320 W. Washington Street
Springfield, Illinois 62767
(217) 782-4515
http://insurance.illinois.gov
Illinois Department of Insurance
JB Pritzker
Governor
Ann Gillespie
Acting Director
J
uly 1, 2024
W
ayne Peacock, President
c/o Greg Gerland
United Services Automobile Association & Affiliates
9800 Fredericksburg Road
San Antonio, TX. 78288
Re: USAA Casualty Insurance Company, NAIC 25968
USAA General Indemnity Company, NAIC 18600
Garrison Property and Casualty Insurance Company, NAIC 21253
United Services Automobile Association, NAIC 25941
Market Conduct Examination Report Closing Letter
D
ear Wayne Peacock:
T
he Department has received your Company’s proof of compliance. Therefore, the Department is closing its file
on this exam.
I
intend to ask the Director to make the Examination Report and Stipulation and Consent Order available for public
inspection as authorized by 215 ILCS 5/132. At the Department’s discretion, specific content of the report may be
subject to redaction for private, personal, or trade secret information prior to making the report public. However,
any redacted information will be made available to other regulators upon request.
Please contact me if you have any questions.
S
incerely,
Erica Weyhenmeyer
Chief Market Conduct Examiner
Illinois Department of Insurance
320 West Washington St., 5th Floor
Springfield, IL 62767
Phone: 217-782-1790
E-mail: Erica.Weyhenmeyer@Illinois.gov
Illinois Department of Insurance
Market Conduct Examination
of
USAA Casualty Insurance Company
USAA General Indemnity Company
Garrison Property and Casualty Insurance Company
United Services Automobile Association
MARKET CONDUCT EXAMINATION REPORT
DATE OF EXAMINATION: September 1, 2021, to August 31, 2022
EXAMINATION OF: USAA Casualty Insurance Company (NAIC #25968)
USAA General Indemnity Company (NAIC #18600)
Garrison Property and Casualty Insurance Company (NAIC #21253)
United Services Automobile Association (NAIC #25941); and
LOCATION OF EXAMINATION: Remote
9800 Fredericksburg Road
San Antonio, Texas 78288
PERIOD COVERED BY September 1, 2021, through August 31, 2022
EXAMINATION: (Complaints were reviewed for the period
March 1, 2021, through August 31, 2022)
EXAMINERS: Craig L. Leonard, CIE, CPCU, CCP, FLMI, ARC, AIAF, ARM,
MCM
Willa Burroughs, MCM
Tina Campbell, CIE, AIRC , MCM
Dixie Carroll, MCM, FLMI, AIRC
Frank Fricks, CIE, CFE, FLMI, AIRC
Katherine Girard, MCM
Greg Hawkins, MCM
Nicholas Klug, JD, CIE, AMCM, AIRC
Jon Lembke
Robert Reichart, CIE, ARM, MCM
Ashley Rogers, AIC-M, AINS, MCM
Mike Woolbright, CIE, MBA, ALHC, MCM
Kelly Wylie, MCM, CPCU, ARM, SCLA, AIC-M
Susan Zwaschka, MCM
TABLE OF CONTENTS
I. SUMMARY .............................................................................................................................. 1
II. BACKGROUND .................................................................................................................... 12
III. METHODOLOGY ................................................................................................................. 14
IV. FINDINGS ............................................................................................................................ 18
A. Complaint Handling ............................................................................................................................ 18
1. Consumer Complaints ..................................................................................................................... 18
B. Marketing and Sales ........................................................................................................................... 18
1. Company-generated Advertising .................................................................................................... 18
2. Producer Training Materials ........................................................................................................... 18
3. Producer Communications .............................................................................................................. 18
C. Underwriting and Rating .................................................................................................................... 18
1. Private Passenger Automobile New Business ................................................................................. 18
2. Private Passenger Automobile & Motorcycle Renewals ................................................................. 19
3. Homeowners New Business ............................................................................................................ 20
4. Dwelling Fire New Business ........................................................................................................... 20
5. Dwelling Fire Renewals .................................................................................................................. 20
D. Risk Selection ..................................................................................................................................... 21
1. Private Passenger Automobile & Motorcycle Cancellations – Less than or Equal to 60 Days ....... 21
2. Homeowners Cancellations – Greater than 60 Days ....................................................................... 21
3. Homeowners Nonrenewed .............................................................................................................. 21
4. Dwelling Fire Cancellations – Greater than 60 Days ...................................................................... 21
5. Dwelling Fire Nonrenewed ............................................................................................................. 21
E. Claims..................................................................................................................................................22
1. Private Passenger Automobile & Motorcycle First-Party Paid ....................................................... 22
2. Private Passenger Automobile & Motorcycle First-Party Closed Without Payment ...................... 22
3. Private Passenger Automobile Total Loss ...................................................................................... 23
4. Private Passenger Automobile Third-Party Paid ............................................................................. 23
5. Private Passenger Automobile Third-Party Closed Without Payment ............................................ 24
6. Private Passenger Automobile Subrogated ..................................................................................... 25
7. Private Passenger Automobile Litigated ......................................................................................... 25
8. Homeowners Paid ........................................................................................................................... 25
9. Homeowners Closed Without Payment .......................................................................................... 25
10. Dwelling Fire Paid .......................................................................................................................... 26
V. ACKNOWLEDGEMENT ....................................................................................................... 27
1
I. SUMMARY
A comprehensive market conduct examination of USAA Casualty Insurance Company (NAIC #25968),
USAA General Indemnity Company (NAIC #18600), Garrison Property and Casualty Insurance Company
(NAIC #21253), and United Services Automobile Association (NAIC #25941), (herein referred to as
“Companies”) was performed to determine compliance with Illinois Statutes and the Illinois Administrative
Code.
The property and casualty (“P&C”) lines of business under review included Private Passenger Automobile
(“PPA”), Motorcycle (“MC”), Homeowners (“HO”), Dwelling Fire (“DF”), and Mobile Home (“MH”).
The following represents general findings from issued criticisms; however, specific details are found in
each section of the report.
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
2 215 ILCS 5/143.15
Risk Selection – Private Passenger
Automobile and Motorcycle –
Canceled Less Than or Equal to 60
Days: Companies failed to provide
10 days’ notice to the insured of
cancellation due to nonpayment of
premium.
D.01. 113 1 0.90%
4 50 Ill. Adm. Code 919.80(b)(2)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Paid: Companies failed
to send a written explanation for
the delay to the insured when the
claim exceeded 40 days.
E.01. 109 2 1.80%
5 50 Ill. Adm. Code 919.80(c)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Paid: Companies failed
to provide the insured with the
information contained in Exhibit A
when the insured vehicle was
deemed a total loss.
E.01. 109 21 19.30%
6 215 ILCS 5/154.6(b)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Paid: Companies failed
to respond to pertinent
communications regarding the
claim.
E.01. 109 2 1.80%
7 50 Ill. Adm. Code 919.80(b)(2)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Paid: Companies failed
to send a timely written
explanation for the delay to the
insured when the claim exceeded
40 days.
E.01. 109 2 1.80%
11 50 Ill. Adm. Code 919.80(c)
Claims – Private Passenger
Automobile – Litigated:
Companies failed to provide the
insured with the information
contained in Exhibit A when the
insured vehicle was deemed a total
loss.
