Four companies sold auto-related warranty products to Washington consumers
OLYMPIA, WA — Insurance Commissioner Mike Kreidler took disciplinary action and issued fines in January 2018 totaling $32,400 against the insurance industry for violations of state insurance laws. He also issued cease and desist orders against unlicensed insurance adjusters.
Occidental Fire & Casualty Co. of North Carolina, Raleigh, N.C.; fined $2,500, order 17-0491
The insurance company sold policies through insurance producers who were not properly licensed and failed to conduct business in its legal name.
AMT Warranty Corp., and Northcoast Warranty Services, Wilmington, Del.; fined $20,000, order 17-0387
Both companies, which share a parent company, provide motor vehicle service contracts in Washington state. They sold 104 service contracts using different forms than those approved. The service contracts also charged a cancellation fee of $50 — state law prohibits cancellation fees in excess of $25.
Continental Service Plan, Inc., Scottsdale, Ariz.; fined $3,500, order 17-0424
Continental is a registered vehicle service contract provider. It sold 989 unauthorized stand-alone tire and wheel service contracts to Washington consumers, for which it collected $216,213. The company also made errors on its annual report filings to the insurance commissioner from 2006 through 2015.
CitiFinancial Auto Corp., Irving, Texas; license revoked, order 17-0431
CitiFinancial Auto Ltd., Irving, Texas; license revoked, order 17-0473
Both companies were authorized to sell guarantee asset protection (GAP) as registered service contract providers. In 2015, they were dissolved due to a merger with CitiFinancial Credit Co., a Delaware company that is not registered to do business in Washington state. The companies failed to notify the insurance commissioner about the merger and the new company continued to sell the product to Washington consumers. The companies also failed to notify consumers who purchased a GAP waiver that a different company owned the contracts. Further, the companies failed to notify the Washington Secretary of State about the merger and subsequent dissolutions. The insurance commissioner revoked both registrations and the companies are not allowed to sell service contracts or GAP waivers to Washington consumers.
Dennis V. Bey, Bellevue, Wash.; fined $500, order 17-0391
Bey, a licensed insurance producer, improperly sold a surplus line insurance policy to a business owner, primarily because the policy cost less than a comparable policy from a regulated insurer. Under Washington state law, insurance producers are not allowed to sell unregulated surplus line policies to clients solely to save them money. While surplus line policies sometimes cost less, they do not carry the same consumer protections as policies sold by regulated insurance companies.
Albert G. McClure, Vancouver, Wash.; fined $250, order 17-0275
McClure, a licensed insurance producer, impersonated a client in a phone call to an insurance company. The client had reported trouble canceling an insurance policy, so McClure called the company and pretended to be the client in order to get the policies canceled.
Rainwater Insurance, Inc., Tacoma, Wash.; issued probationary license and fined $500, order 17-0404
Rainwater Insurance is a licensed insurance producer with five locations in Washington state. A series of financial exams conducted by the insurance commissioner from 2013 until 2017 found repeated and ongoing deficiencies in the agency’s accounting and recordkeeping. As a result of the agency’s failure to implement corrections to its systems, the insurance commissioner moved its license to probationary status. If the agency fails to meet the terms of the consent order, the insurance commissioner may revoke the license.
Vern Fonk Insurance Services, Inc., Everett, Wash.; fined $500, order 18-0019
The agency allowed an insurance producer to issue an auto policy without the insured person’s knowledge or signature. The producer is no longer employed at the agency.
Western Experts in Transportation LLC, Kingston, Wash.; fined $2,000, order 17-0456
Western Experts, a licensed insurance producer, failed to remit $1.7 million in premium payments to Zurich American Insurance Co. The agency was not aware of the issue until Zurich filed a complaint with the insurance commissioner. The agency worked with Zurich to pay the premiums and no consumers’ policies lapsed as a result. The cause of the unpaid premiums was the agency’s chief financial officer suffering memory and cognitive issues. The officer has since retired.
Wilson Insurance, Inc., Port Townsend, Wash.; fined $250, order 17-0468
A consumer filed a complaint with the insurance commissioner when Wilson Insurance failed to pay the homeowner’s premium, causing the insurer to issue a cancelation notice to the consumer. The consumer had paid the agency, but an agency employee failed to remit the premium payment to the insurer. The agency paid the premium and the consumer was never left without coverage.
Bradley G. Pierce, Renton, Wash.; license revoked, order 17-0470
Pierce, a licensed insurance producer since 2013, pleaded guilty in June 2017 to a misdemeanor charge of attempted insurance fraud in connection with a 2015 auto collision. State law requires insurance producers to report criminal convictions, even if the investigation comes from the insurance commissioner. Pierce failed to report the guilty plea, and the insurance commissioner revoked his license.
Boley Insurance Agency and Heather Boley, Aberdeen, Wash.; license revoked, order 17-0483
Farmers Insurance terminated the appointments of Boley and her agency in July 2016 due to several actions she took to benefit herself and her family members. She issued a $1 million umbrella policy for her brother and backdated the policy to take effect days before he was in a serious auto accident; she wrote a fire policy for her parents’ home in Washington and got them a lower rate by falsely stating that they live in the home, even though they live out of state full time; she wrote two auto policies in her parents’ names for cars they didn’t own in order to get multipolicy discounts; she manipulated the receipting system to issue policies without collecting premiums; and gave herself a discount on her own renter and auto policies by falsely indicating she was married. Farmers was not able to calculate the cost of Boley’s actions, other than collecting $945 less on her renter and auto policies as a result of her false statement about being married.
As a result of these actions, the insurance commissioner revoked both licenses.
Inderbir S. Sandhu, Auburn, Wash.; fined $250, order 18-0001
Sandhu applied for a producer license in Washington state and failed to disclose three misdemeanor criminal charges in 2001 and 2004.