AIG unit faces potential fines in California over management of fire claims

Remains of mobile home parkAmerican International Group Inc. (AIG) subsidiary, New Hampshire Insurance Co., along with York Risk Services, its claims processing agent, are now facing citations for 125 violations connected with alleged improper handling of California wildfire related claims from 2008.

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

CDI has stated that each of the various violations for which the insurer has been sited have to do with “an alleged unfair or deceptive act,” and their individual fines could each be as much as $10,000.

The company insured approximately 370 mobile homes that were destroyed in the Sylmar, California in the Sayre Fire that occurred in November 2008. That fire destroyed a total of 489 homes, as it burned through 11,000 acres. According to CDI, 480 of those structures were mobile homes in the Oakridge Mobile Home Park.

CDI also stated that following the fire, it was inundated with complaints from the policyholders with the insurer. Upon further investigation of those complaints, the agency determined that the insurer should be formally put on notice of the penalties that it could face.

That said, CDI has also said that York and the New Hampshire Insurance are still entitled to an administrative hearing that will determine the degree of their penalty. The state of California insurance law says that each alleged offense could receive a fine of up to $5,000 if it is deemed to be deceptive or unfair. However, that potential fine increases to up to $10,000 if those violations are found to have been willfully done.

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