State targets insurance agency franchise – seeks to revoke licences, close agencies

Firms accused of deceptive business practices and allegedly tricking customers

State targets insurance agency franchise – seeks to revoke licences, close agencies

Insurance News

By Paul Lucas

The spotlight has fallen on several insurance agencies under one umbrella as they stand accused of tricking customers and deceptive business practices.

Insurance regulators in the state of Michigan claim that customers were deceived into buying a roadside assistance plan that was designed to pad the profits of L.A. Insurance – something that the firm vehemently denies, hitting back by saying that state investigators are “targeting us.”

According to a report by Crain’s, the Michigan Department of Insurance and Financial Services has been investigating the insurance firm dating back to 2011. Its investigators have allegedly found that roadside assistance plans from the firm could double downpayments thanks to a sales tactic known as “sliding”, which sees agents fail to disclose the ancillary product, or inform customers that emerging towing services are a mandatory part of an insurance premium, when in fact they are not.

The report states that “sliding” is not officially outlawed in Michigan – but an administrative order was issued in September 2015 to bar the practice and allow action to be taken against insurance firms engaging in dishonest tactics.

In addition, the regulator is also threatening to bar L.A. Insurance’s seven-day auto policies that are marketed towards those who cannot afford the downpayments on six-month plans. Typically these policies are sold for as little as $199 and have been deemed as a workaround for drivers to get vehicles registered and then drive without insurance for the remainder of the year.

In response, Anthony Yousif, the CEO of L.A. Insurance, suggested his company had been unfairly targeted

“The customers are not filing the complaints,” Yousif told the publication. “They’re creating their own complaints. The investigator creates the problem.”

Meanwhile, Andrea Miller, a spokeswoman for the Department of Insurance and Financial Services, stated that she was unable to comment on “any ongoing enforcement cases.”

What is your opinion on the sales tactic of “sliding” and do you believe that seven-day insurance policies should be sold? Leave a comment below with your thoughts.


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