For Immediate Release - March 31, 2009

Attorney General Martha Coakley Requires Occidental Fire & Casualty Insurance Company to Remove Unfair and Discriminatory Provisions in Rating Plan

Accuses Insurer of Violating Massachusetts Law and Engaging in Unfair Practices

BOSTON - Attorney General Martha Coakley’s Office has entered into a settlement with Occidental Fire and Casualty Insurance Company of North Carolina (Occidental), barring it from using a variety of unfair rating practices and company policies when underwriting automobile insurance policies in Massachusetts. In February, Occidental filed its rating plan with the Commissioner of Insurance to begin writing automobile insurance this year.

“We have serious concerns regarding Occidental’s plan to write auto insurance policies in Massachusetts. As the company is targeting urban drivers in those areas where other companies are pulling out, many inner-city Massachusetts drivers may purchase insurance from Occidental at prices greatly in excess of the fair cost of the insurance,” said Attorney General Coakley. “This settlement is an important first step to ensure that Occidental consumers are treated fairly.”

Under an Assurance of Discontinuance filed yesterday in Suffolk Superior Court, Occidental is now prohibited from:

  • charging consumers an additional $25 policy fee for each insurance policy
  • charging installment fees in excess of the Massachusetts usury standards
  • limiting the right of policyholders to unconditionally cancel their policies after proper notice
  • limiting the right of policyholders to reinstate their policies after receiving a notice of cancellation if the deficiency is paid
  • charging installment fees to those policyholders who pay their balance in full
  • charging a glass deductible in addition to a comprehensive deductible on glass claims
  • charging a 25% surcharge on high risk vehicles
  • rating Massachusetts drivers based on length of residency

In March, the Attorney General’s Office called for an administrative rate hearing on Occidental’s filing before the Commissioner of Insurance. In its motion for a rate hearing, the Attorney General’s Office argued that the proposed rates were excessive and unjustified, and also violated a variety of Massachusetts statutes. While agreeing to hear the issue on the excessiveness of the rates, the Commissioner of Insurance opined that she could not act to prevent the company from using illegal practices in its rating policies, which she claimed was beyond her authority. In light of the Commissioner’s decision, the Attorney General’s Office used its authority under the Consumer Protection Act to stop the illegal practices.

The Attorney General’s Office will continue to litigate issues relating to Occidental’s inflated rates as part of the administrative proceeding. The Commissioner placed the rates “on file,” allowing the company to begin writing policies on April 1, 2009. However, a hearing date has been set for April 30.

View PDF of letter from the Commissioner of Insurance on Occidental's rate filing:

Re: Request for a Hearing on Occidental Fire & Casualty of North Carolina's Private Passenger Motor Vehicle Rate Filing pdf format of 2009_03_31_occidental_settlement_attachment1.pdf

This matter is being handled by Assistant Attorneys General Peter Leight and Monica Brookman of Attorney General Coakley’s Insurance and Financial Services Division.