E.07. 82 10 12.20%
2
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
15 50 Ill. Adm. Code 919.30(c)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Paid: Companies failed
to provide detailed documentation
in order to permit reconstruction of
the activities relative to the claim.
E.01. 109 3 2.75%
17 215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Paid: Companies
initiated the investigation of the
claim and determined the insured
to be at fault. The Companies did
not request the police report or
make any attempt to obtain the
third-party claimant’s information
in order to address the exposure to
the insured, and thereby failed to
promptly investigate the claim.
E.01. 109 1 0.90%
28 50 Ill. Adm. Code 919.50(a)(1)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies did not
include the Notice of Availability
of the Department of Insurance
with the written explanation for the
denial of the claim.
E.02. 108 1 0.90%
30 50 Ill. Adm. Code 919.50(a)(1)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies did not
provide a written explanation for
the denial of the claim.
E.02. 108 4 3.70 %
31 50 Ill. Adm. Code 919.80(c)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies failed to
provide the insured with the
information contained in Exhibit A
when the insured vehicle was
deemed a total loss.
E.02. 108 2 1.90%
32 215 ILCS 5/154.6(b)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies failed to
respond to pertinent
communications regarding the
claim.
E.02. 108 3 2.80%
33 50 Ill. Adm. Code 919.80(b)(2)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies failed to send
a timely written explanation for the
delay to the insured when the claim
remained unresolved for more than
40 days.
E.02. 108 1 0.90%
3
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
34 50 Ill. Adm. Code 919.30(c)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies failed to
provide detailed documentation in
order to permit reconstruction of
the activities relative to the claim.
E.02. 108 50 46.30%
35 215 ILCS 5/143.13(f)
Risk Selection – Homeowners –
Canceled Greater Than 60 Days:
Companies failed to maintain
documentation of the insured’s
request to cancel the policy.
D.05. 116 1 0.90%
43 215 ILCS 5/143.14(a)
Risk Selection – Private Passenger
Automobile and Motorcycle –
Canceled Less Than or Equal to 60
Days: Companies failed to
maintain documentation of the
insured’s request to cancel the
policy.
D.01. 113 1 0.90%
49
215 ILCS 5/154.6(b)
215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile and Motorcycle –
First-Party Closed Without
Payment: Companies failed to send
an acknowledgement when the
claim was reported, and the
Companies also delayed
investigation of the claim.
E.02. 108 1 0.90%
53 50 Ill. Adm. Code 919.80(b)(2)
Claims – Private Passenger
Automobile – Total Loss:
Companies failed to send a written
explanation for the delay to the
insured when the claim exceeded
40 days.
E.03. 108 2 1.90%
54 50 Ill. Adm. Code 919.80(c)
Claims – Private Passenger
Automobile – Total Loss:
Companies failed to provide the
insured with the information
contained in Exhibit A when the
insured vehicle was deemed a total
loss.
E.03. 108 96 88.90%
56 50 Ill. Adm. Code 919.80(b)(2)
Claims – Private Passenger
Automobile – Total Loss:
Companies failed to send a timely
written explanation for the delay to
the insured when the claim
exceeded 40 days.
E.03. 108 5 4.60%
58 215 ILCS 5/143d(b)
Consumer Complaints – P&C:
Companies failed to provide a
written response within 21 days of
receiving the complaint.
A.02. 84 8 9.50%
59 215 ILCS 5/143d(b)
Consumer Complaints – P&C:
Companies failed to provide a
written response to the complaint.
A.02. 84 5 6.00%
4
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
65 215 ILCS 5/143b
Claims – Private Passenger
Automobile – Subrogated:
Companies failed to refund the
deductible to the insured as soon as
the subrogation amount was
received.
E.06. 108 2 1.85%
67 215 ILCS 5/154.6(n)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to send a liability denial or
compromise offer letter to the
claimant in follow up to the verbal
offer.
E.05. 105 1 1.00%
68 215 ILCS 5/154.6(i)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to send a coverage denial
letter to either the insured or
claimant.
E.05. 105 2 1.90%
69 50 Ill. Adm. Code 919.80(b)(3)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to send a written explanation
when the liability claim remained
unresolved in excess of 60 calendar
days.
E.05. 105 1 1.00%
70 215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
accepted 100% liability but did not
attempt to locate the claimant
information either from their
insured or by requesting a police
report when available.
E.05. 105 3 2.90%
71 50 Ill. Adm. Code 919.50(a)(2)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to send a liability denial
letter to the claimant.
E.05. 105 6 5.71%
72 50 Ill. Adm. Code 919.80(c)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to provide the insured with
the information contained in
Exhibit A when the insured vehicle
was deemed a total loss.
E.05. 105 3 2.90%
73 50 Ill. Adm. Code 919.90(c)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
accepted 85% liability and as the
claimant disagreed, failed to
instruct the claimant on how to
present a claim, but recommended
he go through his own policy.
E.05. 105 1 1.00%
5
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
74 215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to send status or closing
letters to the claimant informing
them of the time limits for
presenting a claim.
E.05. 105 10 9.52%
75 50 Ill. Adm. Code 919.50(a)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to affirm liability with the
claimant and offer payment when
the claim was not in dispute.
E.05. 105 5 4.80%
76 215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile – Third-Party Closed
Without Payment: Companies
failed to send a Reservation of
Rights letter to the insured when
there was a coverage issue.
E.05. 105 1 1.00%
77 50 Ill. Adm. Code 919.50(a)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to offer payment
within 30 days after affirmation of
liability and the amount of the
claim was determined.
E.04. 109 3 2.75%
78 50 Ill. Adm. Code 919.80(b)(3)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to send a written
explanation for the delay to the
third-party claimant when the
claim exceeded 60 days.
E.04. 109 9 8.30%
79 215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies did not request the
police report or attempt to contact
the third-party claimant to
determine the exposure to the
insured and thereby failed to
promptly investigate the claim.
E.04. 109 6 5.50%
80 50 Ill. Adm. Code 919.80(b)(3)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to send a timely
written explanation for the delay to
the third-party claimant when the
claim exceeded 60 days.
E.04. 109 1 0.90%
81 215 ILCS 5/154.6(c)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to respond to
pertinent communications and
implement reasonable standards for
the prompt investigation of claims.
E.04. 109 4 3.70%
82 50 Ill. Adm. Code 919.30(c)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to provide
detailed documentation regarding
the total loss settlement.
E.04. 109 9 8.30%
6
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
83
215 ILCS 5/154.6(d)
50 Ill. Adm. Code 919.80(c)(3)(A)(i)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies did not issue the
appropriate payment and failed to
pay the required amounts of sales
taxes, transfer and/or title fees to
the insured at the time of the total
loss settlement resulting in
underpayments of $447.57
E.04. 109 22 20.20%
88 50 Ill. Adm. Code 754.10 (b)(1)
Underwriting and Rating –
Homeowners – New Business:
Companies failed to file a rating
rule that specifies a married
individual who is separated, is
therefore considered to be single
with regard to determining the
appropriate status for the
application of the Homeowners’
Marital Status Factor necessary to
rate policies.
