Claims News Service, Jan.26, 8:54 a.m. EST — A $1 million fine against Farmers Insurance Group has been levied by the California Department of Insurance following settlement negotiations over how the company handled consumer claims.

Farmers — consisting of Farmers Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Company, and Truck Insurance Exchange — agreed to the settlement to resolve a CDI enforcement action. The action covered approximately 1,000 violations of the California Insurance Code and Fair Claims Regulations between Jan. 2, 2002 through Aug. 8, 2004. An investigation by the Claims Services Bureau of the California Department of Insurance found violations arising from some 350 claim-handling complaints filed by consumers from 2001 to 2004.

The majority of the complaints and violations involved claim-handling delays, failure to commence investigation of a claim within 15 days, failure to properly notify policyholders of the need for additional investigation time, failure to pay a claim within 30 days after liability was accepted, and failure to respond to the CDI within 21 days of receipt of communication from the Department.