AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA |
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Consumer reviews about AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA |
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ANNIE ANY
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Feb 7, 2012
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PREMIUM MANIPULATION BY AGENTS
January 24, 2012
Re: The Auto Club of Southern California’s Verified Mileage Program
A Misrepresentation by AAA Agents Regarding Insurance Premiums and Rates
Thomas V. McKernan
CEO Auto Club Enterprises
1070 Fallen Leaf
Arcadia, CA 91006
Dear Mr. McKernan:
I want to follow up from the last correspondence regarding the Verified Mileage Program because the problem was not fixed. AAA Agents are still lowering mileage and the Automobile Club is holding insureds responsible for a mileage reading that was never verified and a mileage reading that could be very wrong. There have been no guideline changes made to correct this problem and the last letter was sent more than 2 months ago!
Requiring inspections for every policy may be too much to require from such a big company. Requiring that insureds sign a mileage disclosure might be too hard to accomplish and just too complicated. If this company sticks with what they already know and sends out the same disclosure that is mailed out on policy renewals, sends it within 30 days after the inception of the policy, that could release them from liability. This would ensure the policy is truly verified and if an agent is frequently and fraudulently lowering miles you can terminate them because you record every call. If the insured doesn’t return the form, you can remove the insured from the Verified Mileage Program. An exception can be made for vehicles that are inspected with the odometer photo. This disclosure would dovetail quite nicely with the current guidelines because the inspection must be completed within 2 weeks after binding. If there is no inspection, send the disclosure. That is all this company would need to do.
I have already taken the liberty of notifying the media because I do not have any confidence these changes will be made. Is revenue everything? Or is the way you achieve that revenue relevant? Several organizations, including the author of Prop 103, have taken an interest in our case. I’m sure I will find more supporters because I will not stop until this ship has righted its course. The end does not justify the means. This is what our training department teaches, but in practice this company falls way short.
Sincerely,
Ann Anonymous Agent (AAA)
For fear of retaliation
cc: David E. Jones; CA Insurance Commissioner, Robert T. Bouttier; COO Auto Club Enterprises, Avery R. Brown; General Counsel Auto Club Enterprises, Karen Featherstone; Underwriting Manager
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annieany
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Sep 28, 2012
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Premium Manipulation
November 17, 2011
Re: The Auto Club of Southern California’s Verified Mileage Program
A Misrepresentation by AAA Agents Regarding Insurance Premiums and Rates
Thomas V. McKernan
CEO Auto Club Enterprises
3333 Fairview Rd
Costa Mesa, CA 92626
Dear Mr. McKernan:
The Auto Club’s Verified Mileage Program or Pay as You Drive Program was approved by the Insurance Commissioner earlier this year and was touted as a way to save consumers money by lowering the price of insurance when they drive less. In theory, the program has its merits by discouraging unnecessary driving by motorists. In reality, the Auto Club’s implementation of the program has many troubling flaws.
Auto Club agents are pressured to forge insurance documents and manipulate insurance premiums in exchange for more phone duty, better phone calls, better leads, paid vacations, better treatment by management, a trip to the Bahamas, and to maintain their employment. Ethical agents are threatened and harassed to quit or accept their fate that they will be terminated for low performance. High production is looked at as a virtue and not scrutinized as agents submitting fraudulent business. Low production is looked at as laziness, incompetence, stupidity, and reason for punishment and termination. Lead distribution is such that high producers are given more leads and low producers are given even less leads insuring a huge gap between high and low producers. It also skews the policies written with integrity verses policies that are problematic.
Rather than estimate the accurate or actual mileage for each policy, agents are lowering initial mileage readings when starting a policy, which lowers the annual mileage category and thus lowers the annual premium, but just for that year. Agents that use this practice to quote will sell more policies because the premium will be much lower than it would otherwise be. Agents can accomplish this because only about 25% of all policies require inspections with an odometer reading. Agents at the district offices are allowed to inspect their own vehicles. They omit odometer readings intentionally and enter any figure they want to sell the policy.
All this would be a moot point; however, with the Verified Mileage Program insureds are required to submit their exact mileage reading upon renewal of the policy or be removed from the program. Through no fault of their own, many Auto Club insureds will have renewals with extraordinarily higher mileage depending on how much the agent lowered the original mileage and how many miles were driven during the current policy period.
