NYSDFS Enforcement Action - August 10, 2023: Consent Order to Allstate Insurance Group

NEW YORK STATE

DEPARTMENT OF FINANCIAL SERVICES

ONE STATE STREET

NEW YORK, NEW YORK 10004

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In the Matter of :

ALLSTATE INSURANCE GROUP, including :

ENCOMPASS AUTO AND HOME INSURANCE COMPANY, :

ALLSTATE INSURANCE COMPANY,

ALLSTATE INDEMNITY COMPANY, :

ENCOMPASS INDEPENDENT INSURANCE COMPANY,

ENCOMPASS INSURANCE COMPANY OF AMERICA, :

ESURANCE INSURANCE COMPANY,

ENCOMPASS PROPERTY AND CASUALTY INSURANCE COMPANY, :

ENCOMPASS INDEMNITY COMPANY,

ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, :

ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY,

ESURANCE PROPERTY AND CASUALTY INSURANCE COMPANY, and :

ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY

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CONSENT ORDER

The New York State Department of Financial Services (the “Department” or “DFS”) and

Encompass Auto and Home Insurance Company, Allstate Insurance Company, Allstate

Indemnity Company, Encompass Independent Insurance Company, Encompass Insurance

Company of America, Esurance Insurance Company, Encompass Property and Casualty

Insurance Company, Encompass Indemnity Company, Allstate Vehicle and Property Insurance

Company, Allstate Property and Casualty Insurance Company, Esurance Property and Casualty

Insurance Company, and Allstate Fire and Casualty Insurance Company (collectively, “Allstate

Insurance Group” or the “Company”) are willing to resolve the matters described herein without

further proceedings.

WHEREAS, the Department conducted a market conduct investigation into the business

practices of the Company, for the period from January 1, 2018, through December 31, 2018;

WHEREAS, the investigation concluded that the Company failed to timely report new

business and other vehicle registration information to the New York State Department of Motor

Vehicles (“DMV”) as required by New York Insurance Law § 317; and

WHEREAS, this Consent Order contains the Department’s findings and the relief agreed

to by the Department and the Company.

NOW THEREFORE, in connection with an agreement to resolve this matter without

further proceedings, the Department finds as follows:

THE DEPARTMENT’S FINDINGS

Introduction

1. Allstate Insurance Group consists of insurance companies authorized to transact

motor vehicle liability insurance business in New York State pursuant to § 1113(a) of the New

York Insurance Law and that have been issued an Insurance Company Code (“ICC”) by the

DMV.

2. The DMV’s Insurance Information & Enforcement System (“IIES”) was

developed and implemented in January of 2000 as a result of enactment of Chapter 678 of the

laws of 1997 as amended by Chapter 509 of the laws of 1998. IIES employs an insurance

information database to monitor the insurance status of New York State-registered vehicles

thereby enabling peace officers to know whether vehicles on the road lack insurance. As a public

safety matter, injured motorists rely on the benefit of statutorily required auto insurance. Thus, it

is critical that registrants provide DMV with vehicle identification numbers (“VINs”) during the

registration process and that insurance companies use the same VINs and names in their

electronic reporting to DMV. Insured vehicle information is used to identify, sanction, and

ultimately remove uninsured vehicles from New York’s highways. IIES reporting applies to all

motor vehicles insured and registered in NYS except motorcycles.

3. Article 6 of the New York Vehicle and Traffic Law (“VTL”) requires insurers to

notify the DMV of certain transactions in accordance with regulations promulgated by the DMV

Commissioner. Part 34 of Title 15 of the New York Codes, Rules and Regulations (“NYCRR”)

implements the particular requirements of Article 6, with Section 34.4 of that regulation

providing that insurers report new business no later than seven days after the effective date of the

policy issuance. For all terminations and suspensions, insurers must report within 30 days of the

termination effective date, with the exception of for-hire vehicles, which must be reported no less

than 20 days prior to the termination effective date.

