For Immediate Release - December 23, 2009

Attorney General Martha Coakley's Office Sues Kilgore Insurance Agency for Charging Undisclosed Fees and Misrepresenting Premiums

BOSTON - Attorney General Martha Coakley's Office filed a lawsuit against Peabody-based Kilgore Insurance Agency, its agents Andrew W. Crowther, Jr. and Kathleen J. Burke, and its owners Cyrus A. Kilgore and Jeffrey B. Kilgore. The complaint, filed late yesterday in Suffolk Superior Court, alleges that the defendants billed undisclosed agency fees to customers totaling more than $3.4 million by misrepresenting those fees as insurance premiums. The defendants' undisclosed agency fees were often 50% to 100% or more of the actual premiums charged by insurance companies (whereas normal agent commissions on such policies are around 10 percent).

View PDF copies of the complaint filed against Kilgore Insurance Agency and the complaint exhibits:

"We allege in our complaint that these defendants have repeatedly taken advantage of their customers-many of which are small, family-owned local businesses-by hiding their undisclosed and excessive agency fees," said Attorney General Martha Coakley. "Particularly in this difficult economy, we must ensure that our businesses, especially small businesses, are not taken advantage of and continue to grow and thrive."

The Attorney General's Office alleges that the defendants routinely told customers that Kilgore Insurance Agency had "shopped" the insurance market on the customer's behalf and that the insurance policy and associated "premium" figure being recommended by the defendants was the cheapest, or only, insurance policy available. At no time would the defendants inform customers that this "premium" figure included a large agency fee for the defendants. In order to conceal these undisclosed agency fees, the defendants would routinely "white out" premium figures on actual insurance policies and replace those premium figures with inflated numbers that included the defendants' undisclosed agency fees, the complaint asserts.

In addition to charging customers undisclosed agency fees, the defendants also allegedly forged their customers' signatures on documents that revealed an insurance policy's true premium, including surplus lines affidavits that were filed with the Massachusetts Division of Insurance.

The complaint further alleges the Defendants secured premium financing agreements for customers that deceptively included the defendants' undisclosed agency fees as insurance premiums and, in numerous cases, the defendants altered the financing agreements to conceal their undisclosed agency fees. On certain insurance policies, the defendants allegedly charged undisclosed agency fees and "double-dipped" by also accepting commissions paid to the defendants by insurance companies. The Attorney General's complaint seeks restitution, disgorgement, injunctive relief, civil penalties, and attorney's fees.

This matter is being handled by Assistant Attorney General Claire Masinton, Investigations Supervisor Arwen Thoman, and Legal Analysts Pallavi Chintapalli and Gina Masotta, all of Attorney General Coakley's Insurance & Financial Services Division.