Two subsidiaries of Auto Club Group have agreed to refund $2.6 million to policyholders and to pay $113,000 in fines after a market conduct examination by the North Carolina Department of Insurance.
Members Insurance Co. and Universal Insurance Co., both based in North Carolina, write automobile and property coverage. Auto Club Group is owned by the American Automobile Association, or AAA.
The two North Carolina carriers violated state laws and regulations by failing to notify producers that their appointments had been terminated; using unlicensed adjusters and unappointed producers; taking too long to pay some claims; miscalculating rates for some policyholders; and improperly notifying customers of rate changes, the DOI’s market conduct report noted.
“The Companies were deemed to be in violation of the provisions of NCGS 58-36-30(b1) as the insured was not notified that the rates used to calculate the premium for the policy were greater than those rates that were applicable in the State of North Carolina for 30 policies reviewed (30.0% error ratio), resulting in 30 overcharges,” the market conduct examination report reads.
Because of the issues found in the sample policies, DOI examiners directed Members and Universal to conduct its own audit. The audit found 6,996 policies that did not include proper notification to the policyholders, and the companies issued refunds totaling almost $2.3 million, including interest. That’s an average refund of about $324.
The DOI examined hundreds policiesfrom July 2019 through June 2022. The carriers agreed to pay the refunds and the fines and to avoid a public hearing about the violations, Insurance Commissioner Mike Causey said in a statement. Robert Ross, president of the companies, signed a settlement agreement dated April 30, 2025.
The examination also found several instances in which the insurers had undercharged policyholders and had followed proper procedures. No discrepancies were noted in Members’ and Universal’s use of their underwriting guidelines, and policy cancellation reasons were found to be valid.
On homeowners policies, rating errors resulted in 56 undercharges and four overcharges, and the insures issued small refunds for the overcharges, DOI said. “The premium for the increase in Coverage C limits was not included in the premium calculation for the Replacement Cost Contents endorsement for 47 policies,” and the maximum premium credit allowed for protective devices was exceeded for 14 policies, the report noted.
On auto and property claims, the insurers took an average of about 18 days to complete claims payments, according to a sample of 100 policies. That was deemed to be excessively long under North Carolina law, the report said.
The carriers also provided the names of 424 producers that had been terminated from their appointments and DOI examined a sample of 50 of those. The department found that 30 of the 50 had not been properly notified of their terminations.
Besides the fines and refunds, Members and Universal agreed to implement changes to ensure that producers will be properly notified of terminations within 15 days; to develop standards for paying claims on time; and to develop a comprehensive corrective action plan.
Universal, not affiliated with the Florida-based property insurers with similar names, was previously penalized in 2016 for using an unfiled and unapproved declarations page in auto insurance and for rating errors in auto insurance. The NCDOI’s market conduct examinations have resulted in fines for about one insurance company per year for the past five years, the department noted.
Topics North Carolina
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