The General Automobile Insurance Company
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MARKET CONDUCT EXAMINATION REPORT OF THE GENERAL AUTOMOBILE INSURANCE COMPANY AS OF June 30, 2017 COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSION BUREAU OF INSURANCE Property and Casualty Division Market Conduct Section SCOTT A. WHITE P.O. BOX 1157 RICHMOND, VIRGINIA 23218 COMMISSIONER OF INSURANCE 1300 E. MAIN STREET STATE CORPORATION COMMISSION RICHMOND, VIRGINIA 23219 BUREAU OF INSURANCE TELEPHONE: (804) 371-9741 www.scc.virginia.gov/boi STATE CORPORATION COMMISSION BUREAU OF INSURANCE I, Karen S. Gerber, Senior Insurance Market Examiner of the Bureau of Insurance, do hereby certify that the annexed copy of the Market Conduct Examination Report of The General Automobile Insurance Company, Inc. as of June 30, 2017, conducted at the company’s office in Nashville, Tennessee is a true copy of the original Report on file with the Bureau and also includes a true copy of the company’s response to the findings set forth therein, and a true copy of the Bureau's review letters and the State Corporation Commission’s Order in Case No. INS-2018- 00187, finalizing the Report. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the Bureau at the City of Richmond, Virginia, this 15th of August, 2018. Karen S. Gerber Examiner in Charge MARKET CONDUCT EXAMINATION REPORT OF THE GENERAL AUTOMOBILE INSURANCE COMPANY AS OF June 30, 2017 COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSION BUREAU OF INSURANCE Property and Casualty Division Market Conduct Section TABLE OF CONTENTS INTRODUCTION .............................................................................................................. 3 COMPANY PROFILE ........................................................................................................ 3 SCOPE OF THE EXAMINATION ...................................................................................... 7 STATISTICAL SUMMARY ................................................................................................ 8 PART ONE - THE EXAMINERS’ OBSERVATIONS .......................................................... 10 RATING AND UNDERWRITING REVIEW ....................................................................... 10 Automobile New Business Policies ............................................................ 10 Automobile Renewal Business Policies ...................................................... 11 TERMINATION REVIEW ............................................................................................. 11 Company-Initiated Cancellations – Automobile Policies ............................. 12 Notice Mailed Prior to the 60th Day of Coverage ............................. 12 Notice Mailed After the 59th Day of Coverage ................................. 12 All Other Cancellations – Automobile Policies ............................................ 12 Nonpayment of the Premium .......................................................... 13 Requested by the Insured .............................................................. 13 Company-Initiated Non-renewals – Automobile Policies ............................ 14 Rejected Applications ..................................................................... 14 CLAIMS REVIEW ...................................................................................................... 15 Private Passenger Automobile Claims ....................................................... 15 REVIEW OF FORMS .................................................................................................. 19 Automobile Policy Forms ........................................................................... 20 Policy Forms Used During the Examination Period ........................ 20 Other Forms Used During the Examination Period ......................... 20 Policy Forms Currently Used .......................................................... 20 REVIEW OF THE POLICY ISSUANCE PROCESS ............................................................ 20 Automobile Policies .................................................................................... 21 New Business Policies ................................................................... 21 COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSION BUREAU OF INSURANCE Renewal Business Policies ............................................................. 21 REVIEW OF STATUTORY NOTICES ............................................................................ 21 General Statutory Notices .......................................................................... 22 Statutory Vehicle Notices ........................................................................... 22 Other Notices ............................................................................................. 23 LICENSING AND APPOINTMENT REVIEW .................................................................... 23 Agent ......................................................................................................... 23 Agency ....................................................................................................... 23 REVIEW OF THE COMPLAINT-HANDLING PROCESS ..................................................... 24 REVIEW OF PRIVACY AND INFORMATION SECURITY PROCEDURES .............................. 24 PART TWO – CORRECTIVE ACTION PLAN ................................................................... 25 General ...................................................................................................... 25 Rating and Underwriting Review ................................................................ 25 Termination Review ................................................................................... 26 Claims Review ........................................................................................... 27 Forms Review ............................................................................................ 28 Review of Policy Issuance Process ............................................................ 28 Review of Statutory Notices ....................................................................... 28 Licensing and Appointment Review ........................................................... 29 PART THREE – RECOMMENDATIONS ........................................................................... 30 RECOMMENDATIONS ............................................................................................... 30 Termination ................................................................................................ 30 Claims ........................................................................................................ 30 Forms ........................................................................................................ 31 Notices ....................................................................................................... 31 SUMMARY OF PREVIOUS EXAMINATION FINDINGS ...................................................... 31 ACKNOWLEDGEMENT .................................................................................................... 32 COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSION BUREAU OF INSURANCE The General Automobile Ins. Co. Page 3 INTRODUCTION Pursuant to the authority of § 38.2-1317 of the Code of Virginia, a comprehensive examination has been made of the private passenger automobile line of business written by The General Automobile Insurance Company at its office in Nashville, Tennessee. The examination commenced September 18, 2017 and concluded February 21, 2018. Brandon Ayers, Eric Ellerbe, William T. Felvey, Karen S. Gerber and Latitia L. Orange, examiners of the Bureau of Insurance, and Joyclyn M. Morton, Market Conduct Manager of the Bureau of Insurance, participated in the work of the examination. The examination was called in the Market Action Tracking System on April 27, 2017 and was assigned the examination number of VA-VA097-1. The examination was conducted in accordance with the guidelines contained in the National Association of Insurance Commissioners Market Regulation Handbook. COMPANY PROFILE* The General Automobile Insurance Company, Inc. was incorporated under the laws of Ohio on January 22, 2009 and commenced business on January 28, 2010. The company was originally capitalized with $10,000,000 from a redistribution of capital from Permanent General Assurance Corporation (PGAC) and Permanent General Assurance Corporation of Ohio (PGACOH). In March 2010, PGACOH acquired 3000 additional shares of the company’s common stock which resulted in an increase in capital stock from $1,000,000 to $2,500,000 and a corresponding offset from the paid-in and contributed surplus account. In August 2016, PGACOH acquired 1,000 additional shares of the company’s common stock which resulted in an increase in capital stock from $2,500,000 to $3,000,000 and a corresponding offset from paid-in and contributed surplus account. * Source: Best's Insurance Reports, Property & Casualty, 2017 Edition. COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSION BUREAU OF INSURANCE The General Automobile Ins. Co. Page 4 The company has 20,000 shares of $500 par value common stock authorized of which 6,000 shares are issued and outstanding. Administration of the company’s affairs is directed by John A. Hollar, President and Chief Operating Officer. A management agreement is in place with Permanent General Companies, Inc. The later provides underwriting, policy issuance and record keeping, data processing, accounting and legal services for