Following a market conduct examination by the North Carolina Department of Insurance, two insurance companies will refund more than $2.6 million to policyholders.

Insurance Commissioner Mike Causey fined The Members Insurance Co. and Universal Insurance Co. $113,000. The companies are owned by Auto Club Group and are licensed to write private passenger automobile and homeowners’ insurance policies in North Carolina.

Members and Universal have submitted a corrective action plan to address violations that were found in the examination, according to a press release from the DOI. Violations included improper policyholder notification of consent-to-rate charges, charging policyholders incorrect amounts, and taking excessive time to issue claim payments.

The examination began on May 16, 2023, and concluded on May 2, 2024, covering the period from July 1, 2019, to June 30, 2022.

According to the market conduct examination results, the average service time for the companies to respond to a departmental complaint was six calendar days.

The report also notes that the companies used unlicensed adjusters and producers, and when the unlicensed adjuster was discovered, the commissioner wasn’t notified of the fraud.

Out of 100 policies randomly selected for review, eight were incorrectly rated, resulting in two premium undercharges and six premium overcharges. At the request of the examiners, the companies issued refunds in the amount of $475.05, including interest, for the overcharges. The remaining premiums charged were deemed correct.

According to the voluntary settlement agreement signed by the companies, Members and Universal admitted that they failed to comply with statutory and regulatory requirements and entered into the agreement in the interest of avoiding an administrative hearing, the release states.

“I’m happy that we were able to get Members and Universal to provide more than $2 million in refunds owed to policyholders,” Commissioner Causey said, in the release. “I’m also glad that we were able to resolve these issues without having to go to an administrative hearing.”

The fine will be dispersed under the provisions of the North Carolina Constitution for the benefit of public schools, according to the release.

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Featured image credit: Kak Iki/iStock

Chart provided in NCDOI market conduct examination report