Over $2 Million Returned To Florida Policyholders
Tallahassee - Florida Insurance Commissioner Kevin McCarty today announced the Florida Office of Insurance Regulation (Office) has concluded an examination of American Mercury Insurance Company, a homeowners insurance company, and Mercury Insurance Company of Florida, an automobile insurer. The Office issued a consent order that requires the companies to pay over $2 million in refunds to policyholders for engaging in improper claims settlements and charging rates not approved by the Office.
The consent order follows a six-month examination of the two companies that found 13 separate statutory violations, and three violations of the Florida Administrative Code. In addition to being ordered to refund monies to policyholders, the company agreed to pay $1 million to the Office -- $500,000 in administrative fines, and $500,000 for reimbursement of examination expenses.
The Office scheduled the examination because the Department of Financial Services Division of Consumer Services relayed concerns after receiving a steady increase in complaints from Florida Mercury policyholders. Many of the consumer complaints and agent complaints initially filed against American Mercury pertained to the company's failure to cover damage to screened pool enclosures during the 2004 hurricane season.
The examination found a multitude of violations relating to the companies' business practices including the unwarranted termination of policies upon the filing of a claim, failing to pay the full amount on covered claims, failing to deliver policies within 60 days, failing to provide specific reasons for denial of claims, and the use of unappointed agents. However, it was the use of unfiled forms and rates to improperly deny claims that the Office considered to be the most egregious violation.
"Charging unapproved rates and improperly denying claims will not be tolerated," McCarty commented. "Our laws exist to protect consumers' rights, and will not be circumvented by these companies or any others in the state of Florida."
Insurance company representatives have been cooperative with state regulators, and initiated refunds to policyholders even before state regulators left the insurance company home offices beginning in December, 2005. The insurers in question are subsidiaries of Mercury General Corporation. American Mercury Insurance Company is domiciled in Oklahoma and primarily writes homeowners coverage, while Mercury Insurance Company of Florida is a Florida-domiciled insurer and primarily writes private passenger auto insurance.