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Auto Coverage Broker Fined for Violations

TIMES STAFF WRITER

One of the state’s largest auto insurance brokerage firms has been fined $300,000 for using unlicensed employees to sell policies, the state Department of Insurance said Thursday.

Fullerton-based Eastwood Insurance Services Inc. was also ordered to pay an additional $25,000 to cover the Insurance Department’s enforcement costs.

Under the state insurance code, only people who have completed education requirements and passed an examination and a background check may sell insurance.

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Insurance Department investigators found that, from July 1994 to December 1995, Eastwood used 22 to 32 unlicensed workers to sell car insurance to more than 1,900 customers. The employees earned about $415,000 in commissions from the sales, the department said.

Insurance Commissioner Chuck Quackenbush said the Eastwood fine is the first of what he expects will be several penalties meted out to insurance companies as part of a statewide crackdown on unlicensed operators.

“It hasn’t happened real frequently in the past,” he said. “But it’s a disturbing trend we see on the rise.”

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Quackenbush said no policyholders are known to have been hurt by Eastwood’s violations. But customers are left vulnerable to unscrupulous salespeople when companies operate without licenses, he said.

Eastwood President Judith A. Partridge disputed the department’s findings but said she decided to settle the matter by agreeing to the fine. “This will allow me to get back to the day-to-day management of my business as quickly as possible and to avoid costly legal battles,” she said.

Eastwood, which has 295 employees, reported total 1996 billings of more than $15 million. As a brokerage firm, Eastwood does not provide insurance coverage but sells policies for other insurance companies.

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The Eastwood investigation began about a year ago, Quackenbush said, after the department seized Fullerton-based Underwriters Reserve Ltd., which was selling insurance in California without a license.

Documents at Underwriters Reserve showed that Eastwood acted as an agent for the seized firm from July 1992 through May 1993. Eastwood, which at the time was called Eastwick Insurance, did not have the special license required to sell policies for an unauthorized insurer, the Insurance Department said.

Eastwood received a 17.5% commission and bonuses for selling the Underwriters Reserve insurance policies, the department said.

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