Events at Issue

4. In the latter part of 2017, the DMV notified the Department that the industry as a

whole was not timely reporting to DMV in IIES pursuant to its requirements. DMV also

informed the Department that, commencing in May 2017, DMV sent detailed quarterly

performance reports to all motor vehicle insurers displaying the totals of each company’s

reporting data and the totals and percentages of those reported late to DMV. The Department

then contacted the most delinquent and untimely insurers, seeking an explanation and

remediation.

5. Allstate Insurance Group was among the companies that persisted in failing to

timely report to DMV in IIES, including in 2018. Each member of Allstate Insurance Group, for

the time period January 1, 2018, to December 31, 2018 (the “Time Period”), failed to timely

report certain insured vehicle information to the DMV through IIES and failed to timely respond

to DMV initiated mandatory verification notices. As a result, Allstate Insurance Group violated

15 NYCRR Part 34.4, as well as 15 NYCRR Part 34.2(m) (which defines “Late Filing” as a

notice not submitted within the required timeframes, and requires insurers to take immediate

corrective action when late filings exceed 10% of total matched notices).

6. As mentioned above, accurate insurance information and timely IIES filings are

vital for purposes of law enforcement and public health and safety.

Violations of Law and Regulations

7. By reason of the foregoing, Allstate Insurance Group violated (i) VTL § 313,

(ii) DMV Regulations, 15 NYCRR Part 34, and (iii) New York Insurance Law § 317.

NOW THEREFORE, to resolve this matter without further proceedings, the Department

and the Company stipulate and agree to the following terms and conditions:

SETTLEMENT PROVISIONS

Monetary Penalty

8. No later than ten (10) days after the Effective Date (as defined below) of this

Consent Order, the Company shall pay a total civil monetary penalty pursuant to Section 317 of

the New York Insurance Law to the Department in the amount of Seven-Hundred and Ninety-Six

Thousand Dollars and 00/100 Cents ($796,000.00). The payment shall be in the form of a wire

transfer in accordance with instructions provided by the Department.

9. The Company shall not claim, assert, or apply for a tax deduction or tax credit

with regard to any U.S. federal, state, or local tax, directly or indirectly, for any portion of the

civil monetary penalty paid pursuant to this Consent Order.

10. The Company shall neither seek nor accept, directly or indirectly, reimbursement

or indemnification with respect to payment of the penalty amount, including but not limited to,

payment made pursuant to any insurance policy.

Remediation

11. The Company will take the necessary actions to prevent recurrences of the

violations described above, including without limitation, (i) immediate steps to determine the

reason(s) for the violations, (ii) formulation for DMV’s review and approval of a remediation

plan to correct deficiencies in its submissions to the DMV, and (iii) full implementation of such

remediation plan to mitigate late filings and required responses. Within two months from the

date of full execution of this Consent Order, the Company shall provide to DMV a written

remediation plan detailing the corrective actions taken or proposed to be taken, and the related

projected timeframes, to achieve full compliance with this Consent Order. The Company further

agrees to timely provide such reports or other information required by the Department or DMV

in connection with the violations, the remediation plan, or future filing obligations. The

Company will also take all necessary steps to comply with the New York Insurance Law and

VTL and Regulations, as the same may be or become effective any time from time to time, with

respect to its future DMV filing obligations.

Full and Complete Cooperation

12. The Company commits and agrees that it will fully cooperate with the Department

regarding all terms of this Consent Order.

Further Action by the Department

13. No further action will be taken by the Department against the Company or its

successors for the conduct set forth in this Consent Order, or in connection with the remediation

set forth in this Consent Order, for the Time Period and prior thereto, provided that the Company

fully complies with the terms of the Consent Order.

Waiver of Rights

14. The Company submits to the authority of the Superintendent to effectuate this

Consent Order.

15. The parties understand and agree that no provision of this Consent Order is

subject to review in any court, tribunal, or agency outside of the Department.

Parties Bound by the Consent Order

16. This Consent Order is binding on the Department and the Company, as well as

any successors and assigns. This Consent Order does not bind any federal or other state agency

or any law enforcement authority.

Breach of Consent Order

17. In the event that the Department believes the Company to be in material breach of

the Consent Order, the Department will provide written notice to the Company, and the

Company must, within ten (10) days of receiving such notice, or on a later date if so determined

in the Department’s sole discretion, appear before the Department to demonstrate that no

material breach has occurred or, to the extent pertinent, that the breach is not material or has

been cured.

