Illinois insurance regulators have fined Universal Casualty Co. $200,000 and ordered it to immediately correct its claims processes after the company failed to adopt and maintain procedures for prompt investigations and settlements of consumer claims.

The automobile insurer, based in Elk Grove Village, Ill., does business in Illinois, Indiana and Missouri.

According to the Illinois Department of Insurance, regulators ordered UCC to create and maintain improved claims investigation and resolution procedures in January 2008. Consumer complaints alleging the insurer was not addressing or resolving property damage and liability claims continued, however. The department initiated a new investigation on July 27, 2009.

The new order also requires that UCC "satisfactorily resolve" hundreds of previous consumer complaints. The department said it will undertake additional disciplinary measures if the insurer does not comply.

The company has notified regulators that new management is working to institute corrective measures. Representatives of Kingsway Financial Services, Inc., UCC's parent company, did not immediately return a message seeking comment.

In February, A.M. Best downgraded financial strength ratings for several Kingsway wholly owned property/casualty and reinsurance subsidiaries, including UCC. The subsidiaries were placed under review with negative implications (BestWire, Feb. 13, 2009).

Universal Casualty Co. has current Best's Financial Strength Rating of B (Fair).

Shares of Kingsway Financial Services, Inc. (NYSE: KFS) were trading $2.93 on Aug. 13, down 0.34% from the previous close.

(By Sean P. Carr, Washington Correspondent: sean.carr@ambest.com)