For Consumers

Kreidler orders two pet insurers to repay $4.7 million to consumers

Insurer overcharged 18,000 Washington state policyholders for nearly five years

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January 21, 2020

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler issued a fine of $950,000 against ACE American Insurance Co. and Indemnity Insurance Co. of North America for overcharging 18,000 Washington consumers for nearly five years. He ordered the companies to repay $4.7 million – including interest – to policyholders no later than April 15. 

Reimbursements to policyholders will range from less than $1 to over $2,500. 

“We found tens of thousands of law violations among the two companies,” said Kreidler. “The most egregious violations were overcharging consumers through rate increases and not disclosing the increases to their customers.”

Kreidler suspended $200,000 of the fine and imposed a compliance plan that will require ACE and Indemnity both – Chubb companies – to charge accurate rates and correct other law violations his office uncovered during a yearlong examination. 

He will impose all or part of the suspended fine if the companies fail to comply with the plan or commit any related law violations within two years. 

The companies sold pet insurance policies through Healthy Paws Pet Insurance agency. Healthy Paws sold Ace policies from January 2013 until June 2016 and started selling Indemnity policies in June 2016.

Kreidler found that:

  • ACE overcharged all of its 11,470 Washington state policies by $4.3 million based on statewide aggregate claims history. The company failed to notify consumers of the rate increases even though state law requires insurers to provide notice 20 days before the policy renewal date. 
  • Indemnity overcharged 6,515 policies by $121,000. The rates Kreidler approved stated that a pet’s age would not be a factor. However, the company increased rates every year based on the pet’s age. Indemnity also failed to notify consumers about rate increases, as required by law. 
  • Healthy Paws incorrectly applied discounts to policyholders. The companies offered two types of discounts: 15% if referred by an organization affiliated with a Chubb company and 5% for specific weight-management efforts, such as putting an overweight pet on a diet. Some policyholders qualified for both discounts but only received one. Others did not qualify for a discount at all but received one. Kreidler’s investigation found a 37.5% error rate for the discounts.
  • ACE and Indemnity restricted the cancelation process for policyholders, requiring written notice at least 14 days before the premium payment date. That process contradicts the policy language, which allowed cancelation at any time via written or verbal communication. It canceled 887 policies for nonpayment without giving policyholders the required 10-day notice. 
  • Healthy Paws failed to disclose ACE as the underwriter of its policies on its marketing and customer communications for at least four years.  
  • Healthy Paws was not appointed to Indemnity and its producers were not affiliated from June 18 through Oct. 3, 2016. During that time, it sold 1,283 policies, collected $27,508 in commissions and $125,908 in premiums.
  • Both companies incorrectly used the pet health change form as a renewal certificate for 37,337 policies from June 2015 through March 2018. 

Kreidler separately fined Healthy Paws $20,000 in July 2019  for using unappointed producers to sell insurance, identifying itself as the insurer in communications with consumers, offering discriminatory promotions to consumers and allowing unlicensed people to sell insurance on its behalf. 

Before buying pet insurance, Kreidler recommends consumers understand the costs and what a policy actually covers. 

Kreidler’s office oversees Washington’s insurance industry to ensure that companies, agents and brokers follow state laws. Since 2001, Kreidler has assessed more than $29 million in fines, which are deposited in the state's general fund to pay for state services. 

The Office of the Insurance Commissioner publishes disciplinary orders against companies, agents and brokers. You can search by name or the year they took effect.

For an insurance question or complaint, contact Kreidler’s consumer advocates online or by phone at 800-562-6900.