C.05. 116 N/A N/A
89 50 Ill. Adm. Code 919.30(c)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to provide
detailed documentation regarding
the total loss settlement.
E.04. 109 5 4.60%
92 50 Ill. Adm. Code 919.30(c)
Claims – Homeowners – Closed
Without Payment: Companies
failed to provide detailed
documentation in order to permit
reconstruction of the activities
relative to the claim.
E.09. 108 29 26.90%
93 50 Ill. Adm. Code 919.50(a)(1)
Claims – Homeowners – Closed
Without Payment: Companies did
not provide a written explanation
for the denial of the claim.
E.09. 108 9 8.33%
96 215 ILCS 5/143c
Underwriting and Rating – Private
Passenger Automobile and
Motorcycle – Renewals: Renewal
packets with effective dates on or
after December 3, 2021, contained
revised policies, endorsements, and
other notices. The revisions did not
include written notice of the
Companies’ complaint department
address or the address of the Public
Service Division of the Department
of Insurance.
C.02. 184 134 72.80%
7
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
102 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies’ filed rule
stated, “…We will include the new
vehicles and their assigned
symbols in periodic (emphasis
added) updates to the filed symbol
assignment pages.” As no symbol
filing has been made since
February 21, 2021, the rule is
either ambiguous or the Companies
failed to adhere to the filed rule and
violated Illinois Personal Auto
Manual, Rule 3, B, 2.
C.01. 116 N/A N/A
103 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies failed to file
updates to their private passenger
automobile symbols. The most
recent PPA Symbol Filing was
submitted to the Department on
February 21, 2021, to become
effective on May 17, 2021. The
filing did not include all makes and
models for model years 2021 and
2022 and no known makes and
models for model year 2023. The
Companies failed to maintain
information necessary to rate PPA
policies.
C.01. 116 N/A N/A
104
50 Ill. Adm. Code 932.40
215 ILCS 5/143.28
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies failed to
apply the appropriate anti-theft
discount.
C.01. 116 1 0.90%
106 50 Ill. Adm. Code 919.30(c)
Claims – Homeowners – Paid:
Companies failed to provide
detailed documentation in order to
permit reconstruction of the
activities relative to the claim.
E.08. 109 5 4.60%
107 50 Ill. Adm. Code 919.50(a)(1)
Claims – Homeowners – Paid:
Companies did not provide a
written explanation for the partial
denial of the claim.
E.08. 109 7 6.40%
108 215 ILCS 5/154.6(c)
Claims – Homeowners – Paid:
Companies failed to properly apply
a prior payment or policy
limitation resulting in an
overpayment of $27,113.73.
E.08. 109 2 1.83%
109 215 ILCS 5/154.6(d)
Claims – Private Passenger
Automobile – Third-Party Paid:
Companies failed to issue the
appropriate payment owed to the
claimant at the time of the total
loss settlement resulting in
underpayments of $1,227.58.
E.04. 109 3 2.80%
8
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
110 50 Ill. Adm. Code 919.50(a)
Claims – Dwelling Fire – Paid:
Companies failed to tender
payment within 30 days after
affirmation of liability and the
amount of the claim was
determined.
E.10. 82 1 1.20%
112 215 ILCS 5/143.21
Risk Selection – Dwelling Fire –
Canceled Greater Than 60 Days:
Companies provided an inaccurate
reason for canceling the policy.
D.08. 114 1 0.90%
117 50 Ill. Adm. Code 919.30(c)
Claims – Dwelling Fire – Paid:
Companies failed to provide
detailed documentation in order to
permit reconstruction of the
activities relative to the claim.
E.10. 82 3 3.70%
129 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies filed rule for
rating excess vehicle(s) where all
operators are age 50 or older
requires rating utilizing specific
excess vehicle age/gender/marital
status (AGMS) factors and the
mileage factors for age 40. The
Companies actual procedure for
rating excess vehicle(s) where all
operators are age 50 or older is to
use the AGMS and mileage factors
of the operator with the lowest
AGMS if the BI AGMS factor is
less than one (1). The Companies’
procedure conflicts with the
Companies’ filed rule.
C.01. 116 N/A N/A
131 50 Ill. Adm. Code 919.50(a)
Claims – Dwelling Fire – Paid:
Companies failed to tender
payment within 30 days after
affirmation of liability and the
amount of the claim was
determined.
E.10. 82 1 1.20%
133 215 ILCS 5/143c
Underwriting and Rating – Private
Passenger Automobile – New
Business: Policy issuance packets
with effective dates on or after
December 3, 2021, did not include
written notice of the Companies’
complaint department address or
the address of the Public Service
Division of the Department of
Insurance.
C.01. 116 92 79.30%
134 50 Ill. Adm. Code 919.30(c)
Claims – Dwelling Fire – Paid:
Companies failed to provide
detailed documentation in order to
permit reconstruction of the
activities relative to the claim.
E.10. 82 1 1.20%
136 215 ILCS 5/143.17(a)
Risk Selection – Dwelling Fire –
Nonrenewed: Companies failed to
send a nonrenewal notice to the
insured.
D.09. 39 1 2.60%
9
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
140 215 ILCS 5/143.17(e)
Risk Selection – Dwelling Fire –
Nonrenewed: Companies’
nonrenewal notice stated, “We
can’t offer to renew the
policy…because of our eligibility
and acceptability rules”, which was
not a specific explanation of the
reason(s) for nonrenewal.
D.09. 39 11 28.20%
141 215 ILCS 5/143.17(a)
Risk Selection – Dwelling Fire –
Nonrenewed: The nonrenewal
notice listed the incorrect insured
property address.
D.09. 39 1 2.60%
142 215 ILCS 5/143.17(e)
Risk Selection – Homeowners –
Nonrenewed: Companies’
enclosure included with the
Nonrenewal Notice stated, “This
action was taken because of our
eligibility and acceptability rules”,
which was not a specific
explanation of the reason(s) for
nonrenewal.
D.09. 79 50 63.30%
144
50 Ill. Adm. Code 754.10(b)
50 Ill. Adm. Code 754.10(f)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies failed to use
the rates in force on the effective
date of the policies which was
inconsistent with the effective
dates specified in the filings,
resulting in premium differences of
$47.88 ($37.57 overcharge and
$10.31 undercharge).
C.01. 116 2 1.70%
145 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile and
Motorcycle – Renewals:
Companies failed to file updates to
their private passenger automobile
symbols. The most recent PPA
Symbol Filing was submitted to the
Department on February 21, 2021,
to become effective on May 17,
2021. The filing did not include all
makes and models for model years
2021 and 2022 and no known
makes and models for model year
2023. The Companies failed to
maintain information necessary to
rate PPA policies.
C.02. 184 N/A N/A
146 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies failed to use
accurate information to properly
tier the policies resulting in
incorrect premiums.
C.01. 116 6 5.20%
10
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
147 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies failed to
consistently apply a vague and
ambiguous rule resulting in unfair
discrimination, as generally
defined in the business of
insurance. The Companies failed to
file and adhere to rules with
sufficient specificity to definitively
determine the proper premium.
