Ohio Department of Insurance Orders 23 P/C Companies to Pay Up

The Ohio Department of Insurance ordered 23 property and casualty companies to pay money owed to insurance customers and submit corrective actions plans after market conduct examinations revealed that the companies were not properly documenting and/or calculating automobile loss claims.

The Department’s examinations reviewed claim procedures regarding automobile total loss settlements focusing on each company’s calculation of actual cash value and payment of applicable sales taxes on automobile total loss settlements.

According to the Ohio Administrative Code, when an insurer chooses to make a cash settlement in payment of a total loss claim on an automobile, the company is obliged to pay the claimants’ sales tax on the actual cash value of the claim if the insured replaces the vehicle within 30 days. The companies allegedly did not consistently pay the required sales tax on these losses.

In consent orders signed by the companies and the Department, the companies agreed to modify their automobile claims handling practices to ensure compliance with Ohio insurance laws. Each company must outline these modifications in a corrective action plan turned in to the Department of Insurance for approval.

In the majority of cases, the companies will review all total loss settlements from Jan. 1, 1998, to the present to decide whether the claim was settled properly or not. The company must pay applicable sales tax to any individuals whose claims were settled in violation of the total loss settlement laws.

According to Susan Stead, assistant director for the Office of Investigation and Licensing, this examination is part of the Ohio Department of Insurance’s efforts to protect Ohio insurance consumers and make sure companies are paying policyholders every dollar to which they are entitled.

The companies involved are: Atlanta Casualty Company, Atlanta, Ga.; Buckeye State Mutual Insurance Company, Piqua, Ohio; Buckeye Union Insurance Company, Chicago, Ill.; Continental Insurance Company, Chicago, Ill.; Donegal Mutual Insurance Company, Marietta, Penn.; Economy Fire and Casualty Company, Warwick, R.I.; Economy Preferred Insurance Company, Warwick, R.I.; German Mutual Insurance Company, Napoleon, Ohio; Horace Mann Insurance Company, Springfield, Ill.; Illinois National Insurance Company, Chicago, Ill.; Indiana Insurance Company, Keene, N.H.; Leader Preferred Insurance Company, Dallas, Texas; Mennonite Mutual Insurance Company, Orrville, Ohio; Merchants Insurance Company of New Hampshire Inc., Buffalo, N.Y.; Mic General Insurance Corporation, St. Louis, Mo.; Milwaukee Casualty Insurance Inc., Milwaukee, Wis.; Personal Service Insurance Company, Columbus, Ohio; Pioneer Insurance Company, Greenville, Ohio; Security National Insurance Company, Dallas, Texas; St. Paul Guardian Insurance Company, St. Paul, Minn.; Superior Insurance Company, Atlanta, Ga.; Teachers Insurance Company, Springfield, Ill.; and Wayne Mutual Insurance Company, Wooster, Ohio.

Topics Carriers Ohio Property Casualty