The California Department of Insurance (CDI) filed an Accusation against a San Diego father and son insurance agency that has been selling Mexican tourist insurance to Californians since 1951. The Accusation seeks the revocation of their individual and agency licenses to transact insurance business, and a monetary penalty for alleged unfair and deceptive acts.
The CDI accused Oscar Padilla, his son Peter John and the agency they operate, Oscar Padilla Mexican Insurance Services Inc. of failing to safeguard the interest of their insureds, unfair and deceptive practices, operating a system of unlicensed producers, and improperly placing insurance through another agency.
An investigation by the CDI Investigations Bureau found from January 1, 1993 to June 1999, the Padilla’s agency sold policies for no less than six different Mexican insurers. The Padillas allegedly sold annual tourist insurance utilizing motor club rates, which are significantly lower than standard policies. The Accusation alleges that the premiums charged by the Padillas were too low to sustain the business; consequently, Mexican insurers used by the Padillas were forced into liquidation, and that thousands of U.S. citizens were left with unpaid claims and/or unearned premiums when Seguros del Noroeste S.A. De C.V. went out of business.
It is further alleged that from February 2, 1999 until at least June of 1999, the Padillas engaged in a pattern of unfair and deceptive acts or practices in the business of insurance. These include allegedly writing or issuing policies on behalf of Noroeste, even though they knew that insurer’s authorization to operate had been withdrawn by the Mexican government, and its assets were in the process of being liquidated, placing an additional 1,651 policyholders at risk.
CDI Investigators also discovered that during the period of approximately March 22, 1999 until August 1, 1999, respondents wrote Mexican tourist insurance policies through an agency that did not have the required state license to transact such business. Oscar Padilla told the San Diego Union Tribune that the CDI’s accusations were not only “outlandish and ridiculous” but also “unfair” and “really damaging” without affording his company a prior opportunity to address them before an administrative judge.
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