After what it says was an investigation that took months, the Delaware Department of Insurance has levied a $300,000 penalty on three Liberty Mutual companies for advertising discounts that they do not offer in the state.
The department said the final settlement incudes a stipulation that the insurers will pay an additional $200,000 if they do not immediately remedy the conduct.
Liberty Mutual has cooperated with the department, has paid the penalty, and is working to correct the mistakes. However, the company does not agree with all of the violations cited in the department’s report.
Insurance Commissioner Trinidad Navarro said that the main activities under review were the companies’ advertisement of potential premium discounts to automobile and homeowners’ insurance consumers despite not offering such discounts in Delaware. He said such “misleading advertising and other misrepresentations” could lead to consumers “choosing the wrong coverage for their needs, or their wallets.”
According to the department, this is not the first time the company has been investigated for this issue. “We have seen this problem before, and we are committed to ensuring it is corrected,” Navarro said.
According to the department, investigators uncovered 39,806 instances of false information and advertising. In 31,696 instances, the company listed a “claims free” discount on homeowners insurance declaration pages, when no such discount was offered in Delaware.
In 8,110 cases, the department said Liberty companies indicated auto insurance consumers could access safety discounts if their vehicles use adaptive cruise control, lane departure warning, or collision preparation systems – but they offered no such discounts on Delaware policies.
The companies, Liberty Insurance Corp., Liberty Mutual Personal Insurance Co., and LM Insurance Corp. write more than $59.7 million in premium in Delaware.
The examination reviewed data from January 1, 2021 to July 31, 2023.
In the past, the department said, its investigations of LM General Insurance Co. and Liberty Mutual Fire Insurance Co. from January 1, 2018 through March 31, 2021 encountered nearly 35,000 instances of false information and advertising, as well as additional violations of the state’s insurance code. The companies each paid $150,000 in penalty, but their noncompliance with orders to correct the issue resulted in an additional examination.
Penalties are paid to the state’s general fund.
The department warned that if it finds further violations by Liberty Mutual, it could issue additional monetary penalties, prohibit it from writing new business in the state, or suspend the insurer’s certificate of authority.
While it did not agree with all of the findings, Liberty Mutual waived its right for a hearing or a challenge to the report.
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