Prudential Insurance Company of America will pay a $2.3 million civil forfeiture in Illinois--the state's share of the record $35 million nationwide fine imposed on the New Jersey based insurance company for marketing abuses. The fine is part of a stipulation and consent order Insurance Director Mark Boozell issued on July 5, 1996, in response to the findings of the market conduct examination conducted by a Multi-state Task Force headed by the New Jersey Insurance Department. Illinois was a member of that Task Force and has officially adopted its report.
Illinois originally initiated its own market conduct examination of Prudential's sales practices, but preliminary findings so closely mirrored those of the Task Force that Boozell opted to join the Multi-state group rather than duplicate its efforts and issue a separate report. "We concluded that policyholder interests would be better served utilizing the combined resources of the 30 participating states," he said.
State insurance regulators have charged the company with widespread sales violations ranging from agent misrepresentation to illegal replacement of coverage. The report also faults company management for failing to responsibly police and discipline its agents.
"Although the Prudential fine is the highest ever assessed, both in Illinois and nationally, the focus of our settlement agreement is restitution to policyholders," Boozell said. "During the course of our own investigation and through our participation in the Task Force, our goal has always been to protect the interests of the estimated 749,000 Illinois citizens who may have been financially harmed by Prudential's sales practices. The remediation program outlined in the Task Force report, and adopted in our order ensures that all policyholders will be treated fairly," he said.
Prudential clients who purchased the approximately 10.7 million permanent life insurance policies sold between January 1, 1982, and December 31, 1995, will receive an explanation of the remediation program directly from the company. Those who choose to participate will be instructed on how to submit their sales-related claims for review and will have multiple opportunities throughout the process to appeal the findings. Options ultimately available to consumers who have been harmed will include full premium refunds, continued coverage with no additional premiums due, partial premium refunds, and the opportunity to obtain additional life insurance or annuities enhanced by the amount that would normally be allocated to agent commissions.
"Illinois intends to be closely involved in the remediation review process," Boozell stated. "At least two of our own market conduct experts will participate on the state regulator oversight panel. Further, under our settlement agreement, we reserve the right to perform a target review of the remediation program if it is determined that the program is not performing satisfactorily."
When Disaster Strikes: What to Do after an Insured Homeowners Loss
The question and answer guide walks readers through issues that most commonly surface in the aftermath of a disaster involving property damage. The format defines key insurance terms and describes responsibilities the agent, the company and the insured will be expected to shoulder throughout the repair or replacement process.
Among the issues addressed are: how to report a claim, what to report to the insurer, handling emergency repairs and temporary housing and how claims are calculated.
Consumer complaint ratios
The Department calculates a ratio for insurance companies that have ten or more complaints in a calendar year for auto, homeowners, individual life, and individual and group accident and health insurance coverages. Ratios for health maintenance organizations are also included.
Company address links
Our auto and homeowners insurance premium comparison programs now include links to the company addresses.
The Illinois Department of Insurance home page can be accessed at http://insurance.illinois.gov/
An Illinois Department of Insurance survey examining underwriting practices with regard to domestic violence or abuse received 100% response from the 989 insurance companies asked to participate.
Results of the survey administered in January to companies writing some combination of life, accident and health insurance polices in Illinois were released July 2, 1996. The survey comes in response to increased government, media and industry attention to the issue.
While the majority of carriers licensed in Illinois do not utilize an applicant's history of domestic violence or abuse, opinions expressed by the carriers indicate this is a complex issue facing the industry. The survey shows companies are trying to balance social consciousness with good business decisions.
Ninety percent of respondents reported that they currently do not consider an applicant's history of domestic violence or abuse when issuing a new policy or that such information is not applicable to the lines of business they write. Another 96.5 percent reported they currently do not consider a person's history of being subjected to domestic violence or abuse when renewing policies of insurance, or that such considerations are not applicable in the lines of business they write.
However, 45 percent indicated they would use underlying health conditions in the underwriting process, regardless of how caused or affected by domestic violence or abuse. And, over 51 percent of the respondents favored considering underlying health conditions which arose from acts of domestic violence or abuse as valid underwriting criteria.
