AIG Unit Faces California Regulatory Action Over Fire Claims

American International Group Inc. (AIG) is facing an enforcement action from a California regulator over the insurer’s claims-handling tied to a 2008 fire that destroyed more than 400 mobile homes.

The California Department of Insurance found 125 violations after policyholder complaints tied to New York-based AIG’s New Hampshire Insurance Co. and its agent for claims processing, York Risk Services Group Inc., according to an e-mailed statement today from the regulator. Violations can carry civil penalties of as much as $10,000 each if the act was willful.

The Sayre Fire in November 2008 destroyed more than 600 structures and burned 11,000 acres in Los Angeles, leading the mayor of Los Angeles and then-California Governor Arnold Schwarzenegger to declare a state of emergency, according to the statement. New Hampshire Insurance issued policies to about 370 customers whose mobile homes were fully lost in the firestorm.

“The allegations in this case reflect a troubling lack of attention to consumer needs by New Hampshire Insurance Company,” Adam M. Cole, the regulator’s general counsel, said in the statement. “We expect insurers and their agents to be thoroughly diligent in handling claims, especially at times of devastation such as the Sayre fire.”

Mark Herr, a spokesman for AIG, declined to comment.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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