For Immediate Release - March 29, 2010

Attorney General Martha Coakley Obtains Order Prohibiting Peabody-Based Kilgore Insurance Agency From Overcharging Premiums and Misleading Customers

BOSTON - Kilgore Insurance Agency, of Peabody, and its owners and agents, will be prohibited from charging so-called "agency fees" - direct additional charges to consumers - on any insurance sales they make under an order obtained by Attorney General Martha Coakley's Office. The preliminary injunction, signed by Superior Court Judge Bonnie MacLeod-Mancuso, also prohibits the defendants from transferring assets during the course of litigation, which commenced in December 2009. The Attorney General's lawsuit is seeking recovery of undisclosed agency fees, civil penalties, attorney's fees and costs, plus interest. The Attorney General's Office is also seeking to permanently prohibit the defendants from engaging in the business of insurance brokerage.

The Attorney General's lawsuit, filed in Suffolk Superior Court, alleged that Kilgore Insurance, its agents Andrew Crowther and Kathleen Burke, as well as owners Cyrus and Jeffrey Kilgore charged their clients--mostly small, family-owned businesses--millions of dollars in concealed agency fees, deceptively hiding those fees by altering insurance policies and other insurance documents, and forging client signatures. These hidden fees ranged from 40-50% of premiums, and in some instances were greater than 300% of the premiums. The industry standard is around 10% and generally takes the form of commissions from the insurance carrier, not fees charged directly to clients.

According to the lawsuit, defendants would bury exorbitant agency fees in the "premium" amount presented to clients - and would then erase the true premium figure on insurance policies and other documents and type in their inflated "premium", prior to providing these documents to clients. Moreover, the defendants allegedly forged client signatures on documents that would reveal the true premium, thus keeping such documents out of the hands of their unsuspecting clients.

Under the terms of the order, in addition to prohibiting the transfer of assets, the defendants:

  • Are prohibited from charging or accepting agency fees, but instead will be compensated solely in the form of commissions paid by the insurance carrier,
  • Must refrain from signing documents on behalf of any customer without the express, written, advance approval of the customer,
  • Must refrain from altering any part of any insurance policy or finance agreement prior to providing a true and complete copy of same to the customer,
  • Must refrain from making misleading or deceptive statements to their customers, whether written or verbal, concerning the present lawsuit.

This matter is being handled by Assistant Attorneys General Claire Masinton and Pallavi Chintapalli, Investigations Supervisor Arwen Thoman, Legal Analyst Gina Masotta, and Paralegal Martin Sattell, all members of Attorney General Coakley's Insurance & Financial Services Division, as well as Investigator Bill Mackay, of Attorney General Coakley's Investigations Division.