Surety Bond Firm Agrees to Pay $1-Million State Fine

An Orange County company that sells surety bonds to cover incomplete or shoddy work by contractors agreed Tuesday to pay a $1-million fine to settle state charges that it routinely delayed and withheld claim payments from consumers.

The fine, to be paid over four years by Indemnity Co. of California, is the third-largest ever assessed against an insurance company by the state Department of Insurance. Indemnity didn’t admit liability in settling the charges.

The action comes after an intensive two-year investigation into numerous complaints from consumers that Indemnity delayed and denied payments unjustifiably, according to the state agency.

Insurance examiners also contended that the company resisted an audit by withholding files, removing documents from other files and refusing or delaying answers to agency questions. The company didn’t have written procedures on investigating and processing claims, the state charged.

“What really caught our attention was that over a period of five years, the number of complaints doubled every year,” said Cindy Ossias, a senior staff lawyer. “Just in the last two years, since we started our investigation, there have been 144 complaints against the company.”

Executives at the company, started in 1968 by Harry Crowell, its chairman, would not discuss the charges or any specific case.

“We’re just glad the matter is settled and that we can go forward from here,” said Craig Curtner, the company’s marketing director.