None of the companies reported using an individual's history of domestic violence or abuse to automatically deny insurance coverage. Most companies said they do not specifically solicit this information, but add it often gets mentioned during the underwriting process. When violence or abuse situations become evident, especially when the violence or abuse is repetitive, life threatening, or has resulted in severe bodily or psychological injury, companies reported they consider such policies on a case-by-case basis.
A majority of firms also expressed specific concerns about the ways domestic violence or abuse affect a person's insurability. First among these were issues of risk affecting mortality or morbidity; whether the abuse is current, residual, or extreme; whether the applicant's situation is life threatening; and the proximity of the perpetrator to the subject of abuse. Companies stated that to charge equitable premiums, they need to be aware of all relevant factors contributing to an insured's health, which may include a person's experience of domestic violence or abuse.
Of the various insurance carriers completing the survey, life insurance companies most often reported considering, or wanting to consider, domestic violence or abuse in the underwriting process.
Senate Bill 1425, amendatorily vetoed for clarification, would prohibit licensed insurance companies from denying life, health, or disability income insurance coverage based solely on abuse. However, the bill does permit companies to underwrite based on health conditions. While a company could deny coverage to a person who has been subject to abuse and has a health condition that would not be covered even if there were no abuse, this decision must be based on the underlying health problem and not on the insurer's discovery of violence or abuse.
The following information is being published at the request of the Secretary of State's Office.
On June 28, 1996, Governor Edgar signed into law Public Act 89-503, which became effective July 1, 1996. This legislation allows the Secretary of State to disclose notations of accident involvements maintained on driving records. Prior to this legislation, such information was considered confidential and not disclosed on public abstracts.
As provided for in the legislation, accident involvement information is disclosed in cases where a motor vehicle accident report is required to be forwarded to the Illinois Department of Transportation, pursuant to Sections 11-406 and 11-408 of the Illinois Vehicle Code (625 ILCS 5/11-406 and 5/11-408).
To differentiate between various types of accident involvements on driving records, the Secretary of State's Office uses numeric codes called "type actions" and "reason codes." On a driving abstract, an accident involvement is indicated by one of the following three type actions:
Type Action 14- Signifies driver's involvement in a property damage only accident.
Type Action 16- Signifies the driver's involvement in a fatal accident.
Type Action 19- Signifies the driver's involvement in a personal injury accident.
Also located on the abstract is the date of the accident, the accident report number, and a reason code. The reason code is noted as "R-C," with one of the following numbers beside it:
Reason Code
Auto Motorcycle Description
00 00 Entry made prior to establishing reason
codes
01 51 Signifies officer observed presence of
alcohol/drugs; no tickets issued
02 52 Signifies officer issued traffic
citation for DUI
03 53 Signifies officer issued traffic
citation; no drugs or alcohol involved
04 54 Signifies officer issued traffic
citation for illegal transportation of
alcohol
07 57 Signifies officer issued traffic
citation for offenses other than alcohol
or drugs, even though the officer
observed the presence of alcohol or
drugs
08 58 Signifies alcohol or drugs present and
that an accident involving multiple
fatalities occurred
09 59 Signifies citations issued for DUI,
Section 11-501 of the Illinois Vehicle
Code, and illegal transportation of
alcohol, Section 11-502 of the Illinois
Vehicle Code
10 60 Signifies citations issued for DUI,
Section 11-501 of the Illinois Vehicle
Code, and traffic violations other than
Sections 11-501 or 11-502 of the
Illinois Vehicle Code
11 61 Signifies citation issued for DUI,
Section 11-501 of the Illinois Vehicle
Code and that an accident involving
multiple fatalities occurred
12 62 Signifies citations issued for illegal
transportation of alcohol, Section
11-502 of the Illinois Vehicle Code, and
that accident involving multiple
fatalities occurred
13 63 Signifies citation issued for illegal
transportation of alcohol, Section
11-502 of the Illinois Vehicle Code, and
that accident involving multiple
fatalities occurred
14 64 Signifies citation issued for traffic
violations other than Sections 11-501 or
11-502 of the Illinois Vehicle Code and
that an accident involving multiple
fatalities occurred
99 98 Signifies no traffic citation issued and
no notation made by the officer to
reflect his or her observation of the
presence of alcohol or drugs
It should also be noted that Section 11-412 of the Illinois Vehicle Code still provides that "all required written motor vehicle accident reports and supplemental reports shall be without prejudice to the individual so reporting and shall be for the confidential use of the department of Transportation and the Secretary of State; and, in addition, no such written report shall be used as evidence in any trial, civil or criminal" (625 ILCS 5/11-412).
