Attorney General Coakley Obtains $1.5 Million for Massachusetts Credit Insurance Customers
Balboa Insurance Company to repay customers for overcharges on credit unemployment insurance purchases, make $150,000 payment to the State, and change business practices
"As this product becomes more significant given today's economy, it is particularly important that insurance companies treat customers fairly and not overcharge them," said Attorney General Martha Coakley. "We appreciate Balboa's cooperation in this matter, and we will continue to review the conduct of other carriers in this marketplace. If consumers have questions about this type of product, they should contact our office before purchasing it."
Credit unemployment insurance pays for credit card or other types of recurring debts owed by consumers for a set period of time if the consumers are laid off or otherwise lose their jobs. In general, consumers purchase the coverage either when they sign up for a specific credit card, or in response to an offer that accompanies a credit card bill. Rates for credit unemployment insurance cannot exceed certain statutory ceilings, which measure the amount of money paid out in claims compared to the amount of premiums collected by the insurance companies.
The Attorney General has been reviewing allegations that credit insurers have violated the statutory ceilings, and charged customers rates beyond the levels allowed by law. To resolve these issues, Balboa entered into an Assurance of Discontinuance, which was filed in Suffolk Superior Court. Under the terms of the agreement, Balboa will return $1.2 Million to Massachusetts customers, as well as an additional $300,000 in interest on the alleged overcharges. In addition, Balboa will make a $150,000 payment to the State, and agree to change its business practices.
Consumers who have questions whether they are entitled to refunds under the Balboa settlement, or questions regarding credit unemployment insurance generally, can call the Attorney General's Insurance and Financial Services Hotline at 1-888-830-6277.
The Balboa investigation was handled by Assistant Attorney General Peter Leight, Mathematician Burt Feinberg and Division Chief Glenn Kaplan of Attorney General Martha Coakley's Insurance and Financial Services Division.