Market Conduct Corner: Allstate fined $225,000 by the Green Mountain State

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Dec. 10, 2021 — The Allstate companies received a $225,000 penalty from the Insurance Division of the Vermont Department of Financial Regulation after an exam on claims settlement practices of third-party auto liability claims found certain violations.

According to a consent order and stipulation dated Dec. 8, 2021, the exam focused on auto liability claims that involved comparative negligence to check whether they were handled correctly under Vermont law.

The regulators found Allstate failed at times to document evidence of implementing so-called “reasonable standards” for promptly investigating claims.

While the department did not find any instance in which Allstate didn’t implement these reasonable standards, the company’s apparent lack of “proper documentation” led the Insurance Division to conclude there was a failure to implement. Vermont cited it lacked “evidence to the contrary.”

Regulators simply could not tell how Allstate was measuring up in promptly investigating these liability claims.

Of note, Allstate must also pay restitution with interest to any third-party claimant whose claim was initially denied in part or fully because it was assigned comparative negligence liability when a further review of the claim determined the assignment of liability to be faulty.

It is unclear how much the total payout would be. Allstate did not respond to an inquiry. However, the department began the Allstate exam on July 9, 2018.

Under the consent order, Allstate must also “properly document how the procedures its adjusters are to use when making comparative negligence determinations have been implemented.”

Vermont regulators gave Allstate a set of actions and materials for these procedures, including training materials, conducting accident scene investigations from inquiries and photographic evidence and vehicle inspections and documenting the process.

The company has already implemented training measures and controls, according ot the consent order. It has until Jan. 31 2022, to show the Department certification of shared liability training of all licensed adjusted in Vermont.

Vermont regulators wrote that they might conduct a follow up exam within 12 to 24 months to check on compliance.

Allstate means in this instance: Allstate Fire & Casualty Insurance Co.Allstate Indemnity Co., Allstate Insurance Co., and Allstate Property & Casualty Co.

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