After 41 years practicing personal injury law, I have found there are very few insurance companies I enjoy dealing with. A few are right at the bottom of the list though, and Fred Loya Insurance is one of those. So it came as no surprise to me when the Dallas Morning News reported that Loya Insurance had to pay a $300,000 fine for deceptive advertising practices. That money really should have gone to the Loya customers who were tricked by the advertising, but the state said it was unable to determine the names and addresses of the customers, so the state took the money. Here are excerpts from the newspaper article:
Loya Insurance Co., a leading auto insurer in Texas, has been fined $300,000 by the Texas Department of Insurance for unfair and deceptive business practices and for failing to file accurate information on the rates it charges its customers.
A consent order issued by state Insurance Commissioner Eleanor Kitzman directed the company to submit to the department a report detailing how it determines its rates and discounts for the 210,000 drivers it insures in Texas.
Among the Loya practices cited by the agency as improper were claims made in radio commercials, billboards, fliers and the Yellow Pages that said auto insurance coverage could be obtained with no down payment and no fees.
“However, Loya only issues policies which require one month or more of premiums to be collected in advance … and Loya charges a policy fee for each policy issued,” the commissioner’s order stated.
The order noted that Loya has revised its advertising practices and no longer makes such claims in its promotions.
Loya also failed to follow the underwriting guidelines for determining discounts and “preferred” customers that it filed with the insurance department, according to the order. The company used additional requirements that made it more difficult for customers to receive lower premiums.
“Loya’s policy files do not clearly demonstrate which criteria were considered or how the ultimate determination was made whether to apply the discounts to a particular applicant or policyholder. Loya’s computer files for each policy issued also did not contain electronic fields to identify which criteria were met to apply the discounts,” the commissioner said.
Loya declined to comment on the order, which said the company consented to the state’s terms “to settle all allegations against it and to avoid the expense and uncertainty of litigation.”
Although the company agreed to revise its business practices, the commissioner’s order said the lack of information about policies makes it impossible to order refunds for customers.
Loya has been near the top of the state’s complaint list for major auto insurers for several years, although in 2011 it dropped to the fifth highest complaint “index” among the 25 largest insurers in the state — those with more than 100,000 policies. In 2011, Loya had a complaint index of 1.58 — or 58 percent higher than the state average.
Some North Texas drivers have lodged complaints with the insurance department contending that Loya refused to pay for damages caused by its policyholders. In one case, the insurer denied a claim by saying that a driver who produced a Loya proof of insurance card after an accident didn’t really have coverage with Loya.
The company with the worst complaint record among the largest auto insurers is Old American County Mutual, which had an index nearly four times the state average.
Complaints lodged by Texas drivers included practices such as delays in processing claims, “lowball” offers and settlements, denial of claims and liability disputes.