C.01. 116 12 10.30%
148 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies rounded the
product of the physical damage
model year factors times the
symbol factors to the nearest 100th,
contrary to the Premium
Determination and Exact Premium
rule.
C.01. 116 100 86.20%
151 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies applied an
Early Quote Discount to policies
that were ineligible for the discount
due to not being the first policy
issued to the named insured.
C.01. 116 12 10.30%
152 50 Ill. Adm. Code 754.10(b)
Underwriting and Rating – Private
Passenger Automobile – New
Business: Companies failed to
apply the proper Early Quote
Discount in accordance with their
filed rule and rating plan.
C.01. 116 2 1.70%
154
50 Ill. Adm. Code 754.10(b)(1)
50 Ill. Adm. Code 754.10(f)
Underwriting and Rating –
Homeowners – New Business:
Companies utilized rates other than
those contained in SERFF
Tracking# USAA-133013499 that
became effective January 17, 2022,
for new business.
C.05. 116 1 0.90%
155 50 Ill. Adm. Code 754.10(b)(1)
Underwriting and Rating –
Homeowners – New Business:
Companies failed to comply with
filed rates since they had failed to
file a rating factor or rule(s) on
identifying the specific information
to use when dwellings have more
than one foundation type.
C.05. 116 5 4.30%
156 50 Ill. Adm. Code 754.10(b)(1)
Underwriting and Rating –
Homeowners – New Business:
Companies failed to file a rating
rule that specified if a divorced or
widowed individual should be
considered single or married with
regards to determining the
appropriate status for the
application of the Homeowners’
Marital Status Factor necessary to
rate policies.
C.05. 116 N/A N/A
11
TABLE OF TOTAL VIOLATIONS
Crit
#
Statute/ Rule Description of Violation Findings Reviewed Violations Error %
157 50 Ill. Adm. Code 754.10(b)(1)
Underwriting and Rating –
Homeowners – New Business:
Companies failed to comply with
filed rates as policyholders whose
marital status reflected separated
were rated single.
C.05. 116 2 1.70%
12
II. BACKGROUND
The examination is of USAA Casualty Insurance Company (NAIC #25968), USAA General Indemnity
Company (NAIC #18600), Garrison Property and Casualty Insurance Company (NAIC #21253), and
United Services Automobile Association (NAIC #25941), (herein referred to as “Companies”).
Information about each of the listed companies can be found below.
• USAA Casualty Insurance Company (NAIC 25968)
USAA Casualty Insurance Company (USAA CIC) was incorporated on September 6, 1968, under the
laws of Texas and began business on December 1, 1969. USAA CIC operated under the name United
States Casualty Insurance Company until December 2, 1970, when the present name was adopted.
Effective December 31, 1990, USAA CIC merged with the newly formed USAA Casualty Insurance
Company of Florida and re-domesticated from San Antonio, Texas to Tampa, Florida. Subsequently,
on January 31, 2000, USAA CIC re-domesticated from Tampa, Florida to San Antonio, Texas. USAA
CIC is a wholly owned subsidiary of United Services Automobile Association (USAA). USAA CIC is
licensed in all states, the District of Columbia, and the U.S. Virgin Islands.
• USAA General Indemnity Company (NAIC 18600)
USAA General Indemnity Company (USAA GIC) was incorporated on June 23, 1972, under the laws
of Texas and began business on August 2, 1972. USAA GIC is a wholly owned subsidiary of USAA.
USAA GIC is licensed in all states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico.
• Garrison Property and Casualty Insurance Company (NAIC 21253)
Garrison Property and Casualty Insurance Company (Garrison) was originally chartered in Missouri on
December 1, 1900, as Brewers’ Exchange, a reciprocal inter-insurance exchange, and was renamed
Reciprocal Exchange in 1905. USAA acquired control of Reciprocal Exchange on December 31, 1997.
Garrison re-domesticated to Texas and the name was changed to Garrison Property and Casualty
Insurance Association on December 21, 1998. On November 1, 2003, Garrison Property and Casualty
Insurance Association was converted to a stock insurance company and the name was changed to
Garrison Property and Casualty Insurance Company. Garrison is a wholly owned subsidiary of USAA.
Garrison is currently licensed in all states and the District of Columbia.
• United Services Automobile Association (NAIC 25941)
United Services Automobile Association (USAA) was organized and began business on June 20, 1922,
as United States Army Automobile Insurance Association. The present name was adopted in 1924.
USAA is a Texas domestic reciprocal inter-insurance exchange. USAA is licensed in all states, District
of Columbia, the U.S. Virgin Islands, Guam, and Puerto Rico.
As of December 31, 2021, the Companies’ written premiums in Illinois for the lines of business subject to
the scope of this examination were as follows:
13
USAA Casualty Insurance Company
Line of Business
Direct
Premiums
Written ($)
Direct
Premiums
Earned ($)
Direct
Unearned
Premium ($)
Direct Losses
Paid ($)
Direct Losses
Incurred ($)
Direct Losses
Unpaid ($)
1,376,428
1,381,551
753,606
46,672
35,166
97,562
45,049,005 43,658,252 23,767,181 31,811,036 33,092,233 9,377,177
36,432,526 36,595,276 8,737,337 20,555,034 23,804,897 28,136,385
Automobile Physical
34,085,902 33,934,999 8,239,146 21,762,980 21,230,481 (316,593)
116,943,861
115,570,078
41,497,270
74,175,722
78,162,777
37,294,531
USAA General Indemnity Company
Line of Business
Direct
Premiums
Written ($)
Direct
Premiums
Earned ($)
Direct
Unearned
Premium ($)
Direct Losses
Paid ($)
Direct Losses
Incurred ($)
Direct Losses
Unpaid ($)
885,355
874,068
484,755
0
100,870
136,834
29,499,630 28,257,456 15,899,659 18,351,536 20,413,934 7,133,912
25,214,900 25,429,909 6,235,592 18,012,185 18,667,840 17,711,740
Automobile Physical
24,857,501 24,906,598 6,134,147 19,643,297 19,522,036 67,513
80,457,386
79,468,031
28,754,153
56,007,018
58,704,680
25,049,999
Garrison Property and Casualty Insurance Company
Line of Business
Direct
Premiums
Written ($)
Direct
Premiums
Earned ($)
Direct
Unearned
Premium ($)
Direct Losses
Paid ($)
Direct Losses
Incurred ($)
Direct Losses
Unpaid ($)
404,294
400,432
221,073
32,354
92,454
87,193
12,487,408
11,678,898
6,717,018
7,332,725
7,555,996
1,877,774
11,226,172 11,119,994 2,797,053 7,621,533 9,003,573 8,820,450
Automobile Physical
12,554,882 12,406,547 3,099,721 8,386,357 8,424,085 71,755
36,672,756
35,605,871
12,834,865
23,372,969
25,076,108
10,857,172
United Services Automobile Association
Line of Business
Direct
Premiums
Written ($)
Direct
Premiums
Earned ($)
Direct
Unearned
Premium ($)
Direct Losses
Paid ($)
Direct Losses
Incurred ($)
Direct Losses
Unpaid ($)
2,907,243
2,953,259
1,541,075
633,837
1,241,775
869,007
54,015,941
53,286,779
28,918,931
29,096,293
31,649,573
11,401,341
35,303,633 35,731,154 8,313,053 23,891,196 23,511,397 33,934,978
Automobile Physical
33,492,511 33,641,087 7,914,213 22,047,890 21,992,183 36,572
125,719,328
125,612,279
46,687,272
75,669,216
78,394,928
46,241,898
14
III. METHODOLOGY
The market conduct examination places emphasis on an insurer's systems, procedures and guidelines used
in dealing with insureds and claimants. Other than for the reviews of Complaints, the examination period
was September 1, 2021, through August 31, 2022. The following categories were the areas examined:
A. Complaint Handling
B. Marketing and Sales
C. Underwriting and Rating
D. Risk Selection
E. Claims
The review of these categories was accomplished through examination of individual policy and claim files,
the Companies’ procedures, written interrogatories, and interviews with the Companies’ personnel. Each
category was examined for compliance with Illinois Department of Insurance (“DOI”) rules and
regulations, and applicable state laws.