Questions concerning the new law can be directed to the Secretary of State's Office at 217/785-7448.
Geneva Assurance Syndicate, Inc., a member of the Illinois Insurance Exchange, was declared insolvent and placed in liquidation on July 11, 1996. The Cook County Circuit Court granted Director Mark Boozell's petition, based on the Department's finding that the company's policyholders surplus was impaired in excess of $4.5 million. The company had been under an Order of Conservation since May 17.
The company's most recent annual statements reflect approximately $50 million in direct premium as of December 31, 1994; however, Geneva has not been actively writing new business since July, 1995. The company's remaining policyholders will be notified that all policies will be cancelled as of 12:01 a.m. August 11, 1996, unless they expire or are terminated at an earlier date.
Geneva is a member of the Illinois Insurance Exchange Guaranty Fund which could provide up to $15 million of coverage, in amounts not to exceed $300,000 per claimant, to assist the liquidator in meeting obligations to policyholders. However, due to the number and complexity of claims against Geneva, it is not known when or to what degree those funds will be available.
Geneva is a wholly owned subsidiary of United Southern Assurance Company (Melbourne, FL) and JBW & Co., Inc. (Concord, CA), which in turn are affiliates of Concord General Corporation (Concord, CA).
The liquidation proceedings are being handled by the Department's Office of the Special Deputy Receiver, 222 Merchandise Mart Plaza, Suite 1450, Chicago, IL 60654; (312) 836-9500.
New Admissions
Certificates of authority have been issued to the following
insurance companies:
Dentists Insurance Company, CA, 7/2/96
First Mercury Insurance Company, IL, 6/28/96
National Heritage Insurance Company, IL, 7/17/96
Terminations
Certificates of authority have been revoked for the
following insurance companies:
Fidelity Mutual Life Insurance Company, PA, 6/28/96
National American Life Insurance Company of Pennsylvania,
PA, 6/28/96
Central National Insurance Company of Omaha, NE, 7/31/96
Protective National Insurance Company of Omaha, NE, 7/31/96
The full text of Department rules is printed in the Illinois Register published weekly by the Illinois Secretary of State's Index Department, 111 E. Monroe St., Springfield, IL 62756. Subscriptions are available from that source for an annual fee of $290. Issue numbers and a Department contact person are listed below after each rule summary.
Copies of rules are also available upon written request to the Department of Insurance at a $1 per page charge. Adopted rules are codified in Title 50 of the Illinois Administrative Code.