18. The Company understands and agrees that its failure to make the required

showing within the designated time period shall be presumptive evidence of the Company’s

breach. Upon a finding that a breach of this Consent Order has occurred, the Department has all

the remedies available to it under Section 317 of the New York Insurance Law, and any other

applicable laws, and may use any evidence available to the Department in any ensuing hearings,

notices, or orders.

Notices

19. All notices or communications regarding this Consent Order shall be sent to:

For the Department:

New York State Department of Financial Services

One State Street, 20th Floor

New York, NY 10004-1511

Attention: Cynthia M. Reed, Senior Assistant Deputy Superintendent, Consumer

Protection and Financial Enforcement Division;

Jason St. John, Assistant Deputy Superintendent, Consumer Protection and

Financial Enforcement Division

For Allstate Insurance Group:

Allstate Insurance Company

3100 Sanders Road

Suite 201

Northbrook IL 60062

Attention: Javier R. Tapia, Legislative & Regulatory Counsel, Government &

Industry Relations, Allstate Insurance Company

Katie A. Jones, Director of Legal Compliance, Allstate Insurance Company

Miscellaneous

20. This Consent Order and any dispute thereunder shall be governed by the laws of

the State of New York without regard to any conflicts of laws principles.

21. This Consent Order may not be altered, modified, or changed unless in writing

and signed by the parties hereto.

22. This Consent Order constitutes the entire agreement between the Department and

the Company and supersedes any prior communication, understanding, or agreement, whether

written or oral, concerning the subject matter of this Consent Order.

23. Each provision of this Consent Order shall remain effective and enforceable

against the Company, its successors, and assigns, until stayed, modified, suspended, or

terminated by the Department.

24. In the event that one or more provisions contained in this Consent Order shall for

any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity,

illegality, or unenforceability shall not affect any other provision of this Consent Order.

25. No promise, assurance, representation, or understanding other than those

contained in this Consent Order has been made to induce any party to agree to the provisions of

this Consent Order.

26. Nothing in this Consent Order shall be construed to prevent any consumer or any

other third party from pursuing any right or remedy at law.

27. This Consent Order may be executed in one or more counterparts and shall

become effective when such counterparts have been signed by each of the parties hereto (the

“Effective Date”).

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IN WITNESS WHEREOF, the parties have caused this Consent Order to be signed on

the dates set forth below.

NEW YORK STATE DEPARTMENT OF

FINANCIAL SERVICES

By: /s/ Jason D. St. John

JASON D. ST. JOHN

Assistant Deputy Superintendent for

Consumer Protection and Financial

Enforcement

July 31 , 2023

By: /s/ Christopher B. Mulvihill

CHRISTOPHER B. MULVIHILL

Deputy Superintendent for Consumer

Protection and Financial Enforcement

August 2 , 2023

By: /s/ Kevin R. Puvalowski

KEVIN R. PUVALOWSKI

Acting Executive Deputy Superintendent for

Consumer Protection and Financial

Enforcement

August 8 , 2023

ENCOMPASS AUTO AND

HOME INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ALLSTATE INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ALLSTATE INDEMNITY

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ENCOMPASS

INDEPENDENT INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ENCOMPASS INSURANCE

COMPANY OF AMERICA

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ESURANCE INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ENCOMPASS PROPERTY

AND CASUALTY

INSURANCE COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ENCOMPASS INDEMNITY

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ALLSTATE VEHICLE AND

PROPERTY INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ALLSTATE PROPERTY AND

CASUALTY INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ESURANCE PROPERTY AND

CASUALTY INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

ALLSTATE FIRE AND

CASUALTY INSURANCE

COMPANY

By: /s/ Javier R. Tapia

JAVIER R. TAPIA

Legislative & Regulatory Counsel

July 24 , 2023

THE FOREGOING IS HEREBY APPROVED. IT IS SO ORDERED.

/s/ Adrienne A. Harris

ADRIENNE A. HARRIS

Superintendent of Financial Services

August 10 , 2023