California Looks to Fine AIG Unit Over Fire Claims Handling

NU Online News Service, March 7, 8:53 a.m. EST

New Hampshire Insurance Co. and its claims processing agent York Risk Services, has been cited for 125 violations related to alleged mishandling of claims after a California wildfire in 2008.

New Hampshire Insurance is a subsidiary of American International Group Inc. (AIG).

“The allegations in this case reflect a troubling lack of attention to consumer needs by New Hampshire Insurance Company,” says Adam M. Cole, general counsel at the California Department of Insurance (CDI).

CDI says each violation represents “an alleged unfair or deceptive act,” and each could carry a fine of up to $10,000.

New Hampshire insured about 370 mobile homes lost to the Sayre Fire in Sylmar, Calif. in November 2008. The Sayre Fire charred 11,000 acres and destroyed 489 homes, including 480 mobile homes in the Oakridge Mobile Home Park, says CDI.

CDI says after the fire it received a number of complaints from the insurer’s policyholders.

CDI says it investigated the complaints, which led to the agency formally putting New Hampshire Insurance on notice of the penalties it could get.

The company and York are entitled to an administrative hearing, CDI says.

According to state insurance law, the company could face up to a $5,000 fine for each alleged offense if it is deemed unfair or deceptive. Up to a $10,000 fine for each violation is levied if it is determined the offenses were willful.

This is not the first action taken by CDI against New Hampshire Insurance. In 2009 the insurer agreed to extend replacement cost coverage available to its policyholders after they complained to CDI.

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