Washington Insurance Commissioner Mike Kreidler has fined an Ohio auto insurer a total of more than $150,000 after it unlawfully calculated and charged incorrect premiums to more than 62,700 Washington policyholders.
During a seven month period ending April, 2006, Progressive Classic Insurance Co. and Progressive Northwestern Insurance Co. used unapproved rates to calculate premiums for uninsured motorist bodily injury and property coverages, the Commissioner said.
The use of the unapproved rates resulted in the company both overcharging and undercharging consumers a total of more than $720,000. The company refunded $341,645 to consumers who overpaid for their coverage, according to the Office of the Insurance Commissioner.
The violations marked the second time the insurer was cited for such infractions. In 2005, the company was ordered to pay a $10,000 fine, with half of the fine suspended on condition of no further violations during a two-year period.
A $100,000 fine was imposed for the new violations, with half of the penalty suspended on condition that the company not have any more violations for two years. The company also was ordered to pay the $5,000 fine that was suspended in the 2005 case.
In a related enforcement action, the Insurance Commissioner also ordered Progressive Max Insurance Co., another member of the Progressive Insurance Group, to pay a $1,000 fine for using unapproved rates to calculate premiums for 614 policies issued during a six-month period ending March 2006. Those infractions violated terms of a suspended fine stemming from an earlier case also involving violations with unapproved rates affecting more than 760 policies. The fine in that case was $190,732 with half ($95,366) suspended on conditions of no additional violations. The company was ordered to pay the suspended fine, OIC said.
Total fines to the Progressive Insurance Group, including new penalties and impositions of suspended fines, amounted to $151,366.
In other enforcement actions, the Insurance Commissioner:
* Fined Universal Underwriters Insurance Co., Overland Park, Kan., $10,000 ($7,500 suspended) for incorrectly calculating premiums using unapproved rates, affecting about 500 policyholders during a three-year period ending in 2005.
* Fined Arcadian Health Plan, Inc., Bothell, $20,000 ($5,000 suspended) for failing to obtain authorization to issue and sell additional shares of preferred stock. The health care service contractor also failed to notify the agency of changes in ownership and control.
Penalties and fines collected by the Insurance Commissioner are deposited in the state’s General Fund, where the dollars are used to fund programs for Washington residents, OIC said. The agency collected a total of $2.2 million in enforcement fines in 2006.
Details of the individual enforcement actions can be found at http://www.insurance.wa.gov/industry/enforcement.asp.