Criticisms were provided to the Companies addressing violations discovered in the review processes. All
valid criticisms were incorporated into this report.
The following methods were used to obtain the required samples and to assure a statistically accurate and
methodical selection. The samples were developed from data provided by the Companies. The sample size
was based on the most recent NAIC Market Regulation Handbook. Random samples were generated using
Audit Command Language (“ACL”) software and the selected samples were provided to the Companies
for retrieval.
A. Complaint Handling
DOI Complaints and Consumer Complaints for the period March 1, 2021, through August 31, 2022, were
reviewed for compliance with applicable state laws and the Companies’ own guidelines.
DOI Complaints – The population request for this category consisted of complaints received from the DOI
during the examination period. The Companies’ complaint registry was reconciled with the individual file
information and the DOI records to determine the completeness and accuracy of the data recorded. Each
complaint file, along with the underlying claim or underwriting file, was reviewed for compliance with
applicable state laws and the Companies’ own guidelines.
Consumer Complaints – The population request for this category consisted of complaints received directly
from consumers during the examination period. The Companies’ complaint registry was reconciled with
the individual file information to determine the completeness and accuracy of the data recorded. Each
complaint file, along with the underlying claim or underwriting file, was reviewed for compliance with
applicable state laws and the Companies’ own guidelines.
B. Marketing and Sales
Marketing and sales materials were reviewed to evaluate the representations made by the Companies about
their products or services and for compliance with applicable state laws and the Companies’ own guidelines.
The examiners requested the Companies’ advertising and marketing manual; procedures for the approval
of any advertising developed; a listing of all advertising and marketing materials used by the Companies
during the examination period; and producer training materials.
15
The Companies reported they do not have brokers or agents.
The reviews included judgmental sampling from the listing of all advertising and marketing materials
provided by the Companies.
C. Underwriting and Rating
The underwriting and rating samples consisted of new and renewal business for the property and casualty
lines of business.
The Companies reported they did not have any Motorcycle New Business policies for the examination
period.
The Companies reported they did not have any Mobile Home New Business or Renewal policies for the
examination period.
Since the Companies’ policies, procedures and personnel were the same for Private Passenger Automobile
as Motorcycle, the examiners combined the Motorcycle Renewals with the Private Passenger Automobile
Renewals.
The property and casualty new business samples were randomly selected based on the inception date
occurring during the examination period. Policies were reviewed for rating accuracy, use of filed rates, use
of filed forms, and compliance with applicable state laws and the Companies’ own guidelines.
The property and casualty renewal business samples were randomly selected based on the renewal date
occurring during the examination period. Policies were reviewed for the Companies’ handling of the
renewal process as well as compliance with applicable state laws and the Companies’ own guidelines.
D. Risk Selection
For the property and casualty lines of business, Cancellations, and Nonrenewals were reviewed for
compliance with applicable state laws, the Companies’ own guidelines, and to ensure reasons for
termination were valid and not unfairly discriminatory. Random samples were selected based on
transactions occurring during the examination period.
The Companies combined the Motorcycle policies with the Private Passenger Automobile for the areas
under review where there were Motorcycle policies within the examination period.
The Companies reported they did not have any Motorcycle policies Canceled Less Than or Equal to 60
Days for the examination period.
The Companies reported they did not have any Mobile Home policies for the examination period.
The Companies reported they did not have any Rescinded Private Passenger Automobile, Motorcycle,
Homeowners or Dwelling Fire policies for the examination period.
16
E. Claims
Claims samples were selected based on settlement occurring within the examination period. Claims were
reviewed for compliance with policy contracts and endorsements, applicable sections of the Illinois
Insurance Code (215 ILCS 5/1, et seq.) and the Illinois Administrative Code (50 Ill. Adm. Code 101 et
seq.).
For the property and casualty lines of business, separate samples were selected for First-Party and Third-
Party claims. For each, separate samples were developed for both paid claims and those closed without
payment (“CWP”). In addition, separate reviews were conducted of all total loss, subrogated, and litigated
claims.
The Companies combined the Motorcycle Claims with the Private Passenger Automobile Claims. The
Companies reported that there were no Third-Party Motorcycle claims.
17
SELECTION OF SAMPLES
A. Complaint Handling
Sample Size
% Reviewed
1. Department of Insurance Complaints
72
100.00%
2. Consumer Complaints
84
24.21%
B. Marketing and Sales
Sample Size
% Reviewed
1. Company-generated Advertising
113
13.90%
2. Producer Training Materials
124
100.00%
3. Producer Communications
76
100.00%
C. Underwriting and Rating
Sample Size
% Reviewed
1. PPA New Business
116
1.10%
2. PPA & MC Renewals
184
<0.1%
3. HO New Business
116
1.70%
4. HO Renewals
184
0.30%
5. DF New Business
113
16.60%
6. DF Renewals
116
1.60%
D. Risk Selection
Sample Size
% Reviewed
1. PPA & MC Cancellations – Less than or Equal to 60 Days
113
17.30%
2. PPA & MC Cancellations – Greater than 60 Days
116
0.70%
3. PPA & MC Nonrenewed
79
57.70%
4. HO Cancellations – Less than or Equal to 60 Days
79
41.40%
5. HO Cancellations – Greater than 60 Days
116
1.80%
6. HO Nonrenewed
79
55.60%
7. DF Cancellations – Less than or Equal to 60 Days
79
43.40%
8. DF Cancellations – Greater than 60 Days
114
8.10%
9. DF Nonrenewed
39
100.00%
E. Claims
Sample Size
% Reviewed
1. PPA & MC – First-Party Paid
109
0.70%
2. PPA & MC – First-Party CWP
108
3.40%
3. PPA – Total Loss
108
3.40%
4. PPA – Third-Party Paid
109
2.00%
5. PPA – Third-Party CWP
105
15.00%
6. PPA – Subrogated
108
3.30%
7. PPA – Litigated
82
28.90%
8. HO – Paid
109
1.90%
9. HO – CWP
108
5.10%
10. DF – Paid
82
20.90%
11. DF – CWP
76
46.90%
18
IV. FINDINGS
A. Complaint Handling
1. Consumer Complaints
• In eight (8) P&C files, (9.52% of the 84 P&C files examined), the Companies failed to
provide a written response within 21 days of receiving the complaint, thereby in violation
of 215 ILCS 5/143d(b). (Crit #058).
