims processing operations of its managing general agent, United Insurance Management LC; forcing policyholders to pursue litigation to recover amounts due under their insurance policies; failing to make payment within the required timeframe following the submission of satisfactory proof of loss, and other violations.
Domiciled in St. Petersburg, Florida, United Property and Casualty had admitted assets, as of Sept. 30, 2021, of approximately $709.5 million, with policyholders surplus of approximately $95.3 million, according to the company’s examination report. As of Nov. 30, 2021, the company had a Demotech financial strength rating of A. The company’s ultimate parent is United Insurance Holdings Corp., Delaware.
As of Dec. 31, 2020, United Property and Casualty’s direct earned premiums in Louisiana totaled $75.2 million, with homeowners insurance comprising about $65.4 million of the earned premium total, according to the report.
GeoVera has a proposed fine of $183,000 after the examination found nine instances of improper activities and/or business practices, including failing to make payment within the required timeframe following the submission of satisfactory proof of loss; using multiple desk adjusters in a way that delayed the claim investigation and settlement, and other violations.
GeoVera is licensed to write property and casualty business in California, where it was previously domiciled, and Delaware, where it is currently domiciled. The company is eligible to write surplus lines business in the remaining 48 states, including Louisiana, where it has held a license since Feb. 25, 2005, according to the company’s examination report.
As the examination report describes it in the Company Profile, GeoVera was incorporated on Nov. 28, 1994, as part of the United States Fidelity and Guaranty Company group of companies. The St. Paul Companies Inc. acquired USF&G in November 1998. In April 2004, St. Paul merged with Travelers Insurance. In August 2005, GeoVera Specialty was acquired by GeoVera Holdings Inc. On Aug. 8, 2012, the company and its affiliates were acquired by Flexpoint Ford, a private equity firm. On May 2, 2013, GeoVera Specialty was redomiciled to Delaware.
GeoVera’s net admitted assets as of Sept. 30, 2021, were approximately $192.9 million, with policyholders surplus of approximately $19.0 million. The company has a current AM Best financial strength rating of A, and its ultimate parent is GeoVera Investment Group Ltd.
As of Dec. 31, 2020, the company’s direct earned premium in Louisiana totaled approximately $60.7 million, with homeowners insurance comprising approximately $35.5 million of the total, the examination report stated.
FedNat has a proposed fine of $173,500 after the examination found 10 instances of improper activities and/or business practices, including failing to make payment within the required timeframe following the submission of satisfactory proof of loss; using multiple desk adjusters in a way that delayed the claim investigation and settlement, and other violations.
FedNat was incorporated on Nov. 23, 1983, and is domiciled in Florida. According to the examination report, FedNat had admitted assets as of Sept. 30, 2021, of approximately $623.2 million, with policyholders surplus of approximately $91.0 million. The company’s ultimate parent is FedNat Holding Co.
As of Dec. 31, 2020, the company’s direct earned premiums in Louisiana totaled approximately $45.6 million, with homeowners comprising all of the total. As of Nov. 30, 2021, Demotech confirmed the company’s financial strength rating of A, the examination report stated.
Maison has a proposed fine of $115,000 after the examination found five instances of improper activities and/or business practices, including failing to make payment within the required timeframe following the submission of satisfactory proof of loss; using multiple desk adjusters in a way that delayed the claim investigation and settlement, and other violations.
Maison was incorporated on Oct. 3, 2012, is domiciled in Louisiana and offers homeowners, manufactured home and dwelling fire policies in Louisiana, Texas and Florida. Maison Managers Inc., an affiliated entity, is the managing general agent for the insurer. The company processes claims through another affiliated entity, ClaimCor LLC, and other third-party adjusting companies. The company’s ultimate parent is FedNat Holding Co., according to the company profile in the examination report.
Maison’s net admitted assets as of Sept. 30, 2021, amounted to about $130.7 million, with policyholders surplus of approximately $19.3 million. As of Dec. 31, 2021, the company’s direct earned premiums in Louisiana totaled approximately $46.9 million, with homeowners insurance comprising approximately $33.2 million of the total, the report of the market conduct targeted examination states.
Allied Trust has a proposed fine of $43,250 after the examination found 10 instances of improper activities and/or business practices, including failing to make payment within the required timeframe following the submission of satisfactory proof of loss; failing to respond to claim inquiries and requests within 14 days, and other violations.
Allied Trust was incorporated May 6, 2015, and began operation during the first quarter of 2016 in Texas. The company obtained authorization to write in Louisiana in September 2016 and began writing in the state in early 2017. Currently, the company provides homeowners, dwelling fire, flood and boat insurance in Louisiana and Texas, the two states where it is licensed. The company’s ultimate parent is United Holdings Group LLC, Delaware, according to the examination report.
Allied Trust partners with WaterStreet policy processing systems for its quoting platform and with Transcynd Claims Partners for daily claims adjusting, the report says.
According to the report, net admitted assets as of Sept. 30, 2021, were approximately $102.8 million, with policyholders surplus of about $21.7 million. As of Dec. 31, 2020, the company’s direct earned premiums in Louisiana totaled about $23.5 million, with homeowners comprising all but $51,224. The company carries a Demotech financial strength rating of A.
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