$200K Penalty Issued Against Universal Casualty in Illinois

The Illinois Department of Insurance has issued an order against Universal Casualty Company (UCC) for failing to adopt and maintain procedures for the prompt investigation and settlement of consumers’ claims.

On Aug. 11, 2009, the department ordered UCC, an automobile insurance company based in Elk Grove Village, Ill., which does business in Illinois, Indiana and Missouri, to pay a $200,000 fine and correct its claims processes immediately.

Both Indiana and Missouri have imposed sanctions against the company, mostly due to UCC’s claims practices.

In January 2008, the Illinois department ordered the company to create and maintain improved claims investigation and resolution procedures. The department continued, however, to receive complaints from consumers based on UCC’s failure to properly address or resolve property damage and liability claims.

Acting on behalf of Illinois consumers, the department initiated additional punitive measures and a new investigation of UCC on July 27, 2009.

The order entered Aug. 11 imposes a fine of $200,000 on UCC – $100,000 of which is payable in the event that the department’s current examination finds that UCC’s corrective measures are unsatisfactory. It also requires that UCC must re-visit and satisfactorily resolve several hundred previous consumer complaints.

UCC has informed the department of its effort to institute corrective measures, including the engagement of new management.

If the company fails to undertake required reforms, the department said it will take further disciplinary measures.

In June, the Indiana Department of Insurance imposed a $200,000 fine against UCC and ordered it to cease writing new business in that state.

At that time, the Indiana department noted that while UCC writes less than 1 percent of the auto insurance business in the state, it ranked number one on IDOI’s complaint index for 2008. The department said it received more than 200 complaints from policyholders regarding the UCC’s unwillingness to pay claims properly and on time.

Missouri has also barred UCC from writing new business there. The Missouri Department of Insurance indicated in its June 11 order that it has received more than 13 times the number of consumer complaints about UCC than it typically does for a company its size.

Sources: Illinois Department of Insurance, insurance.illinois.gov; Indiana Department of Insurance, www.in.gov/idoi/index.htm; Missouri Department of Insurance, www.insurance.mo.gov/