American Ambassador Insurance Company Fined

Springfield, IL Illinois Insurance Director Mark Boozell has issued a Stipulation and Consent Order and levied a $250,000 fine against American Ambassador Insurance Company, Schaumburg, IL, for improper claims practices identified in a market conduct examination. The automobile insurer was cited for a number of violations including:

• failure to settle collision claims in a timely manner;
• failure to promptly investigate claims;
• underpaying on total loss vehicles;
• receiving excessive complaints throughout the year.

Under the terms of the Order, American Ambassador will pay $100,000 by May 30, 1997, and the remaining $150,000 if a follow-up examination reveals that the company has failed to comply with the Order. The re-examination will commence on or after July 1, 1998.

"The Illinois Department of Insurance is taking a hard look at the business practices of insurance companies and we intend to crack down on those that historically have had the highest complaint ratios," Boozell said. "This two-tiered fine not only requires immediate compliance, but reinforces our regulatory leverage. Our action should send a clear message that insurance is first and foremost a service industry."

The regulatory Order requires American Ambassador to correct all deficiencies cited in the examination report. Boozell said the Department would also expect to see a reduction in consumer complaints against the company.