BISMARCK, N.D. (AP) -- Insurance Commissioner Jim Poolman has fined the Farmers Insurance Group $750,000 for allegedly setting up incentives for its auto insurance adjusters to underpay some claims and deny others.

The fine is the highest penalty the state Insurance Department has ever levied, Poolman said Thursday. It is for "claims handling practices that were, at best, unfair, and at worst, abusive to the policyholder," he said.

A spokesman for Farmers Insurance Group, which is based in Los Angeles, said the company denies Poolman's allegations. Mark Toohey said the company agreed to pay the settlement to get the dispute out of the way.

"The most important issue here is that we have full faith and utmost confidence that our customers' claims have been paid properly," Toohey said.

Poolman did not find any evidence that specific policyholders were shortchanged, Toohey said.

Poolman said an Insurance Department investigation, which began in August 2004, uncovered evidence that Farmers Insurance had quotas for denying claims and assuming that others were fraudulent, which delayed any payments to customers.

Farmers set payments for some injuries according to predetermined ranges, and they were not based on the merits of individual claims, Poolman said. The pay of Farmers Insurance employees was pegged to whether they kept insurance payouts down, he said.

Farmers Insurance Group sells about $11 million worth of car insurance to North Dakota customers each year, and has thousands of customers, Poolman said. He did not have an estimate of the company's number of policyholders.

The company is North Dakota's third-largest in terms of car insurance premiums collected each year, Poolman said.

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