Washington Commissioner Orders Six Chubb Cos. to Suspend New Business, Seeks Fine

Washington State Insurance Commissioner Mike Kreidler is seeking to block six affiliates of the Chubb Group of Insurance Cos. from conducting new business in the state for nine months, saying they have violated state laws more than 500 times.

Kreidler also is seeking a $534,000 fine against Chubb & Son. The amount is based on 534 alleged violations of state insurance law, at $1,000 per violation.

Kreidler's suspension order includes Federal Insurance Co., Pacific Indemnity Co., Great Northern Insurance Co., Executive Risk Indemnity Inc., Vigilant Insurance Co., and Northwestern Pacific Indemnity Co. The order bans the companies from writing new business, effective Nov. 18; it does not affect existing policies or renewals.

"It's highly unusual for us to suspend a company's certificate to sell insurance. But we've repeatedly tried to work with Chubb and its subsidiaries to fix a number of ongoing violations of state law," Kreidler said in a written statement. "Some of the problems that triggered this decision have been recurring for a decade."

Kriedler said since 1998, Chubb has repeatedly failed to properly document the reasons for charging higher or lower rates on certain policies, and he said since 2000 the company has been repeatedly fined and urged to fix the problems.

Chubb spokesman Mark Schussel said the company is "surprised and disappointed" by the decision.

"Chubb intends to seek a stay of the suspension pending a hearing on the merits of both the suspension and the fine," Schussel said in an e-mail. "Chubb takes seriously its compliance obligations."

A preliminary conference on the matter is scheduled for Nov. 22.

The Chubb Group of Insurance Cos. currently has a Best's Financial Strength Rating of A++ (Superior).

(By Diana Rosenberg, senior associate editor, BestWeek)