A settlement agreement has been reached in an enforcement action against Travelers Cos., with the company agreeing to pay $9 million in refunds to policyholders who were overcharged on their premiums, as well as a $1.5 million fine, the California Department of Insurance announced.
“I am pleased with the extraordinary cooperation the Department of Insurance received from Travelers in making the remedial changes we requested, and in refunding premiums where appropriate,” California Insurance Commissioner Dave Jones said in a statement.
The settlement is the result of a market conduct examination by CDI that found Travelers committed numerous violations of the Insurance Code and Regulations from Jan. 1, 2006 through July 31, 2006. Specifically, Department examiners looked at whether the companies were properly applying rating rules and underwriting guidelines for both personal and commercial lines.
Department examiners reviewed 866 current policies and 424 policies that were cancelled, not renewed, or declined. They identified 125 rating errors (incorrect calculations of premium amount), 76 non-rating errors (improper application of underwriting or other internal company rules), and 19 termination transaction errors (policies improperly declined, cancelled or not renewed). Based on the results of the examination, CDI initiated an enforcement action against Travelers.