• In five (5) P&C files, (6.0% of the 84 P&C files examined), the Companies failed to
provide a written response to the complaint, thereby in violation of 215 ILCS 5/143d(b).
(Crit #059).
B. Marketing and Sales
1. Company-generated Advertising
• No violations were noted.
2. Producer Training Materials
• No violations were noted.
3. Producer Communications
• No violations were noted.
C. Underwriting and Rating
1. Private Passenger Automobile New Business
• The Companies’ filed rule states, “... We will include the new vehicles and their assigned
symbols in periodic (emphasis added) updates to the filed symbol assignment pages. ”As
no symbol filing has been made since February 21, 2021, the rule is either ambiguous or
the Companies failed to adhere to the filed rule, thereby in violation of 50 Ill. Adm. Code
754.10(b) and Illinois Personal Auto Manual, Rule 3, B, 2. (Crit #102).
• The Companies failed to file updates to their private passenger automobile symbols. The
most recent PPA Symbol Filing was submitted to the Department on February 21, 2022,
to become effective on May 17, 2021. The filing did not include all makes and models for
model years 2021 and 2022 and no known makes and models for model year 2023. The
failure to maintain information necessary to rate PPA policies on file with the Department
violates 50 Ill. Adm. Code 754.10(b). (Crit #103)
• In one (1) file (0.9% of the 116 files examined), the Companies failed to apply the
appropriate anti-theft discount, thereby in violation of 50 Ill. Adm. Code 932.40 and 215
ILCS 5/143.28. (Crit #104).
19
• The Companies’ filed rule for rating excess vehicle(s) where all operators are age 50 or
older requires rating utilizing specific excess vehicle age/gender/marital status (AGMS)
factors and the mileage factors for age 40. The Companies’ actual procedure for rating
excess vehicle(s) where all operators are age 50 or older is to use the AGMS and mileage
factors of the operator with the lowest AGMS if the BI AGMS factor is less than one (1).
The Companies’ procedure conflicts with the Companies’ filed rule, thereby in violation
of 50 Ill. Adm. Code 754.10(b). (Crit #129).
• In 92 files (79.3% of the 116 files examined), policy issuance packets with effective dates
on or after December 3, 2021, did not include written notice of the Companies’ complaint
department address or the address of the Public Service Division of the Department of
Insurance, thereby in violation of 215 ILCS 5/143c. (Crit #133).
• In two (2) files (1.7% of the 116 files examined) the Companies failed to use the rates in
force on the effective date of the policies which was inconsistent with the effective dates
specified in the filings and premium differences of $47.88 ($37.57 overcharge and $10.31
undercharge), thereby violating 50 Ill. Adm. Code 754.10(b) and 50 Ill. Adm. Code
754.10(f). (Crit #144).
• In six (6) files (5.2% of the 116 files examined), the Companies failed to use accurate
information to properly tier the policies resulting in incorrect premiums, thereby in
violation of 50 Ill. Adm. Code 754.10(b). (Crit #146).
• In 12 files (10.3% of the 116 files examined), the Companies failed to consistently apply
a vague and ambiguous rule resulting in unfair discrimination, as generally defined in the
business of insurance. The failure to file and adhere to rules with sufficient specificity to
definitively determine the proper premium, thereby in violation of 50 Ill. Adm. Code
754.10(b). (Crit #147).
• In 100 files (86.2% of the 116 files examined), the Companies rounded the product of the
physical damage model year factors times the symbol factors to the nearest 100th, contrary
to the Premium Determination and Exact Premium rule, thereby in violation of 50 Ill.
Adm. Code 754.10(b) and the Companies rules. (Crit #148).
• In 12 files (10.3% of the 116 files examined), the Companies applied an Early Quote
Discount to policies that were ineligible for the discount due to not being the first policy
issued to the named insured, thereby in violation of 50 Ill. Adm. Code 754.10(b). (Crit #
151).
• In two (2) files (1.7% of the 116 files examined), the Companies failed to apply the proper
Early Quote Discount in accordance with their filed rule and rating plan, thereby in
violation of 50 Ill. Adm. Code 754.10(b). (Crit # 152).
2. Private Passenger Automobile & Motorcycle Renewals
• In 134 files (72.8% of the 184 files examined), the renewal packets with effective dates on
or after December 3, 2021, contained revised policies, endorsements, and other notices.
The revisions did not include written notice of the Companies’ complaint department
address or the address of the Public Service Division of the Department of Insurance,
thereby in violation of 215 ILCS 5/143c. (Crit #096).
20
• The Companies failed to file updates to their private passenger automobile symbols. The
most recent PPA Symbol Filing was submitted to the Department on February 21, 2021, to
become effective on May 17, 2021. The filing did not include all makes and models for
model years 2021 and 2022 and no known makes and models for model year 2023. The
failure to maintain information necessary to rate PPA policies on file with the Department
violates 50 Ill. Adm. Code 754.10(b). (Crit #145).
3. Homeowners New Business
• The Companies failed to file a rating rule that specifies a married individual who is
separated, is therefore considered to be single with regard to determining the appropriate
status for the application of the Homeowners’ Marital Status Factor necessary to rate
policies, thereby in violation of 50 Ill. Adm. Code 754.10(b)(1). (Crit #088).
• In one (1) file (0.9% of the 116 files examined), the Companies utilized rates other than
those contained in SERFF Tracking# USAA-133013499 that became effective January 17,
2022, for new business, thereby in violation of 50 Ill. Adm. Code 754.10(b)(1) and 50 Ill.
Adm. Code 754.10(f). (Crit #154).
• In five (5) files (4.3% of the 116 files examined), the Companies failed to comply with
• filed rates since they had failed to file a rating factor or rule(s) on identifying the specific
information to use when dwellings have more than one foundation type, thereby in
violation of 50 Ill. Adm. Code 754.10(b)(1). (Crit #155).
• The Companies failed to file a rating rule that specified if a divorced or widowed individual
should be considered single or married with regards to determining the appropriate status
for the application of the Homeowners’ Martial Status Factor necessary to rate policies.
Since the Companies’ filed rules are vague, ambiguous, and potentially unfairly
discriminatory and since the Companies are incorrectly rating legally single individuals as
married (if widowed), thereby in violation of 50 Ill. Adm. Code 754.10(b)(1). (Crit #156).
• In two (2) files (1.7% of the 116 files examined), the Companies failed to comply with
filed rates as policyholders whose marital status reflected separated were rated single,
thereby in violation of 50 Ill. Adm. Code 754.10(b)(1). (Crit #157).
4. Dwelling Fire New Business
• No violations were noted.
5. Dwelling Fire Renewals
• No violations were noted.
21
D. Risk Selection
1. Private Passenger Automobile & Motorcycle Cancellations – Less than or Equal to 60 Days
• In one (1) file (0.9% of the 113 files examined), the Companies failed to provide 10 days’
notice to the insured of cancellation due to nonpayment of premium, thereby in violation
of 215 ILCS 5/143.15. (Crit #002).
