By TERRENCE STUTZ / The Dallas Morning News
tstutz@dallasnews.com

AUSTIN — Larry Randall was one of thousands of Texas drivers in accidents last year that weren’t their fault. But unlike many, the Richardson engineer’s problems were just beginning after the collision.  The driver who sideswiped his 2006 Chrysler Sebring and forced him off the road in May 2009 had a policy with an insurer that Randall later discovered was among the worst in handling claims.   Loya Insurance, a Texas auto insurance company,  initially balked at assuming responsibility for its policyholder — who tried to flee the scene — and then said it would pay just $270 for damages and expenses that Randall estimated was nearly $1,700.

“They tried to ignore me from day one, and then they finally sent me a check covering a fraction of my claim. When’s the last time you heard of major damage to the side of a car being fixed for $300?” Randall said, noting he has not cashed the company’s check.

Loya is one of two large Texas auto insurers that had a complaint record well above the state average in 2009, according to a new listing of “justified” complaints handled by the state Insurance Department.  Those complaints from Texas drivers included such practices as delays in processing claims, unsatisfactory offers or settlements, denial of claims and liability disputes  An analysis of the Insurance Department figures by The Dallas Morning News showed that 10 of the 25 largest auto insurers in the state — those with more than 100,000 policies — had worse-than-average customer service records.

The two Texas auto insurance companies at the top of the list — Loya and Old American County Mutual — are now being investigated by the Insurance Department for violations of state regulations, an agency spokesman said.  Loya, which collected more than $283 million in premiums last year, performed nearly four times worse than a typical Texas insurer, according to the state-calculated “complaint index.”

Market value

Edgar Meza, vice president of claims for Loya, said many of the complaints stem from differences over the market value of cars that are totaled and from accidents involving a person driving a Loya-insured vehicle who has been excluded from coverage.  Meza also said Loya serves a unique customer base, typically lower-income drivers who have trouble obtaining insurance  He also said complaints against the insurer are down significantly in 2010 — and that Loya takes those complaints seriously.

Old American County Mutual, a Dallas-based company that collected nearly $539 million in premiums, had a complaint index of 3.42 — or about three and a half times worse than a typical company. Old American declined to comment on the complaint numbers.  No other company besides Old American and Loya broke 2.0, which would be twice the average.  The two insurers have a business relationship, and Loya is listed as one of several managing general agents for Old American on its website.

Hospital administrator Peggy Bryant of Rockwall also had troubles with Loya after her Volkswagen was hit by a driver insured by the company.  “It was quite an ordeal,” she said.  “They low-balled the damage by over a thousand dollars, and then the games began. They told me they weren’t going to pay the difference even though their client took responsibility for the accident.”  Bryant, who had to sue to get her claim paid, said of her experience: “I hope to God I never get hit again by somebody with Loya insurance. If I do, I’ll probably hire a lawyer right away.”

Arlene Gillespie of Dallas was driving with her 3-year-old daughter in a Dodge Caravan a year ago when a Loya-insured driver ran a stop sign and broadsided her.  The driver, who Gillespie suspected had been drinking, ran off but dropped his wallet and cellphone, allowing police to determine his identity.  “They just gave me the run-around when I called,” she said of Loya. “At one point they told me someone had stolen [their client’s] vehicle and they couldn’t find him — so they weren’t going to pay.”  When the insurer finally agreed to compensate her for the car — which was totaled — they denied her claim for leg injuries she sustained in the collision.

When Gillespie complained to the Texas Department of Insurance, Loya said they made a mistake in paying for her car and insisted they really owed nothing.  Gillespie is still trying to recoup her medical expenses and is considering legal action.  Old American County Mutual has similar complaints on file.

Jack Montoya of Rowlett battled the company and one of its subsidiaries over damage done to his 2005 Cadillac STS by a driver insured by Old American who rear-ended his vehicle a year ago.  “Just trying to get hold of them was near impossible,” he said of his efforts to contact the company and get his car repaired.  “When I finally got in touch with them, they went straight to the point and said they weren’t going to pay for all the damage — and I’d have to live with it.” Most of the damage was to the rear bumper and muffler.

When he threatened to complain to the Insurance Department, “they told me to go right ahead,” he said.  He eventually received about $2,000 but still had to pay about $300 out of pocket because the company depreciated the value of the muffler.

Agency’s role

Ben Gonzalez, an Insurance Department spokesman, said the agency is limited in how it can respond to consumer complaints.  For example, the department cannot force a company to pay a disputed claim if there is no violation of the law. Also, the agency cannot decide who is at fault in an accident.  “We cannot resolve every case,” he said. “Complaints do help us identify issues of concern with a particular company.”

Gonzalez said the department “has pending enforcement cases” against Loya and Old American. He said he could not discuss the Loya case, but he released documents indicating that Old American has been cited for canceling hundreds of auto policies after claims were filed on each.  The company says the policyholders made false representations in applying for insurance, according to state documents.  A hearing on the allegations is later this year.

HOW TO FILE AN INSURANCE COMPLAINT

•Consumers must file a complaint by phone (1-800-252-3439), e-mail ( consumerprotection@tdi.state.tx.us) or the complaint form on the agency’s website ( www.tdi.state.tx.us).

•After studying the complaint, the consumer protection division sends the insurer a copy and asks for a detailed written response to the complaint.

•The Insurance Department staff then determines if the claim or any other issue was handled properly under the policy.

•The staff also reviews the file to assess whether laws were violated.

•If violations are found, the department institutes an enforcement action that can result in sanctions ranging from a fine and restitution to revocation of the insurer’s state license.

SOURCE: Texas Department of Insurance