Rule 916 (Required Procedure for Filing and Securing Approval of Policy Forms) was amended on May 1, 1996, to further clarify our regulatory requirements. The amendment makes a number of "housekeeping" changes and adds provisions to allow companies to electronically file policy forms. (Vol. 20, #20; Nancy Simpson)
Rule 2017 (Uniform Medical Claim and Billing Forms) was amended on June 5, 1996, to require health care providers, as defined in the rule, to use uniform claim and billing forms, as defined in the rule. (Vol. 20, #26; Mary Peterson)
Revocation of Licensing Authority GWYA, Inc., Your Insurance Agency 1198 N. Main Street Decatur, IL Effective 4/30/96 Voluntary Revocation Randall Gene Hubbard 2807 Crestwood Columbia, MO Effective 5/22/96 Leonard A. Dennis RR 1, Box 50 Griggsville, IL Effective 5/22/96 Patrick J. Dunn 830 Lafayette Aurora, IL Effective 5/29/96 William Emil Schenk 6726 North Northwest Highway Chicago, IL Effective 5/28/96 Denial of Request for License Ronald Jones 9433 S. Bishop Chicago, IL Effective 5/20/96 David T. Manley 2485 Bethany Lane Hinckley, OH Effective 6/12/96 Variable Protection Administrators, Inc. 16035 Industrial Parkway Cleveland, OH Effective 6/12/96 Stipulation and Consent Order - Civil Forfeiture Paid Agent/Broker Review Company c/o James Edwards Three Lawrence Square Springfield, IL Effective 5/29/96 Carlos F. Alvarez d/b/a CFA Insurance Agency 618 W. Lake Street Maywood, IL Effective 6/25/96 Gary L. Ashley 324 Buena Vista, #28 Pekin, IL Effective 4/8/96 Ronald James Barcelona 6724 North Street Tinley Park, IL Effective 5/22/96 Ronald D. Beck 677 Monaco Drive Edwardsville, IL Effective 5/22/96 Broadmoor Agency, Inc. PO Box 17069 Rockford, IL Effective 4/22/96 Christine Castellano 3613 S. Francisco Chicago, IL Effective 5/22/96 David R. Cazazza 1660 N. Mulford Road Rockford, IL Effective 4/22/96 Gary R. Culp 518 W. Jefferson Monticello, IN Effective 6/7/96 Damen Insurance Agency 2002 W. Cermak Road Chicago, IL Effective 4/8/96 Julio E. Fajardo 2002 W. Cermak Road Chicago, IL Effective 4/8/96 Fischer Insurance Agency 213 W. Main Staunton, IL Effective 5/22/96 Thomas Eugene Foster 1042 N. Broad PO Box 1223 Galesburg, IL Effective 3/20/96 Daniel Kent Hopwood 12822 Southport Road Brimfield, IL Effective 5/22/96 Louis M. King, Jr. 506 E. Corrington Avenue Peoria, IL Effective 5/22/96 Magnum Insurance Agency Co., Inc. 4259 North Western Avenue Chicago, IL Effective 5/22/96 Edward F. McFarlin d/b/a McFarlin Insurance Brokerage 1653 West 79th Street Chicago, IL Effective 4/8/96 Ana Pivaral 8901 North Olcott Chicago, IL Effective 5/22/96 Felix Rodriguez 5419 N. Mont Clare Chicago, IL Effective 4/8/96 Robert Alex Rylowicz 321 Turnberry Lane Glen Ellyn, IL Effective 4/8/96 Richard F. Schweig 111 Chestnut, #54H Chicago, IL 60606 Effective 3/4/96 James C. Scott 1812 Maserati Drive Joliet, IL Effective 5/22/96 Richard A. Tannebaum Small Business Benefits Group 12416 S. Harlem Avenue Palos Heights, IL Effective 5/3/96 Rick G. Travis Box 71 Cowden, IL Effective 4/23/96 Order of Suspension Thomas V. DeBrun 201 Kitchell Avenue PO Box 525 Pana, IL Effective 5/10/96 Angel A. Resch 625 Green Meadow Decatur, IL Effective 4/30/96 Herman Williams 2101 S. Michigan, #1010 Chicago, IL Effective 5/10/96 Cancellation Due to Dishonored Check Maria J. Acot 4763 N. Keystone, Apt. 2 Chicago, IL Effective 5/17/96 Dorothy Jean Almeida 22920 Valley Drive Richton Park, IL Effective 5/20/96 Jo El R. Bagley 648 N. Northwest Hwy Park Ridge, IL Effective 5/8/96 Paul D. Boulden 9127 E 3000 N Rd Momence, IL Effective 4/23/96 David Covington 7953 