An example to illustrate the wrong that is being perpetrated on unsuspecting consumers: If I start a policy today and my current annual mileage is 15,000 and I bought the car exactly a year ago, with zero miles, the mileage category should be 15,000 miles or less. The agent knows if he quotes me at 15,000 miles per year I won’t buy the policy so he enters my mileage at 5,000 and my premium is much lower than what I am paying now so I switch to the Auto Club. I’m happy until my renewal arrives next year. The premium almost doubles in price. When I am asked by the Auto Club what my current mileage is next year, it will be 30,000 because if you remember I was driving 15,000 miles per year and my vehicle had 15,000 miles at the inception of the policy. The Auto Club is going to rate my renewal at 25,000 miles per year because my agent entered 5,000 as my current mileage at the time I purchased the policy. The renewal will encompass the miles that were deficient from the prior policy (10,000) and include the actual miles driven (15,000). My annual mileage rating goes from 5,000 per year to 25,000 per year because it looks like I drove all those miles in only one year. I really didn’t drive that much but that is the way the miles are calculated. That’s a big increase. If I complain, I am told by the representative that I am a liar and can bring in a service receipt in 30 days to lower my mileage to where it should be. Now that is customer service! Some in the company may say the miles are being accounted for over two years so it really doesn’t matter. This is all being suppressed by the sales department. My view is the original sale would not have taken place and the premium manipulation has put the insured into a situation where the policy is written under false pretenses and can be voided by the insurance company.
The agent doesn’t care because all this stuff will happen a year later and he sold a policy he normally would not have. The Auto Club praises the current agent and lavishes him with more phone duty, pays him more per policy, and sends him on paid vacations because he is a top producer and gets away with doing this on a daily basis. Nobody seems to notice except our insured. On the renewal the policy is way over priced and the insured non-renews or has to fight with our customer service department that won’t believe him. The insured doesn’t know exactly what happened because they did not see the fraud that was committed against them. The fraud only becomes apparent on the renewal a year later. The insured has lost all longevity with their prior carrier because they are now with the Auto Club. Their current renewal is too high so the insured must shop for insurance elsewhere.
The only way to eliminate the out right fraud and corruption at the Automobile Club of Southern California is to require inspections with odometer readings for every policy written. Currently, inspections are not required for “liability only” policies or insureds that have prior insurance with similar coverage. Also, agents in the field can perform their own inspections and omit the odometer photo on purpose! This lack of accountability on new policies opens the door for agents to commit fraud and abuse on the unsuspecting public. This is a “verified” mileage program so you must “verify” the mileage, or otherwise this is a sham and should be abolished. Also, allowing the same agent that writes the policy to inspect the vehicle is a flagrant conflict of interest. The inspection should be completed by a manager or impartial third person at all levels of the organization and at all times include a photo of the odometer.
There should be a separate disclosure just for mileage in the insurance documents that require the exact mileage for each vehicle to be listed at the inception of the policy. The insured should be required to sign the disclosure verifying the exact mileage for each car on the policy. There should be an explanation that this figure will be used to determine next year’s mileage calculation. Unbelievably, this is not now required. The mileage would therefore be verified by the insured, by an inspector, and by the agent. The current system allows for only the agent to verify the mileage and the agent has a conflict of interest to be trusted with that. Currently the only disclosure that references anything about mileage is on the Coverage and Limits page and this only lists what the annual mileage is calculated at. This is misleading if the insured doesn’t know what their real annual mileage is or how it was calculated. Most insureds don’t know what they drive and are influenced by the agent. When you ask an insured how many miles they drive, they most likely under estimate. This figure should still be listed in that location but the mileage disclosure should list the exact miles at the inception of the policy. There is a culture of corruption within the Auto Club of Southern California and drastic measures are needed for true change to be forthcoming.
The Auto Club will defend its position by stating it has systems in place to catch fraud and abuse and to some extent they do. However, the only way to avoid agents from lowering mileage is to educate the insured with a mileage disclosure that must be signed by the insured and the agent. It should explain how this figure will affect the rating for the following year. When only some of the policies require inspections, and this can be manipulated by field sales agents, then there is no effective process. When the agent knows in advance which policies will require an inspection the agent can make up the mileage on selective policies to, “get the job done”. The Auto Club will also reference the fact that conversations are recorded and can be audited for integrity. The agent knows this and never asks the insured what their mileage is. They’ll only make reference to how much the insured’s commute is and make up a figure that is statistically consistent with the commute, albeit on the low end. The policy ends up being a fill in the blanks bonanza for the agent.
