California Department of Insurance Takes Action Over Claims Handling

March 6, 2012

The California Department of Insurance has served an order to show cause, a statement of charges and a notice of penalty against the New Hampshire Insurance Co. and its authorized agent for claims processing, York Risk Services Group Inc. regarding their handling of claims related to the 2008 Sayre Fire in Sylmar.

New Hampshire Insurance Co. is a subsidiary of AIG.

The Sayre Fire on Nov. 14, 2008 led to the loss of 489 residences, mostly mobile homes, and the destruction of more than 600 structures. More than 11,000 acres were burned. Both the mayor of Los Angeles and the governor issued state of emergency declarations.

The 480 mobile homes destroyed in the fire were in the Oakridge Mobile Home Park. New Hampshire issued mobile homeowners Policies to roughly 370 policyholders whose homes suffered total losses. In the ensuing months, CDI’s Claims Services Bureau received a number of complaints from New Hampshire policyholders and cited New Hampshire and York Risk Services for 125 violations of the California Insurance Code, with each violation representing an alleged unfair or deceptive act, according to CDI.

Under the California Insurance Code, any person who engages in any unfair or deceptive act is liable to the state for a civil penalty up to $5,000 for each act, or, if the act or practice was willful, a civil penalty of up to $10,000 for each act.

The California Insurance Code permits New Hampshire and York Risk Services the opportunity to respond to the allegations in an administrative hearing.

In 2009, CDI acted on complaints from Sayre Fire survivors relating to disputes over how much extended replacement cost coverage was available under the New Hampshire policy. CDI was able to secure an additional 110 percent, or 125 percent of fire insurance coverage, for most policyholders. This action resulted in nearly $11 million in increased payments to fire victims.

Was this article valuable?

Here are more articles you may enjoy.