The California Department of Insurance (CDI) announced Tuesday it served an order to show cause, a statement of charges/accusation and a notice of monetary penalty against the New Hampshire Insurance Co. and its authorized agent for claims processing, York Risk Services Group Inc. regarding their handling of claims related to the 2008 Sayre Fire in Sylmar, California.

New Hampshire Insurance Co. is a subsidiary of AIG.

“The department is committed to ensuring that insurers and administrators processing claims on consumers’ behalf adhere to the requirements of the California Insurance Code,” said Adam M. Cole, General Counsel at CDI. “We expect insurers and their agents to be thoroughly diligent in handling claims, especially at times of devastation such as the Sayre fire. The allegations in this case reflect a troubling lack of attention to consumer needs by New Hampshire Insurance Co.”

The Sayre Fire, which occurred on Nov. 14, 2008, led to the loss of 489 residences, including 480 mobile homes, and the destruction of more than 600 structures overall. During the course of the fire, more than 11,000 acres were burned.

In response, both the mayor of Los Angeles and the governor of California issued state of emergency declarations.

The 480 mobile homes destroyed in the fire were located in the Oakridge Mobile Home Park, which, before the fire, housed 600 mobile homes.

The New Hampshire Insurance Co. issued mobile homeowners policies to approximately 370 policyholders whose homes suffered total losses as a result of the firestorm.

In the ensuing months, CDI’s Claims Services Bureau received a number of complaints from New Hampshire Insurance Co. policyholders.

Consequently, CDI investigated the complaints and cited New Hampshire Insurance Co. and York Risk Services Group, Inc. for 125 violations of the California Insurance Code, with each violation representing an alleged unfair or deceptive act.

Under the California Insurance Code, any person who engages in any unfair or deceptive act is liable to the state for a civil penalty not to exceed $5,000 for each act, or, if the act or practice was willful, a civil penalty not to exceed $10,000 for each act.

The California Insurance Code permits New Hampshire Insurance Co. and York Risk Services Group, Inc. the opportunity to respond to the allegations in an administrative hearing.

In 2009, CDI acted on complaints from Sayre Fire survivors relating to disputes over how much extended replacement cost coverage was available under the New Hampshire Insurance Co. policy.

CDI was able to secure an additional 110 percent or 125 percent of fire insurance coverage for most policyholders. This action resulted in approximately $10.8 million in increased payments to the Sylmar fire victims.