Some managers look the other way and others go further by processing business that has serious errors. In fact some managers were required to send policies through processing a second time to verify corrections were completed because the managers couldn’t be trusted to verify the corrections were actually completed. This company needs managers to watch the managers. But when the processing team can only catch incorrect phone numbers or spelling corrections, the mileage factor cannot be corrected at the pre-completion level but only at renewal when the insured complains about the increase in premium unless an inspection is completed and a mileage disclosure is developed. Without seeming redundant, I have spoken in generalities because it is not my intention to get employees in trouble but to correct the failures of this program and this company. If the deficiencies discussed here are not corrected I have lists of managers, employees, and policy numbers that are at issue and I will release this information to the media and notify those insureds that have been wronged. Insureds will have grounds for a class action lawsuit.
Sincerely,
Ann Anonymous Agent (AAA)
For fear of retaliation
cc: Dave E. Jones; CA Insurance Commissioner, Robert T. Bouttier; COO Auto Club Enterprises, Avery R. Brown; General Counsel Auto Club Enterprises, Karen Featherstone; Underwriting Manager, David Lazarus; L.A. Times
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annieany
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Sep 28, 2012
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Premium Manipulation
May 31, 2012
Thomas V McKernan
Chairman of the Board Auto Club Enterprises
1070 Fallen Leaf
Arcadia, CA 91006
Dear Sir:
Charles Darwin is alive and well at the Auto Club as managers here pledge allegiance to the tenants of the laws of natural selection. Before long every ethical agent will be weeded out. Devoured by the made-up rules of employment at the Auto Club ignoring all other rules of a polite and ethical society but failing to come up with the goods fairly and ethically, they are eaten alive and made extinct. The only thing left alive will be a hybrid of agents with no ethics or moral code. The agents that survive are only concerned about what they sell, but not how it is sold, or what has to be done to accomplish the deed. Herein lay your doom.
Since nobody in this company can recognize insurance fraud, I will define it for you: Insurance fraud occurs when companies, agents, adjusters, health care providers, or consumers intentionally deceive others or misrepresent facts for financial gain.
I believe the shoe fits in this case and the Auto Club needs to be taught a lesson in ethics not anthropology. When there are no consequences for selling unethically, then there are no rules at all. If a rule is broken and no punishment is affixed, then there is no effective rule. Taking the accuracy bonus away from an agent only benefits the Auto Club and is no deterrent to the agent. By not punishing agents for committing fraud the Auto Club has essentially legalized insurance fraud.
Elizabeth Clark had caught her agent, Karan Randall, fraudulently lowering mileage and she was prepared to terminate him and took the matter to Steve Carroll and Tom Castle. She had proof of the fraud as she was listening to the phone call and watching what he entered for the vehicle mileage and it was very different. The mileage entered by Karan was much lower than what the insured reported to him. He benefited by deceiving the insured about her mileage because he sold the policy. Steve Carroll and Tom Castle did not terminate Karan. He was asked why he did what he did and Karan told them he did it to sell policies. Karan only told them what they already knew. Elizabeth Clark was not rewarded for her ethical behavior but was harassed and later demoted because she was not part of the “Charles Darwin” team. Karan is still an agent to this day.
Erica Taylor has an agent named Michael Epps and he was given unlimited hours of phone duty along with another agent on that team. Together the two agents were working different shifts, one of them working late, and the other agent working early. They each had the other’s log-in information and would log into each other’s computers and use each other’s phone when the other agent wasn’t in the office or was out to lunch. Many times he was on a call when the second call would come in, from the other agent’s phone, and he would abruptly put the member on hold while he would pre-qualify the other call if it was worth his time. When Michael sold 120 memberships and sold 40 auto policies in one month he was worshiped as a brilliant productive agent and everyone else was told to be like him. What was left unspoken, were all of the problems the auditors were uncovering for his policies and that he was logged into two phones all day long. This agent would make up the delivery date mileage and not include the registration. Then his manager, Erica, would “C” complete the policies when it was returned from the Processing Team. Michael never bothered to correct the errors and Erica never checked to see if they were corrected. It was a fill in the blanks bonanza for Michael. He was never terminated and works for the Auto Club to this day. Steve Carroll did not terminate Michael Epps either. He probably took him to lunch.
There are more stories about the Auto Club and about agent and manager misconduct under Steve Carroll, but I’m trying to get to the point here. Ethical agents are being discriminated against, harassed and terminated by the Auto Club for barely missing goal but agent fraud is being ignored. We are banding together to form a class. Not an ethics class or an anthropology class, but a class of employees that were wrongfully terminated. We plan to take the Auto Club to court for damages and bar the Auto Club from selling auto insurance products in California. We have a big class and believe the law is on our side. We are gathering information and have another legal matter with the Auto Club to conclude first, but you will hear from us.