• In one (1) file (0.9% of the 113 files examined), the Companies failed to maintain
documentation of the insured’s request to cancel the policy, thereby in violation of 215
ILCS 5/143.14(a). (Crit #043).
2. Homeowners Cancellations – Greater than 60 Days
• In one (1) file (0.9% of the 116 files examined), the Companies failed to maintain
documentation of the insured’s request to cancel the policy, thereby in violation of 215
ILCS 5/143.13(f). (Crit #035).
3. Homeowners Nonrenewed
• In 50 files (63.30% of the 79 files examined), the Companies’ enclosure included with the
Nonrenewal Notice stated, “This action was taken because of our eligibility and
acceptability rules”, which was not a specific explanation of the reason(s) for nonrenewal,
thereby in violation of 215 ILCS 5/143.17(e). (Crit #142).
4. Dwelling Fire Cancellations – Greater than 60 Days
• In one (1) file (0.9% of the 114 files examined), the Companies provided an inaccurate
reason for canceling the policy, thereby in violation of 215 ILCS 5/143.21. (Crit #112).
5. Dwelling Fire Nonrenewed
• In one (1) file (2.6% of the 39 files examined), the Companies failed to send a nonrenewal
notice to the insured, thereby violating 215 ILCS 5/143.17(a). (Crit #136).
• In 11 files (28.2% of the 39 files examined), the Companies’ nonrenewal notice stated,
“We can’t offer to renew the policy…because of our eligibility and acceptability rules”,
which was not a specific explanation of the reasons for nonrenewal, thereby violating 215
ILCS 5/143.17(e). (Crit #140).
• In one (1) file (2.6% of the 39 files examined), the nonrenewal notice listed the incorrect
insured property address, thereby in violation of 215 ILCS 5/143.17(a). (Crit #141).
22
E. Claims
1. Private Passenger Automobile & Motorcycle First-Party Paid
• In two (2) files (1.8% of the 109 files examined), the Companies failed to send a written
explanation for the delay to the insured when the claim exceeded 40 days, thereby in
violation of 50 Ill. Adm. Code 919.80(b)(2). (Crit #004).
• In 21 files (19.30% of the 109 files examined), the Companies failed to provide the insured
with the information contained in Exhibit A when the insured vehicle was deemed a total
loss, thereby in violation of 50 Ill. Adm. Code 919.80(c). (Crit #005).
• In two (2) files (1.8% of the 109 files examined), the Companies failed to respond to
pertinent communications regarding the claim, thereby in violation of 215 ILCS
5/154.6(b). (Crit #006).
• In two (2) files (1.8% of the 109 files examined), the Companies failed to send a timely
written explanation for the delay to the insured when the claim exceeded 40 days, thereby
in violation of 50 Ill. Adm. Code 919.80(b)(2). (Crit #007).
• In three (3) files (2.75% of the 109 files examined), the Companies failed to provide
detailed documentation in order to permit reconstruction of the activities relative to the
claim, thereby in violation of 50 Ill. Adm. Code 919.30(c). (Crit #015).
• In one (1) file (0.9% of the 109 files reviewed), the Companies initiated the investigation
of the claim and determined the insured to be at fault. The Companies did not request the
police report or make any attempt to obtain the third-party claimant’s information in order
to address the exposure to the insured, and thereby failed to promptly investigate the claim
in violation of 215 ILCS 5/154.6(c). (Crit #017).
2. Private Passenger Automobile & Motorcycle First-Party Closed Without Payment
• In one (1) file (0.9% of the 108 files examined), the Companies did not include the Notice
of Availability of the Department of Insurance with the written explanation for the denial
of the claim, thereby in violation of 50 Ill. Adm. Code 919.50(a)(1). (Crit #028).
• In four (4) files (3.7% of the 108 files examined), the Companies did not provide a written
explanation for the denial of the claim, thereby in violation of 50 Ill. Adm. Code
919.50(a)(1). (Crit #030).
• In two (2) files (1.9% of the 108 files examined), the Companies failed to provide the
insured with the information contained in Exhibit A when the insured vehicle was deemed
a total loss, thereby in violation of 50 Ill. Adm. Code 919.80(c). (Crit #031).
• In three (3) files (2.8% of the 108 files examined), the Companies failed to respond to
pertinent communications regarding the claim, thereby in violation of 215 ILCS
5/154.6(b). (Crit #032).
23
• In one (1) file (0.9% of the 108 files examined), the Companies failed to send a timely
written explanation for the delay to the insured when the claim remained unresolved for
more than 40 days, thereby in violation of 50 Ill. Adm. Code 919.80(b)(2). (Crit #033).
• In 50 files (46.3% of the 108 files examined), the Companies failed to provide detailed
documentation in order to permit reconstruction of the activities relative to the claim,
thereby in violation of 50 Ill. Adm. Code 919.30(c). (Crit #034).
• In one (1) file (0.9% of the 108 files examined), the Companies failed to send an
acknowledgement when the claim was reported in violation of 215 ILCS 5/154.6(b). The
Companies also delayed investigation of the claim, thereby in violation of 215 ILCS
5/154.6(c). (Crit #049).
3. Private Passenger Automobile Total Loss
• In two (2) files (1.9% of the 108 files examined), the Companies failed to send a written
explanation for the delay to the insured when the claim exceeded 40 days, thereby in
violation of 50 Ill. Adm. Code 919.80(b)(2). (Crit #053).
• In 96 files (88.9% of the 108 files examined), the Companies failed to provide the insured
with the information contained in Exhibit A when the insured vehicle was deemed a total
loss, thereby in violation of 50 Ill. Adm. Code 919.80(c). (Crit #054).
• In five (5) files (4.6% of the 108 files examined), the Companies failed to send a timely
written explanation for the delay to the insured when the claim exceeded 40 days, thereby
in violation of 50 Ill. Adm. Code 919.80(b)(2). (Crit #056).
4. Private Passenger Automobile Third-Party Paid
• In three (3) files (2.75% of the 109 files examined), the Companies failed to offer payment
within 30 days after affirmation of liability and the amount of the claim was determined,
thereby in violation of 50 Ill. Adm. Code 919.50(a). (Crit #077).
• In nine (9) files (8.3% of the 109 files examined), the Companies failed to send a written
explanation for the delay to the third-party claimant when the claim exceeded 60 days,
thereby in violation of 50 Ill. Adm. Code 919.80(b)(3). (Crit #078).
• In six (6) files (5.5% of the 109 files examined), the Companies did not request the police
report or attempt to contact the third-party claimant to determine the exposure to the
insured and thereby failed to promptly investigate the claim in violation of 215 ILCS
5/154.6(c). (Crit #079).
• In one (1) file (0.9% of the 109 files examined), the Companies failed to send a timely
written explanation for the delay to the third-party claimant when the claim exceeded 60
days, thereby in violation of 50 Ill. Adm. Code 919.80(b)(3). (Crit #080).
• In four (4) files (3.7% of the 109 files examined), the Companies failed to respond to
pertinent communications and implement reasonable standards for the prompt
investigation of claims, thereby in violation of 215 ILCS 5/154.6(c). (Crit #081).
