The Pennsylvania Insurance Department rarely forces private insurance companies to reinstate canceled homeowners or personal property policies like it did three times with the Risoldis, who are accused in a $20 million insurance fraud scheme, according to department data.
Last year, for example, only 22 of the 1,561 cancellation reviews the department’s Consumer Services Bureau conducted — fewer than 2 percent — resulted in an insurer that had met all procedural cancellation criteria being told to reinstate policy coverage, the data shows.
Most of the time after such reviews, the Consumer Services Bureau sided with insurances companies that canceled homeowner and personal property policies. Roughly 60 percent, or 904 of the 1,561 complaints filed, resulted on the side of an insurance company following a full review.
Another 158 cases concluded with an insurance company rescinding a termination request, and 110 cases resulted in the companies ultimately reinstating the policy on their own, according to the data.
Consumer Services reviewers may also side with the customer – as it did in 367 cases in 2014 – because the cancellations were deemed “deficient.” That happens when a cancellation is found to be untimely, meaning the insurer failed to follow procedural rules, such as providing 30 days notice before canceling a policy and disclosing evidence and reasons for a cancellation.
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| The Risoldi family heads into court |
The issue of insurance cancellations emerged earlier this week during a preliminary hearing for members of the Risoldi family and two others accused of filing false insurance claims and conspiracy to commit insurance fraud in connection with three fires at the family’s 10-acre Buckingham estate known as Clairemont.
An adjuster for the family’s insurance company, AIG, testified that the company attempted three times to drop the Risoldi family as clients, since the first fire at Clairemont in 2009. But the state insurance department wouldn’t allow it after complaints from Claire Risoldi, the 67-year-old socially prominent family matriarch.
AIG paid the Risoldis $1.8 million for damage and replacement costs after a 2009 fire, more than $8 million following a 2010 fire, and $10 million, so far, after the most recent fire in 2013. The family has filed a civil suit against AIG seeking an additional $10 million in unpaid claims.
An insurance department spokeswoman confirmed that its Consumer Services Bureau refused to allow AIG to cancel the Risoldis’ homeowners and other property coverage three times, but the specific details about why it sided with the family are not public information. The department also does not disclose the names of bureau employees involved in right of review proceedings.
“I cannot discuss why AIG was not permitted to cancel the Risoldis’ policy,” spokeswoman Alison Fogarty said.
AIG appealed the state insurance department’s decision only after the 2013 cancellation attempt, and that review is still pending before the Administrative Hearings Office, she added.
An AIG spokesman from the company’s New York office declined comment on the appeal Wednesday, citing the pending litigation.
The purpose of the right of review is to ensure that consumers are not arbitrarily dropped from a policy, Fogarty said. Insurance companies cannot “preemptively” cancel a policy when an investigation is ongoing.
“This is designed as a consumer protection process,” Fogarty added. “If the company’s notification is deemed deficient for any reason, the department advises the company to continue the policy.”
There is no timeline for an average cancellation review because individual circumstances unique to each case must be taken into account, Fogarty said. With the Risoldis’ pending criminal proceedings, the hearing process could possibly be delayed, she added.
None of the Risoldis or co-defendants — private investigator Mark Goldman, 54, of Wayne, and fabric vendor Richard Holston, 51, of Medford Lakes, New Jersey — is charged with arson in connection with the fires, which were each ruled “undetermined” as to the cause by Buckingham’s fire marshal.
The charges against Claire Risoldi, her daughter, Carla Risoldi, 48, of Solebury, her son, Carl A. Risoldi, 43, his wife, Sheila, 44, and Goldman were held for trial Wednesday in connection with the insurance fraud case. Holston’s preliminary hearing was continued, and Roth will make a separate determination on his charges.
Jo Ciavaglia: 215-949-4181; email: jciavaglia@calkins.com; Twitter: @jociavaglia
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