By Michael P. Tremoglie
The Missouri Department of Insurance (MDI) announced July 1 that a regulatory agreement was reached with American Modern Insurance Group, Inc. Missouri insurance regulators collaborated with their counterparts in Ohio, Indiana, and Washington investigating American Modern’s business practices.
American Modern Insurance is a major player in the specialty insurance business. It has almost two million customers across 50 states.
MDI reviewed the company’s practices regarding the way premium rates were charged, the way it handled claims and other responsibilities under state law.
American Modern will pay $6 million in penalties and establish a $20.3 million restitution pool. The Missouri State School fund will also receive $145,819. According to the announcement, American Modern will “bring its rates into conformance with previously approved rates.”
“This insurer was facing allegations of charging excessive rates for lender-placed policies to homeowners,” said department director John M Huff in a press release. “Our team was able to collaborate on a settlement with multiple states to benefit Missourians.”
A review of policies in-force during Jan. 1, 2009 to March 31, 2013 will be conducted by the company and it will send a notice and claim form to borrowers, who are eligible to receive restitution for premiums paid above the filed rates.
MDI said American Modern assessed its practices and learned that there was an issue with excess premiums with lender placed business lines. “American Modern is pleased to be able to bring this matter to an amicable resolution, ” Bill Bangert, an American Modern spokesperson told Insurance Business America in an e-mail. When asked about the company’s relationship with the brokers, Bangert replied: “American Modern has worked closely with its producers in correcting any errors, and appreciates their cooperation.”