24
• In nine (9) files (8.3% of the 109 files examined), the Companies failed to provide detailed
documentation regarding the total loss settlement, thereby in violation of 50 Ill. Adm. Code
919.30(c). (Crit #082).
• In 22 files (20.20% of the 109 files examined), the Companies did not issue the appropriate
payment and failed to pay the required amounts of sales taxes, transfer and/or title fees to
the insured at the time of the total loss settlement resulting in underpayments of $447.57,
thereby in violation of 215 ILCS 5/154.6(d) and 50 Ill. Adm. Code 919.80(c)(3)(A)(i). (Crit
#083).
• In five (5) files (4.6% of the 109 files examined), the Companies failed to provide detailed
documentation regarding the total loss settlement, thereby in violation of 50 Ill. Adm. Code
919.30(c). (Crit #089).
• In three (3) files (2.8% of the 109 files examined), the Companies failed to issue the
appropriate payment owed to the claimant at the time of the total loss settlement, thereby
in violation of 215 ILCS 5/154.6(d) and resulting in underpayments of $1,227.58. (Crit
#109).
5. Private Passenger Automobile Third-Party Closed Without Payment
• In one (1) file (1.0% of the 105 files examined), the Companies failed to send a liability
denial or compromise offer letter to the claimant in follow up to the verbal offer, thereby
in violation of 215 ILCS 5/154.6(n). (Crit #067).
• In two (2) files (1.90% of the 105 files examined), the Companies failed to send a coverage
denial letter to either the insured or claimant, thereby in violation of 215 ILCS 5/154.6(i).
(Crit #068).
• In one (1) file (1.0% of the 105 files examined), the Companies failed to send a written
explanation when the liability claim remained unresolved in excess of 60 calendar days,
thereby in violation of 50 Ill. Adm. Code 919.80(b)(3). (Crit #069).
• In three (3) files (2.9% of the 105 files examined), the Companies accepted 100% liability
but did not attempt to locate the claimant information either from their insured or by
requesting a police report when available, thereby in violation of 215 ILCS 5/154.6(c).
(Crit #070).
• In six (6) files (5.71% of the 105 files examined), the Companies failed to send a liability
denial letter to the claimant, thereby in violation of 50 Ill. Adm. Code 919.50(a)(2). (Crit
#071).
• In three (3) files (2.9% of the 105 files examined), the Companies failed to provide the
insured with the information contained in Exhibit A when the insured vehicle was deemed
a total loss, thereby in violation of 50 Ill. Adm. Code 919.80(c). (Crit #072).
• In one (1) file (1.0% of the 105 files examined), the Companies accepted 85% liability and
as the claimant disagreed, failed to instruct the claimant on how to present a claim, but
recommended he go through his own policy, thereby in violation of 50 Ill. Adm. Code
919.90(c). (Crit #073).
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• In 10 files (9.52% of the 105 files examined), the Companies failed to send status or closing
letters to the claimant informing them of the time limits for presenting a claim, thereby in
violation of 215 ILCS 5/154.6(c). (Crit #074).
• In five (5) files (4.8% of the 105 files examined), the Companies failed to affirm liability
with the claimant and offer payment when the claim was not in dispute, thereby in violation
of 50 Ill. Adm. Code 919.50(a). (Crit #075).
• In one (1) file (1.0% of the 105 files examined), the Companies failed to send a Reservation
of Rights letter to the insured when there was a coverage issue, thereby in violation of 215
ILCS 5/154.6(c). (Crit #076).
6. Private Passenger Automobile Subrogated
• In two (2) files (1.85% of the 108 files examined), the Companies failed to refund the
deductible to the insured as soon as the subrogation amount was received, thereby in
violation of 215 ILCS 5/143b. (Crit #065).
7. Private Passenger Automobile Litigated
• In ten (10) files (12.2% of the 82 files examined), the Companies failed to provide the
insured with the information contained in Exhibit A when the insured vehicle was deemed
a total loss, thereby in violation of 50 Ill. Adm. Code 919.80(c). (Crit #011).
8. Homeowners Paid
• In five (5) files (4.6% of the 109 files examined), the Companies failed to provide detailed
documentation in order to permit reconstruction of the activities relative to the claim,
thereby in violation of 50 Ill. Adm. Code 919.30(c). (Crit #106).
• In seven (7) files (6.4% of the 109 files examined), the Companies did not provide a written
explanation for the partial denial of the claim, thereby in violation of 50 Ill. Adm. Code
919.50(a)(1). (Crit #107).
• In two (2) files (1.83% of the 109 files examined), the Companies failed to properly apply
a prior payment or policy limitation resulting in an overpayment, thereby in violation of
215 ILCS 5/154.6(c). (Crit #108).
9. Homeowners Closed Without Payment
• In 29 files (26.9% of the 108 files examined), the Companies failed to provide detailed
documentation in order to permit reconstruction of the activities relative to the claim,
thereby in violation of 50 Ill. Adm. Code 919.30(c). (Crit #092).
• In nine (9) files (8.33% of the 108 files examined), the Companies did not provide a written
explanation for the denial of the claim, thereby in violation of 50 Ill. Adm. Code
919.50(a)(1). (Crit #093).
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10. Dwelling Fire Paid
• In one (1) file (1.2% of the 82 files examined), the Companies failed to tender payment
within 30 days after affirmation of liability and the amount of the claim was determined,
thereby in violation of 50 Ill. Adm. Code 919.50(a). (Crit #110).
• In three (3) files (3.7% of the 82 files examined), the Companies failed to provide detailed
documentation in order to permit reconstruction of the activities relative to the claim,
thereby in violation of 50 Ill. Adm. Code 919.30(c). (Crit #117).
• In one (1) file (1.2% of the 82 files examined), the Companies failed to tender payment
within 30 days after affirmation of liability and the amount of the claim was determined,
thereby in violation of 50 Ill. Adm. Code 919.50(a). (Crit #131).
• In one (1) file (1.2% of the 82 files examined), the Companies failed to provide detailed
documentation in order to permit reconstruction of the activities relative to the claim,
thereby in violation of 50 Ill. Adm. Code 919.30(c). (Crit #134).
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V. ACKNOWLEDGEMENT
A comprehensive market conduct examination has been conducted of USAA Casualty Insurance Company
(NAIC #25968), USAA General Indemnity Company (NAIC #18600), Garrison Property and Casualty
Insurance Company (NAIC #21253), and United Services Automobile Association (NAIC #25941). The
examination was conducted in accordance with the Illinois Department of Insurance guidelines and relevant
National Association of Commissioners’ (NAIC) Market regulation Handbook procedures.
The examination included reviews of Operations and Management, Marketing and Sales, Complaint
Handling, Underwriting and Rating, Policyholder Services (Risk Selection), and Claims Handling.
Detailed reviews were performed on Private Passenger Automobile, Motorcycle, Homeowners, and
Dwelling Fire.
The Examiners wish to express appreciation for the courteous cooperation and assistance given by the
officers and employees of the Companies during the examination.
Sincerely,
Craig L. Leonard, CIE, CPCU, CCP, FLMI, ARC, AIAF, ARM, MCM
Examiner-in-Charge
Examination Resources, LLC