S. Wolcott Ave Chicago, IL Effective 5/13/96 Jack J. Glynn 742 Drury Court Gurnee, IL Effective 4/19/96 Ricky Marion 7022 South Shore Drive Apt. 1204 Chicago, IL Effective 5/19/96 Francisco Montalvo, III 53 Ash St Park Forest, IL Effective 4/9/96 Warren G. Morgan 14426 S. Ingleside Ave Dolton, IL Effective 3/24/96 Willie L. Ross, Jr. 5921 Albin Terrace Berkeley, IL Effective 5/29/96 Other Dishonored Checks Amaton Corp. 2943 Keebler Road Maryville, IL Frank A. Caruso 15W 441 Victory Pkwy Elmhurst, IL Jerry D. Conway 216 South 12th Street Belleville, IL Matthew M. Davis PO Box 333 Ashmore, IL Terrence L. Kiesiel 1918 Deerpass PO Box 567 Marengo, IL Carlos J. Lopez, Jr. 15040 S. Riverside South Holland, IL Veenod N. Patel 6028 N. Richmond Chicago, IL Latechia M. Sturkey 2217 Arbor Cir Apt. 21 Downers Grove, IL Wesley A. Swinford 3309 N. Lakewood Dr., #2L Chicago, IL Stephanie Wagner 2857 Barber Court Joliet, IL Cora A. Yap 302 Wilson Street Lombard, IL
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Examination reports filed
Financial BCS Life Insurance Company 6/06/96 Transguard Insurance Company of America 6/06/96 Chicago HMO, Ltd. 6/14/96 Illinois Environmental Services Workers Compensation Trust 6/19/96 Intercargo Insurance Company 6/19/96 International Insurance Company 6/19/96 Kemper Investors Life Insurance Company 6/19/96 Life Services Network Trust (formerly Illinois Association of Homes for the Aging Workers Compensation Trust) 6/19/96 Oceanic Insurance and Surety Company 6/19/96 Bankers Life & Casualty Company 6/20/96 Bankers Life Insurance Company of Illinois 6/20/96 Illinois Press Association Risk Management Group 7/02/96 Industry Mutual Insurance Company 7/08/96 Stephenson County Mutual Fire Insurance Company 7/08/96 Market Conduct J.C. Penney Life Insurance Company 2/14/96 New Hampshire Insurance Company 4/17/96 Providence Washington Insurance Company 4/17/96
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Hearings
Completed Hearings: Maizie V. Barnes State Farm Mutual Automobile Insurance Company Cancellation withdrawn 5/28/96 Hearing No. 3427 Donavon Fonquer, Jr. State Farm Fire & Casualty Company Nonrenewal effective 5/30/96 Hearing No. 3424 Arthur G. Wargo, Jr. State Farm Mutual Automobile Insurance Company Cancellation effective 6/14/96 Hearing No. 3433 Audree Friedman State Farm Fire & Casualty Company Cancellation effective 6/28/96 Hearing No. 3434 Cathyrn R. Iversen State Farm Mutual Automobile Insurance Company Nonrenewal effective 7/2/96 Hearing No. 3439 Kathleen M. Konieczny Konieczny Insurance Agency Licensing authority revoked 7/5/96 Hearing No. 3397 Matters Settled without Hearing: GWYA, Inc. Angel Resch Stipulation and consent order 4/30/96 Hearing No. 3404 Kathleen A. Thomas Illinois Farmers Insurance Company Dismissed 5/20/96 Hearing No. 3432 William and Pamela Hagen Merchants Property Insurance Company of Indiana Dismissed 6/7/96 Hearing No. 3435 Insurance Company of the Prairie States Order of revocation rescinded 6/17/96 Hearing No. 3392 Suzette Ferrill Country Mutual Insurance Company Dismissed 6/28/96 Hearing No. 3436 Mack and Barbara Williamson Cigna Insurance Company of Illinois Dismissed 7/9/96 Hearing No. 3450 Scheduled Hearings: Sudesh Suri State Farm Mutual Automobile Insurance Company Nonrenewal 7/24/96 Hearing No. 3451 Polar Tool and Manufacturing, Inc. National Council on Compensation Insurance Rate 8/2/96 No. 3452 Interstate Insurance Services, Inc. Licensing authority revocation 8/7/96 Hearing No. 3449 Robert L. Henry State Farm Mutual Automobile Insurance Company Cancellation 8/21/96 Hearing No. 3453