Sincerely,
Annie Any
cc: Dave E. Jones; CA Insurance Commissioner, Robert T. Bouttier; CEO Auto Club Enterprises, Avery R. Brown; General Counsel Auto Club Enterprises, Karen Featherstone; Underwriting Manager
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annieany
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Sep 28, 2012
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Premium Manipulation
June 10, 2012
Dear Agents,
I wanted to let everyone know that we are close to filing our first lawsuit with the Auto Club to address violations of the California Insurance Code. These violations have been ongoing for years and the Auto Club will have to correct future operations to avoid further liability which will benefit all property and casualty agents in California. The Auto Club has been incorrectly under paying agents for years. This has had a compounding affect on the under payment of overtime and the accuracy bonus because the rate of pay used to calculate these other figures is bogus. More on this later as it will be in the news and you will be notified by mail.
The reason I’m emailing everyone today is for our second lawsuit regarding the Auto Club. For every agent that has been verbally reprimanded, formally reprimanded, or terminated for missing the Auto Club’s made-up goals, we believe the Auto Club has violated our rights, and we plan to band together and file another class action lawsuit to address all of the complaints together.
When an agent intentionally deceives an insured to sell a policy no matter how small the deception, that agent has committed insurance fraud. As an ethical agent you may think that fraud doesn’t affect you. Another agent’s misconduct can have an adverse affect on all agents, especially if the agent is writing more policies because of the fraud. Since the Auto Club rewards agents with high production, by giving more leads and better leads to those agents, and punishes agents with lower production, by taking away good leads and providing poorer leads to them, every policy that is sold by using fraudulent means unfairly skews the distribution of leads against the ethical agents.
There are only so many leads that are provided by the Auto Club and if more of the good leads are shifted to agents that are committing fraud, then those agents will sell even more policies. While the ethical agents are provided phone duty that only yields transfer calls or worse they are required to make outbound calls or be scheduled for the outbound dialer. Ethical agents will end up selling even less because the lower quality of leads makes the agent have to work harder for poorer results.
Most well run companies utilize their leads to maximize sales which would be expected as the leads cost money. Giving more leads to agents with a higher closing ratio increases or maximizes revenue. However, the Auto Club’s failure to weed out fraudulent agents and ignore poor accuracy scores of others, makes the practice of lead utilization at the Auto Club a “de facto” endorsement of insurance fraud that discriminates against ethical agents on a huge scale.
Accuracy is for when an agent misspells the street name unintentionally but the Auto Club uses it as a way to shield them from all of the horrible policies that are being written. Accuracy was not intended to cover agents when fraud is committed. But, when was the last time the Auto Club wrote somebody up for a bad audit? However, if you miss goal by even one policy you are told to pack your bags or are treated unfairly. So think about this for a minute, the Auto Club is allowing agents to commit fraud and still be employed with them but they will terminate any agent if they miss goal. The incentive is clear from the agent’s perspective: “The Auto Club has a gun to our head. We either commit fraud or will be terminated”.
A manager once told me that Steve Carroll’s favorite saying is, “Sales is not fair” and at the Auto Club we know that “Sales is criminal”. You are just a number to them and if you do not perform you will be pushed out the door. How can you compete with agents that make up the mileage or that commit other offenses to sell more policies? You can tell on them so the behavior stops or the agent is terminated. That’s what you can do.
This is what our second complaint with the Auto Club is about. We need your help to notify us of any wrong doing by agents or managers that occurred within the past four years that was not acted upon by management. We need this information to stop this discrimination from occurring in the future and to help with our second lawsuit. We need the names of all parties involved, the policy numbers, and a brief description of what occurred. All complaints will be directed to the California Department of Insurance for resolution.
Acts like: botching miles, lowering YFL, rating non-good drivers on cheaper cars, inappropriately overriding mileage, incorrectly rating policies at less expensive zip codes, coaching the insured to not give auditors certain information or to get the “story straight”, adding incorrect phone numbers so the file cannot be audited, etc, etc. Whatever you believe the misconduct was, please gather the information and send it to this email address from your home computer and we will keep your identity anonymous. This information will be used in the discovery phase of the lawsuit to obtain subpoenas for audits and the annual reporting of mileage on renewal after the first year.
You can sheepishly wait for your termination, or you can help us stop the criminal behavior that is occurring right now.
