CDI Settles Enforcement Action against Company

June 7, 2002

The California Department of Insurance (CDI) has settled an enforcement action against Harleysville Mutual Insurance Company for alleged unfair claims settlement practices.

Under the agreement, Harleysville will pay a $200,000 penalty and is required to establish a detailed auditing system to monitor the efficiency and proper handling of all claims. An additional $50,000 penalty will be assessed in the event Harleysville fails to maintain compliance with specified monitoring measures.

CDI’s action is the result of an investigation following reported numerous consumer complaints regarding Harleysville’s handling of auto insurance claims. Following its investigation of the company’s claim handling practices, CDI alleged a total of 158 violations in the 60 claim files reviewed.

The alleged unfair claims settlement practices violations of California Insurance Code Section 790.03 were related to lack of timeliness in claim handling, failure to respond to CDI communications, and a failure to properly identify itself as the insurer.

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