N.J. Commissioner Details Consumer Protection Actions

New Jersey’s Banking and Insurance Commissioner Holly C. Bakke has announced a number of actions, following investigations by the Department’s Market Conduct Unit. It operates within the Office of Consumer Protection Services and conducts on-site reviews of insurance company and agency operations and business practices “to determine whether they are in accordance with New Jersey’s laws.”

The DOBI’s announcement gave the following details:
— Liberty Mutual Fire Insurance Company was rejecting applications for automobile insurance in cases where the applicant failed to provide all of the information requested or simply forgot to sign the document in order to bind coverage. The company will correct the problem.

— Selective Insurance Company of America was not paying auto Personal Injury Protection (PIP) claims within the required 60-day period. Selective was cited for failure to pay those claims in a timely manner and for failure to pay interest on delayed claims. The company is in the process of tabulating and refunding the interest on those delayed claims.

— Chubb Insurance Company of New Jersey was improperly non-renewing policyholders under the 2 percent rule. Chubb had failed to give as many as 40 percent of those who were non-renewed a reason for the cancellation, thereby limiting a policyholder’s ability to file an appeal. Chubb will correct the problem. Also, a review of Chubb’s Web site revealed that Chubb offered information on buying auto insurance in all other states except New Jersey, giving consumers the mistaken impression that Chubb does not offer auto insurance in New Jersey. Chubb has corrected that advertising omission on its Web site.

— Prudential Property and Casualty Insurance Company improperly denied discounts for homes that are equipped with smoke detectors, resulting in an overcharge of $29,303 to 798 policyholders. The company is refunding those overcharges.

— Metropolitan Property and Casualty Insurance Company delayed the application process, having the effect of discouraging applicants and in some cases creating the need to seek auto insurance from other carriers. The company will correct the problem.

— Allstate was not investigating suspicious underwriting issues where the policy was terminated for nonpayment of premium after the company’s discovery of a potentially fraudulent act. The company will correct the problem.

“The Department works every day to protect consumers in the insurance marketplace,” Commissioner Bakke stated in a written release. “Consumers would not be aware of market activities that may be improper or place an unfair burden on them had it not been for our examinations of companies’ practices.” She added that the reviews help “promote a climate of fair competition in the marketplace” and protect consumers “from practices that violate their rights under insurance laws.”