AG Coakley Settles with Four More Auto Insurance Companies As Part of AG's Board of Appeal Initiative
10,000 Massachusetts drivers' records to be corrected; AG Coakley begins review of insurers' use of private databases in rating customers
As part of the settlements filed today in Suffolk Superior Court, the insurers have agreed to comply with the state's Board of Appeal statute going forward, make payments to the state totaling over $100,000 and correct the at-fault accident findings that they previously reported to private data collection companies. The settlements also require the insurers to report these corrections to insurance companies that actively use information from private databases to calculate premiums for Massachusetts drivers and to make payments to any driver who was surcharged by such an insurer as a result of an at-fault report that a settling insurer should have corrected. Following the deregulation of the auto insurance market in April 2008, Hanover Insurance Group, Progressive Insurance Company, GEICO, Occidental Fire & Casually, and Ameriprise Auto & Home all began using private databases to rate Massachusetts customers.
"If this problem had not been caught and corrected, these at-fault reports could have resulted in premium overcharges to Massachusetts drivers for years to come," said Attorney General Coakley. "We are pleased that the settling insurers cooperated with our review and agreed to reverse their at-fault reports. As we go forward in this new auto insurance marketplace, our office will continue to work to protect consumers from unfair rating practices. If a driver was not at-fault for an accident, insurance companies should not calculate that driver's insurance premium as if the driver were at-fault."
The Attorney General's Insurance & Financial Services Division began its investigation of insurers' at-fault data reporting practices in October 2009 after receiving a complaint from a consumer who had allegedly been overcharged by GEICO based on an at-fault finding that Commerce Insurance Company had failed to correct after the consumer was determined not to be at-fault by the state's Board of Appeal. In addition to today's settlements, the Attorney General reached similar settlements in February 2010 with Commerce Insurance Company, Metropolitan Property & Casualty, Liberty Mutual Insurance Company, Peerless Insurance Company, Plymouth Rock Assurance Corporation and Pilgrim Insurance Company. As a result of the Attorney General's Board of Appeal Initiative it is expected that insurers will correct at-fault reports for a total of 10,000 Massachusetts drivers.
The Board of Appeal is an independent board that reviews the fairness of at-fault accident findings made by insurers following an automobile accident. The 2009 Board of Appeal statute was enacted by the state legislature on an emergency basis in April 2009, after the state's Division of Insurance announced plans to eliminate the Board of Appeal. The 2009 Board of Appeal statute mandated the continued existence of the Board of Appeal, and at the urging of the Attorney General, included a provision requiring insurers to correct at-fault accident reports they make to private data collection companies after those at-fault findings are overturned by the Board of Appeal.
The next phase of the Attorney General's investigation will examine whether the insurers that are now using private databases for auto insurance rating purposes are making appropriate use of that data and whether they are respecting the Board of Appeal's determinations in calculating their customers' premiums.
Consumers who believe they may have been overcharged by insurance companies that use private databases to calculate premiums, including Hanover Insurance Group, Progressive Insurance Company, GEICO, Occidental Fire & Casually, and Ameriprise Auto & Home are urged to contact the Attorney General's Insurance & Financial Services Division at 1-888-830-6277.
This matter is being handled by Investigations Supervisor Arwen Thoman, Assistant Attorney General Glenn Kaplan and Legal Analyst Allison Morgan all of AG Coakley's Insurance & Financial Services Division.