Sincerely,
Annie Any
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annieany
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Sep 28, 2012
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Premium Manipulation
September 19th, 2012
Thomas V. McKernan
Chairman of the Board Auto Club Enterprises
1070 Fallen Leaf
Arcadia, CA 91006
Dear Sir:
We would like to commend the Auto Club on the recent efforts to crack down on the fraud and manipulation that has been occurring in your call center and field sales offices. But we can’t. There are some irregularities and inconsistencies with which your new enforcement is being applied and we have information to prove this. We believe some agents are being terminated for fraud, but the biggest violators are not being held to account. We believe the strategy is to only enforce fraud when agents are not making goal or when the fraud is too egregious to ignore. Is it plausible that managers at the Auto Club cannot enforce the rules equitably? We think so and have proof. But this is what we are asking for. We would like equal enforcement of rules and regulations to all agents including the “untouchable agents” as this will send a message of your resolve to weed out the corruption and fraud in your organization. These are the agents we are focusing on, as we have been receiving information from current agents that prove mileage and audit irregularities are still occurring from these agents.
Now the reason for this letter is to give notice of our intent to pursue violations of the California Insurance Code pertaining to §1858.07 (a) & §1858.07 (b). This section holds a company liable to the State of California if the insurance company does not use the rate, rating plan, or rating system approved by the California Insurance Commissioner. We contend that the Auto Club willfully and knowingly violated this statute by allowing agents to botch miles which illegally gives a discount to some insureds while increasing premiums on other insureds that reported their mileage correctly (like myself). The courts have established in a prior case of “Persistency” with Mercury Insurance that they could not liberally apply “Persistency” to just anyone with prior coverage because the cost of the discount would be borne by insureds without prior insurance which violated §1861.02 (c) of the CIC. This discount was only allowable if the insured was previously insured with the same carrier, for a specified period of time, and Mercury lost this argument. So too the Auto Club provides unauthorized premium discounts, like Mercury, that must be corrected by the court through the Private Right of Action.
By the Automobile Club of Southern California giving this discount (lets call it the Fraudulent Mileage Discount) to some insureds and not to all insureds they violated §1858.07 (a) since this discount was not approved by the California Insurance Commissioner. My letter which was sent on November 17th, 2011 to the California Insurance Commissioner, Tom McKernan, & Co., and subsequently emailed to the officers of the Auto Club would serve as notice. Also, the company was well aware of this practice for years as policy audits would confirm that auditors uncovered serious pricing errors and nothing was done to correct the problem. Also, this could be considered a willful act punishable for each offense since the company never corrected the problem. I would say this was not seriously addressed by the company until the insurance documents were changed to include the exact mileage on the Coverage and Limits page that requires the current mileage and a signature by the insured. But this is still only half heartedly enforced. Here is the section in question:
§1858.07. (a) Any person who uses any rate, rating plan, or rating
system in violation of this chapter is liable to the state for a
civil penalty not to exceed five thousand dollars ($5,000) for each
act, or, if the act or practice was willful, a civil penalty not to
exceed ten thousand dollars ($10,000) for each act. The commissioner
shall have the discretion to establish what constitutes an act.
However, when the issuance, amendment, or servicing of a policy or
endorsement is inadvertent, all of those acts shall be a single act
for the purpose of this section.
(b) The penalty imposed by this section shall be imposed by and
determined by the commissioner as provided by Section 1858.3, except
that no penalty shall be imposed by the commissioner if a person has
used any rate, rating plan, or rating system that has been approved
for use by the commissioner in accordance with the provisions of this
chapter.
The penalty imposed by this section is appealable by means of any
remedy provided by Section 12940 or by Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code.
These violations are offenses against the general public and enforceable by the Private Right of Action. This company can be held liable for the difference in premium for the fraudulent policies vs. the policies written correctly and also up to $10,000 per violation for administering a pricing policy or practice without prior approval from the California Insurance Commissioner. All this, and The Auto Club will be benefactors of all the public condemnation that goes with it. There are more violations of the California Insurance Code we are preparing to enforce. The public would be better served if the Auto Club was barred from selling any insurance products in California.
Sincerely,
Annie Any
cc: Dave E. Jones; CA Insurance Commissioner, Robert T. Bouttier; CEO Auto Club Enterprises, Avery R. Brown; General Counsel Auto Club Enterprises, Karen Featherstone; Underwriting Manager
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Rushcdn
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Dec 11, 2012
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"PEACE of MIND"
"When you get insurance with the Auto Club you get peace of mind" In December 2007 I applied for life insurance with AAA Life. During the underwriting practice the largest blood lab in the USA mixed up my blood with someone elses and told me that I had a life threatening disease. This ordeal affected my performance in the workplace. I was disciplined, retaliated and ultimately terminated at The Auto Club. This nightmare cost me my marriage, home, life savings but NEVER my INTEGRITY. I am continuing to fight "The Auto Club" But let it be known that they will Lie to protect their "Brand Image" I would love to give them a piece of my mind for taking away my pace of mind !
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