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STATE OF MAINE
BUREAU OF INSURANCE

INTRODUCTION

This Consent Agreement is entered into by and among Homesite Insurance Company of the Midwest ("Homesite"), a Maine-licensed insurance company, the Maine Superintendent of Insurance ("the Superintendent"), and the Office of the Maine Attorney General ("Attorney General") pursuant to 10 M.R.S. § 8003(5)(B). Its purpose is to bring to resolve, without an adjudicatory proceeding, violations of the Maine Insurance Code as described below.

PARTIES

1. The Superintendent of Insurance is the official charged with administering and enforcing Maine's insurance laws and regulations, and the Maine Bureau of Insurance ("Bureau") is the administrative agency with such jurisdiction. The Superintendent has jurisdiction over this matter pursuant to 24-A M.R.S. §§ 12-A and 211.
2. Homesite is a North Dakota domiciled insurance company that has been licensed in Maine as a property and casualty insurance company since July 27, 2005. Homesite's Maine Certificate of Authority number is PCF116371. Its NAIC Code is 13927.

   STATUTORY AUTHORITY

3. Under 10 M.R.S. § 8003(5)(A-1), and 24-A M.R.S. § 12-A, the Superintendent may issue a warning, censure, or reprimand to a licensee, may suspend, revoke or refuse to renew the license of a licensee, may impose conditions of probation on the licensee, may levy a civil penalty, or may take any combination of such actions, for violating any insurance laws, or violating any rule, regulation, subpoena, or order of the Superintendent.
4. Pursuant to 10 M.R.S.A. § 8003(5)(B), the Superintendent may resolve a complaint by entering into a consent agreement with a licensee and with the agreement of the Attorney General.

   FACTS

5. Homesite distributes and sells homeowners, condominium and renters insurance products through agency and marketing relationships with large financial institutions. These products are distributed through call centers, the internet and licensed agents.
6. Beginning on October 1, 2006, Homesite issued cancellation notices for nonpayment of premium for homeowners policies to Maine policyholders that did not contain a notice that the policyholders had a right to request a hearing before the Maine Superintendent of Insurance within 30 days of receiving the cancellation notice.
7. On September 13, 2010, the Bureau advised Homesite in a letter that the cancellation notices did not comply with 24-A M.R.S.A. § 3050 and asked Homesite to confirm that the cancellation notices would be reviewed to correct this omission.
8. By letter dated September 28, 2010, Homesite advised the Bureau that it was in the process of updating its non-payment cancellation notices to include language advising the policyholder that the policyholder had a right to request a hearing within 30 days of receiving the notice.
9. By letter dated November 1, 2010, the Bureau asked Homesite to verify that the company's notices of cancellation now included the right to request a hearing language.
10. By letter dated November 15, 2010, Homesite advised the Bureau that it anticipated that the notice would be corrected and implemented in its system by mid-December, 2010.
11. On January 5, 2011, Homesite represented to the Bureau that, as of December 16, 2010, it corrected its non-payment cancellation notices to include language advising the policyholder that the policyholder had a right to request a hearing within 30 days of receiving the notice.
12. From October 1, 2006, to December 16, 2010, Homesite sent 905 non-payment cancellation notices to Maine policyholders that did not contain the notice of right to request a hearing. A list of the policy numbers with corresponding dates of the cancellation notices is attached hereto as Attachment A.
13. In 2010, Homesite sent non-payment cancellation notices to 345 Maine policyholders; of this number, the policies of 163 policyholders were ultimately cancelled.
14. On January 5, 2011, Homesite represented to the Bureau that it contacted by telephone all Maine policyholders who, from September, 2010, to December, 2010, received the non-payment cancellation notices that did not contain the notice of right to request a hearing, and offered to reinstate their policies.

    APPLICABLE LAW

15. Title 24-A M.R.S.A. § 3054 provides that "A named insured who has received a statement of reason for cancellation, or of reason for an insurer's intent not to renew a policy, may, within 30 days of the receipt of a statement of reason, request a hearing before the Superintendent of Insurance. The purpose of this hearing is limited to establishing the existence of the proof or evidence used by the insurer in its reason for cancellation or intent not to renew. . . "
16. Title 24-A M.R.S.A. § 3050 provides that ". ..Except for a policy that has been in effect for less than 90 days at the time notice of cancellation is received by the named insured, the reason for cancellation must accompany the notice, together with a notice of the right to apply for a hearing before the superintendent within 30 days, as provided in section 3054."

    COVENANTS

17. Homesite acknowledges that by issuing cancellation notices for nonpayment of premium for homeowners policies to Maine policyholders that did not contain a notice that the policyholders had a right to request a hearing before the Superintendent, Homesite violated 24-A M.R.S.A. § 3050.
18. Homesite further acknowledges that the Company took an unreasonable amount of time (over three months) to rectify this violation after the violation was brought to the Company's attention as part of the Bureau's investigation of a consumer's complaint, and that this is a valid consideration in determining a civil penalty under 24-A M.R.S.A. § 12-A and 10 M.R.S.A. § 8003(5)(A).
19. Homesite accepts as disciplinary action the imposition of a civil penalty in the amount of Seven Thousand Five Hundred Dollars ($7,500.00). Homesite shall remit payment of this civil penalty within thirty (30) days after signing this Consent Agreement. Payment shall be by certified check or money order made out to "Treasurer, State of Maine" and delivered to the Bureau.
20. The parties to this Consent Agreement understand that nothing herein shall affect any rights or interest that any person not a party to this Agreement may possess.
21. In consideration of Homesite's execution of and compliance with the terms of this Consent Agreement, the Superintendent and Attorney General agree to forgo pursuing against Homesite any further disciplinary measures or other civil or administrative sanctions available under the Maine Insurance Code concerning the specific conduct described in this Consent Agreement, other than those agreed to herein. Should Homesite violate this Agreement, the Superintendent may pursue any available legal remedy for the violation, including without limitation the suspension or revocation of Homesite's certificate of authority to act as an insurer in the State of Maine.
22. This Consent Agreement is enforceable by an action in Maine Superior Court.
23. This Consent Agreement is not subject to appeal. The parties waive any further hearings or appeals regarding the matters that are the subject of this Consent Agreement.
24. This Consent Agreement may be modified only by a written agreement executed by all of the parties hereto.
25. This Consent Agreement is a public record subject to the provisions of the Maine Freedom of Access Law, 1 M.R.S. §§ 401 through 410, will be available for public inspection and copying as provided for by 1 M.R.S. § 408, and will be reported to the Regulatory Information Retrieval System database at the National Association of Insurance Commissioners.
26. Homesite agrees that it has read this Consent Agreement, that it understands this Consent Agreement, that it has reviewed the statutory provisions set forth herein, and that it enters into this Consent Agreement voluntarily and without coercion of any kind from any person.

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Subscribed and sworn to before me this 7th day of Nov, 2011.

_____________________
Notary Public

_____________________
Printed name

_____________________
Date commission expires

Homesite Insurance Company of the Midwest
Docket No. INS-11-232
Consent Agreement Attachment A

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