For Immediate Release - August 25, 2009

Attorney General Martha Coakley Reaches Settlement with AFCO Credit Corporation

Settlement Resolves Allegations Company Facilitated Unfair Practices by Insurance Broker William Gallagher Associates

BOSTON - Today, Attorney General Martha Coakley's Office reached a settlement with premium finance company AFCO Credit Corporation ("AFCO") resolving allegations that AFCO enabled Boston-based William Gallagher Associates Insurance Brokers, Inc. ("WGA") to charge its customers undisclosed broker fees, billed as insurance premiums. Premium finance companies such as AFCO pay premiums to insurance companies on their customers' behalf and then bill customers for those premiums, plus interest, on a monthly basis.

"We are pleased that AFCO cooperated during our investigation of WGA and that AFCO has agreed to return monies to the affected WGA customers and adopt necessary conduct reforms," said Attorney General Coakley. "Our Office will continue to seek to hold accountable not only companies that fraudulently overcharge their customers, but also the companies that knowingly facilitate such conduct."

The Attorney General's Office filed a lawsuit against WGA on December 19, 2007, in Suffolk Superior Court, alleging that WGA unfairly charged customers over three million dollars in undisclosed fees. According to the complaint, in some instances AFCO acceded to WGA demands that AFCO hide fees on finance agreements by listing WGA's undisclosed fees as insurance premiums. The Attorney General's Office believes that AFCO's actions enabled WGA to deceive customers and collect excessive compensation.

Under the terms of the settlement with AFCO, filed today in Suffolk Superior Court, AFCO will refund $11,870 to Berkshire Power Company, LLC and $21,455 to Milford Power Company, LLC. These refunds represent the interest charges that each company paid to AFCO as a result of unknowingly financing WGA's undisclosed fees. AFCO has also agreed to reform its practices by requiring insurance agents and brokers to separately disclose their fees on AFCO's premium finance agreements.

Under the terms of the consent judgment the Attorney General's Office obtained against WGA in December 2007, WGA returned over three million dollars to customers, paid $925,000 to the Commonwealth, submitted to a binding audit, and adopted transparent compensation practices. As a result of the binding audit, which was completed in November, 2008, WGA returned an additional $330,624 to affected customers and paid an additional $80,000 to the Commonwealth.

This matter was handled by Investigations Supervisor Arwen Thoman and Assistant Attorney General Glenn Kaplan, both of Attorney General Coakley's Insurance & Financial Services Division.

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