Kemper Unit Agrees to Pay $1.1M to Settle Complaints About Slow Response to Auto Claims

Alliance United Insurance Co. has agreed to pay $1.1 million to two Southern California district attorney’s offices to resolve allegations that it failed to timely investigate auto accident claims.

Los Angeles County District Attorney George Gascón and Ventura County District Attorney Erik Nasarenko alleged in a lawsuit filed Oct. 4 that Alliance engaged in an unfair business practice by failing to timely respond to claims. The insurer, which is a unit of Kemper Corp., agreed to a stipulated judgment that was approved by Los Angeles County Superior Court Judge Armen Tamzarian on Oct. 23.

“Insurance companies are quick to collect premiums but also must be swift in investigating and processing claims,” Gascón said in a press release. “Timely investigations are not just a courtesy; they are a legal and ethical duty. Delayed or inadequate investigations can have serious consequences, leaving victims without the support they need to recover from auto accidents.”

Alliance has a 1.2 average customer satisfaction rating on Yelp, a popular consumer review website. The Better Business Bureau website also contains numerous complaints from unhappy customers who say the insurer did not keep them posted about the progress of the claim and failed to respond to telephone calls. Kemper, Alliance’s parent company, received the lowest customer satisfactions score among 25 carriers that were ranked by J.D. Power’s automobile claims satisfaction survey in each of the past three years.

Alliance must pay $125,000 each to the Los Angeles and Ventura district attorney’s office to reimburse investigation costs. The carrier must also separately pay $450,000 in civil penalties to each county.

Alliance specializes in non-standard, high-risk auto policies, the district attorneys said. The company’s headquarters is in Los Angeles and it also has offices in Ventura County.

The carrier did not admit any wrongdoing, but agreed to take several steps to ensure compliance in the future. The lawsuit alleged that Alliance frequently failed to respond promptly to consumers who made auto insurance claims and did not make coverage decisions within the legal timeframe.

The stipulated judgment requires Alliance, for a four-year period, to take these actions to ensure future compliance:

• Provide a one-hour online course to all employees who handle California claims on California Fair Claims Settlement Practices regulations. The course must be interactive and require periodic knowledge checks.
• Update telephone systems by Dec. 31 to ensure that calls are routed to the customer’s claims handler without a claim number. Alliance must also standardize voicemail and email information to include the name and a telephone number for the claims handler and the name and number of the claims handler’s direct supervisor. Voicemail greetings must also include the name of the claims handler and the name and telephone number of a backup claims handler. What’s more, the insurer must transcribe voicemails left for its claims handlers and send them to the claims handler’s email account.
• Create a dashboard that enables management to track and measure “telephonic responses metrics” as a means of ensuring timely customer service.
• Implement a broker assistance program that will respond to inquiries and complaints within 24 hours.
• Audit its compliance with Fair Claims Settlement Practices regulations by reviewing 300 claim files each quarter. The insurer must also review 500 randomly selected claim files semi-annually to monitor compliance with specific statutes that require claims to be accepted or denied within 40 days and provide written notice on the progress of the claim every 30 days.
• Develop and implement enhanced software to prompt claims personnel regarding the notice requirements.
• Monitor social media websites such as Yelp and Facebook for complaints and contact the person complaining, if possible, and attempt to resolve outstanding issues.

The district attorneys agreed not to take any further action against Alliance for unfair business practices during the time frame that was subject to the stipulated judgment, which was from Feb. 12, 2021 to Oct. 3, 2023.